Exhibit 2.2  CONFIDENTIAL TREATMENT  AGREEMENT AND PLAN OF MERGER  BY AND AMONG  CUBIST PHARMACEUTICALS, INC.,  SD ACQUISITION CORPORATION,  CALIXA THERAPEUTICS INC.,  and  THE MEMBERS OF THE STOCKHOLDERS COMMITTEE  December 12, 2009  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Securities and Exchange Commission (the Commission).


LIST OF EXHIBITS AND
SCHEDULES  Exhibit A
  
  DefinitionsExhibit B
  
  Form of
  Certificate of MergerExhibit C
  
  Form of
  Payment Agent AgreementExhibit D
  
  Form of
  Escrow AgreementExhibit E
  
  Form of
  Letter of TransmittalExhibit F
  
  Form of
  Press ReleaseExhibit G
  
  Description
  of CXA-101Exhibit H
  
  Description
  of CXA-201Exhibit I
  
  ConsultantsTarget
  Disclosure SchedulesAcquiror
  Disclosure Schedules  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  2


EXECUTION COPY  AGREEMENT AND PLAN OF MERGER  This AGREEMENT AND PLAN OF
MERGER (this Agreement) is made and entered into as of December 12,
2009 (the Agreement Date) by and among Cubist Pharmaceuticals, Inc.,
a Delaware corporation (Acquiror), SD Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Acquiror (Merger Sub),
Calixa Therapeutics Inc., a Delaware corporation (Target), and Eckard
Weber and Dennis Podlesak, as the members of the Stockholders Committee
(solely for purposes of Section 8, and as defined by Section 8.3(a) herein).  Acquiror, Merger Sub and Target may be
referred to herein individually as a Party, and collectively as the Parties.  Capitalized terms used in this Agreement
shall have the meanings ascribed to such terms in Exhibit A of this
Agreement or, if applicable, as provided in the text of this Agreement.  RECITALS  A.The Boards of Directors of
Target, Acquiror and Merger Sub each has declared the advisability of the
combination of Target and Merger Sub into a single company through the
statutory merger of Merger Sub with and
into Target (the Merger) and, in furtherance thereof, have
approved this Agreement and the Merger.  B.In connection with the
Merger, the outstanding shares of Targets capital stock will be converted into
the right to receive the cash amount and contingent payments, if any, described
in this Agreement.  C.Acquiror, Target and the
members of the Stockholders Committee will enter into an Escrow Agreement
(defined below) to be executed and delivered in accordance with Section 5.8.  D.Target, Acquiror and Merger
Sub desire to make certain representations and warranties and enter into
certain covenants in connection with the Merger.  NOW, THEREFORE, in
consideration of the covenants, representations and warranties set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:  1.The Merger.  1.1The Merger.  At the
Effective Time and upon the terms and subject to the conditions set forth in
this Agreement, in the Certificate of Merger filed pursuant to Section 1.2
and in the applicable provisions of the Delaware General Corporation Law (Delaware
Law), Merger Sub shall be merged with and into Target, the separate corporate
existence of Merger Sub shall cease and Target shall continue as the surviving
corporation in the Merger (the Surviving Corporation).  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  3


1.2Closing; Effective Time.  The consummation of the Merger (the Closing)
shall take place as soon as practicable, but no later than two Business Days,
after the satisfaction or waiver of the last of the conditions set forth in Section 6
to be satisfied or waived (other than those conditions that by their nature are
to be satisfied at the Closing), or at such other time as the Parties agree
(the actual date on which the Closing takes place being the Closing Date).  The Closing shall take place at the offices
of Reed Smith LLP at2500
One Liberty Place, Philadelphia, PA 19103or at such other location as
the Parties agree.  In connection with
the Closing, Target shall cause the Merger to be made effective by filing the
Certificate of Merger in substantially the form attached hereto as Exhibit B
(the Certificate of Merger) with the Secretary of State of the State
of Delaware in accordance with the relevant provisions of Delaware Law (the
time of such filing being the Effective Time).  1.3Effect of the Merger.  At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger as
filed pursuant to Section 1.2 and the applicable provisions of Delaware
Law.  1.4Certificate of Incorporation;
Bylaws.  Unless otherwise agreed to by
Acquiror and Target prior to the Closing, at the Effective Time:  (a)the
certificate of incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided by Delaware Law; provided, however, that Article I of the certificate of
incorporation of the Surviving Corporation shall be amended to read as
follows:  The name of the corporation is
Calixa Therapeutics Inc.; and  (b)the
bylaws of Merger Sub, as in effect immediately prior to the Effective Time,
shall be the bylaws of the Surviving Corporation until thereafter amended.  1.5Directors and Officers.  At the Effective Time, the directors and
officers of Merger Sub immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation, to serve until their
respective successors are duly elected or appointed and qualified.  1.6Closing Payments. 
At the Effective Time, Acquiror shall deliver an amount equal to the
Upfront Payment to Wells Fargo Bank, N.A. (the Payment Agent) and the
Payment Agent shall, at or as soon as reasonably practicable after the
Effective Time, subject to and in accordance with the provisions of Section 1.6
hereof and a Payment Agent Agreement in the form of Exhibit C (the Payment
Agent Agreement) (with such additional revisions, prior to the Closing, as
Acquiror and the Stockholders Committee may mutually agree after consultation
with the Payment Agent), pay and distribute the Upfront Payment as follows:  (a)One Hundred Thousand Dollars ($100,000) (the Committee
Reimbursement Amount) shall be deposited with the Stockholders Committee,
to be held by the Stockholders Committee for the payment of expenses incurred
by the Stockholders Committee in performing its duties pursuant to this
Agreement and the Escrow Agreement;  (b)The Escrow Contribution Amount shall be deposited with
Wells Fargo Bank, N.A. (the Escrow Agent) to be held on behalf of the
Former Holders pursuant to  
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Treatment Requested.  Omitted portions
filed with the Commission.  4


an Escrow Agreement in the form of the attached Exhibit D
(the Escrow Agreement) (with such additional revisions, prior to the
Closing, as Acquiror and the Stockholders Committee may mutually agree after
consultation with the Escrow Agent); and  (c)The Net Upfront Payment shall be paid in respect of
all of the shares of Target Capital Stock, the Target Options and the Target
Warrants outstanding immediately prior to the Effective Time pursuant to the
terms of this Agreement and the Payment Agent Agreement.  1.7Determining Closing Adjustment Amount.  (a)Target Determination.  On the
Business Day immediately prior to the Closing Date, the Targets Chief
Financial Officer shall deliver to Acquiror a certificate setting forth:  (i)Targets good faith estimate of the Closing Cash
Balance (the Estimated Closing Cash Balance)  (ii)Targets good faith estimate of the Closing Debt (the Estimated
Closing Debt);  (iii)Targets good faith estimate of the Closing
Liabilities (the Estimated Closing Liabilities);  (iv)Targets good faith estimate of the Closing Tax
Liabilities (the Estimated Closing Tax Liabilities);  (v)Targets good faith estimate of the Target Lease
Liabilities (the Estimated Target Lease Liabilities);  (vi)Targets good faith estimate of the Transactional
Expenses (the Estimated Transactional Expenses);  (vii)Targets good faith estimate of the Target Severance
(the Estimated Target Severance); and  (viii)the amount, which amount may be a positive or negative
number (the Estimated Closing Adjustment Amount), equal to the
Estimated Closing Cash Balance, minus
the Estimated Closing Debt, Liability & Expense Amount;  all in reasonable detail together with appropriate
backup documentation (including final invoices and pay-off letters with respect
to the Transactional Expenses and Closing Debt and depositary account
statements reflecting the cash and cash equivalents of Target, net of
outstanding checks, as of the date of such certificate) to support such
estimates and calculations (collectively, the Target Determination).  
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Treatment Requested.  Omitted portions
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(b)Post-Closing Adjustment. Within 90 days following the Closing Date, the
Acquirors Chief Financial Officer may, at Acquirors sole discretion, deliver
to the Stockholders Committee a certificate setting forth:  (i)Acquirors good faith determination of the Closing
Cash Balance;  (ii)Acquirors good faith determination of the Closing
Debt;  (iii)Acquirors good faith determination of the Closing
Liabilities;  (iv)Acquirors good faith determination of the Closing Tax
Liabilities;  (v)Acquirors good faith determination of the Target
Lease Liabilities;  (vi)Acquirors good faith determination of the
Transactional Expenses;  (vii)Acquirors good faith determination of the Target
Severance; and  (viii)the amount, which amount may be a positive or negative
number (the Closing Adjustment Amount), equal to the Closing Cash
Balance, minus the
Closing Debt, Liability & Expense Amount;  all in reasonable detail together with appropriate backup documentation
to support such determinations (collectively, the Acquiror Determination).  (c)After the delivery of the Acquiror Determination, if
any, Acquiror shall, and shall cause the Surviving Corporation to, cooperate
with the Stockholders Committee during customary business hours upon
reasonable prior notice in connection with its review of the Acquiror
Determination. The Stockholders Committee may dispute any amounts reflected on
the Acquiror Determination by notifying Acquiror in writing of each disputed
item, specifying the amount thereof in dispute and setting forth, in reasonable
detail, the basis for such dispute, within 30 days after the Stockholders
Committees receipt of the Acquiror Determination.  If the Stockholders Committee delivers a
notice of dispute within such 30-day period, the Stockholders Committee and
Acquiror shall, during the 30days following
such delivery, each use good faith efforts to reach agreement on the disputed
items or amounts in order to finally determine the Closing Adjustment
Amount.  If the Stockholders Committee
and Acquiror are unable to reach agreement concerning the Closing Adjustment
Amount during such 30-day period, they shall promptly thereafter submit the
dispute to the Accounting Referee for resolution pursuant to Section 1.8.  (d)The Closing Adjustment Amount shall be deemed
conclusively determined for purposes of this Agreement upon the earlier to
occur of (x) the failure of the  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  6


Stockholders Committee to notify Acquiror of a
dispute within 30 days of the Stockholders Committees receipt of the Acquiror
Determination, (y) the written resolution of all disputes pursuant to Section 1.7(c) above
by Acquiror and the Stockholders Committee, and (z) the resolution of all
disputes by the Accounting Referee pursuant to Section 1.8.  If the Closing Adjustment Amount is less than
the Estimated Closing Adjustment Amount, Acquiror shall be entitled to receive
within three Business Days of such conclusive determination from the Escrow
Fund an amount equal to the absolute value of the difference between the
Closing Adjustment Amount and the Estimated Closing Adjustment Amount.  1.8Adjustment Dispute Resolution. 
If the Stockholders Committee and Acquiror are unable to reach
agreement concerning the Closing Adjustment Amount pursuant to Section 1.7(d),
they shall submit such dispute to a nationally recognized independent
accounting expert, mutually acceptable to Acquiror and the Stockholders
Committee, which is not the auditor of Acquiror, the Target or any of their
respective Affiliates (the Accounting Referee) for resolution pursuant
to this Section 1.8 and instruct the Accounting Referee to review the
disputed items or amounts for the purpose of final determination of the Closing
Adjustment Amount. In making such determination and calculations, the
Accounting Referee shall consider only those items or amounts in the Closing
Adjustment Amount or in the Acquiror Determination as to which Acquiror and the
Stockholders Committee have disagreed in writing.  Acquiror and the Stockholders Committee
shall instruct the Accounting Referee to use its reasonable best efforts to
deliver to the Stockholders Committee and Acquiror as promptly as practicable
(but in no event later than 30 days after submission of the dispute to the
Accounting Referee) a report setting forth the Accounting Referees calculation
of the disputed amounts.  Such report
shall be final and binding upon the Stockholders Committee, Acquiror and the
Surviving Corporation, and the resulting calculation of the Closing Adjustment
Amount shall be final for all purposes of this Agreement.  The fees, costs and expenses of the
Accounting Referee shall be borne (i) by Acquiror if the aggregate
difference between the finally determined Closing Adjustment Amount and
Acquirors calculation of such amount at the time the disagreement(s) were
submitted to the Accounting Referee is greater than the aggregate difference
between the finally determined Closing Adjustment Amount and the Stockholders
Committees calculation of such amount at the time the disagreement(s) were
submitted to the Accounting Referee, (ii) by the Stockholders Committee
if the aggregate difference between the finally determined Closing Adjustment
Amount and the Stockholders Committees calculation of such amount at the time
the disagreement(s) were submitted to the Accounting Referee is greater
than the aggregate difference between the finally determined Closing Adjustment
Amount and Acquirors calculation of such amount at the time the disagreement(s) were
submitted to the Accounting Referee, and (iii) in any other case, one-half
by Acquiror and one-half by the Stockholders Committee.  1.9Effect on
Capital Stock.  Subject to Section 1.6,
at the Effective Time, by virtue of the Merger and without any further action
on the part of Acquiror, Merger Sub, Target, the Stockholders Committee or the
holders of any of the securities identified below:  (a)each share of Common Stock
and Series A Preferred Stock, issued and outstanding immediately prior to
the Effective Time (excluding Dissenting Shares) shall be converted into the
right to receive (without interest) an amount of cash equal to:  (i) the Upfront Per Share Price; plus (ii) any cash disbursements required to be made
from the Escrow Fund with  
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respect to each such share
to the Former Holders thereof in accordance with the terms of the Escrow
Agreement, such amount initially equal to the Per Share Escrow Amount, as and
when such disbursements are required to be made; plus
(iii) any cash disbursements required to be made from the Committee
Reimbursement Amount with respect to such share of Target Capital Stock to the
Former Holders thereof pursuant to the terms hereof, plus
(iv) a right to receive a portion of the Contingent Payments, if any,
under Section 9;  (b)each share of Target Capital
Stock that is owned by Target as treasury stock, or by Acquiror or Merger Sub,
shall automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor; and  (c)each share of common stock
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into one share of common stock of the Surviving Corporation.  The amount of cash, if any,
that each Former Holder of Target is entitled to receive for the shares of
Target Capital Stock held by such Former Holder and/or Target Options or Target
Warrants held by such Former Holder (as provided in Section 1.14) shall be
rounded to the nearest cent (with $0.005 being rounded upward) and computed
after aggregating the cash amounts payable for all shares of each class and
series of Target Capital Stock, Target Options and Target Warrants held by such
Former Holder.  1.10Cancellation and Surrender
of Certificates.  (a)No Further Rights as Targets
stockholders.  At the
Effective Time, all shares of Target Capital Stock, all Target Options and all
Target Warrants outstanding immediately prior to the Effective Time shall
automatically be cancelled and retired and shall cease to exist, and no holder
of record of a certificate that immediately prior to the Effective Time
represented outstanding shares of Target Capital Stock (a Certificate)
or any Target Option or Target Warrant shall have any rights as a stockholder,
optionholder or warrantholder, as the case may be, of Target or the Surviving
Corporation.  (b)Exchange Procedures.  Prior to the Effective Time, Acquiror will
cause the Payment Agent to distribute, by electronic mail to each record holder
of Certificates (other than Dissenting Shares), Target Options and Target
Warrants, a letter of transmittal in the form attached hereto as Exhibit E
(the Letter of Transmittal). 
Upon surrender of a Certificate (in the case of Target Capital Stock) or
original option agreement (in the case of Target Options) or an original
warrant (in the case of Target Warrants), for cancellation, together with the
Letter of Transmittal, duly completed and validly executed in accordance with
the instructions thereto, provided that the Effective Time has occurred and the
transactions contemplated hereunder, including the Merger, have been
consummated, (i) the holder of such Certificate, Target Option or Target
Warrant, as the case may be, shall be entitled to receive in exchange therefor
an amount equal to the share of the Merger Consideration which such holder has
the right to receive pursuant to Section 1.9(a), Section 1.14(a) or
Section 1.14(b) as applicable, payable in cash in the amounts set
forth therein without any interest thereon, and (ii) all Certificates,
original option agreements and original warrants so surrendered shall forthwith
be canceled.  The Payment  
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filed with the Commission.  8


Agent shall, no later than
two Business Days after the later of (x) the Effective Time or (y) the
receipt of each properly surrendered Certificate, option agreement or warrant,
cause the payment described in the preceding sentence (not including any
amounts covered by clauses (ii)-(iv) of Sections 1.9(a), 1.14(a) and
1.14(b)) to be made to such Former Holder so surrendering by wire transfer of
immediately available funds to the account designated by such Former Holder in
the Letter of Transmittal delivered with such Certificate, original option
agreements and original warrants, or, by check (in which case payment shall be
made no later than three Business Days after receipt of each properly surrendered
Certificate, option agreement or warrant) sent to the address designated by
such holder in the Letter of Transmittal delivered with such Certificate,
original option agreements and original warrants.  Until so surrendered, each outstanding
Certificate, original option agreement and original warrant that prior to the
Effective Time represented shares of Target Capital Stock (other than
Dissenting Shares) will be deemed from and after the Effective Time, for all
purposes, to evidence the right to receive the payments provided, as
applicable, in Sections 1.9(a), 1.14(a) and 1.14(b).  After the surrender and payment described in
the preceding sentence, each Former Holder shall remain entitled to receive, as
applicable, additional cash distributions of the amounts covered by clauses
(ii)-(iv) of Sections 1.9(a), 1.14(a) and 1.14(b).  If, after the Effective Time, any Certificate
is presented to the Surviving Corporation or Acquiror, it shall be cancelled
and exchanged as provided in this Section 1.10.  (c)Transfers of Ownership.  (i)At the Effective Time, the stock transfer books of
Target shall be closed, and there shall thereafter be no further registration
of transfers of shares of Target Capital Stock, Target Options or Target
Warrants outstanding immediately prior to the Effective Time on the records of
Target.  (ii)The right of each Former Holder to receive the portion
of the Merger Consideration, if any, to which such Former Holder is entitled
pursuant to this Agreement upon consummation of the Merger: (i) shall be
personal to such Former Holder; (ii) shall not be transferable by such
Former Holder or any person claiming under such Former Holder, whether by sale,
assignment, pledge or otherwise, except as set forth below in this Section 1.10(c)(ii)
and any other purported transfer shall be void and of no force or effect; (iii) shall
not constitute or represent any equity or ownership interest in Acquiror or the
Surviving Corporation; and (iv) shall not entitle such Former Holder to
any voting or dividend rights, rights to any other distributions or other
rights common to stockholders of the Surviving Corporation or Acquiror.  Notwithstanding the foregoing, this Agreement
shall not restrict any Former Holder from transferring such Former Holders
right to receive the portion of the Merger Consideration, if any, to which such
Former Holder is entitled pursuant to this Agreement upon consummation of the
Merger (A) to other entities controlled by such Former Holder, (B) in
the case of any Former Holder that is a corporation, general partnership,
limited partnership, limited liability company or venture capital firm, to such
Former Holders stockholders, partners, members or other holders of equity
securities in such Former Holder, as applicable, (C) in connection with
tax, estate or financial planning, (D) upon the death of such Former
Holder or (E) by operation of law, provided that, (1) such
Former Holder (or in the event of death, if applicable, such Former Holders
executor or legal representative) provides to Acquiror and the Stockholders
Committee prompt written notice of such transfer, which written notice shall be
given in accordance with the  
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provisions of Section 10.1 hereof and shall set
forth the name and address of each transferee, (2) such Former Holder does
not receive any consideration in connection with such transfer and (3) any
such permitted transferee agrees to assume all of the obligations of such
Former Holder under this Agreement to the extent such obligations are
applicable to the portion of the Merger Consideration so transferred to such
permitted transferee.Additionally,
each Former Holder that is an entity may transfer its right to receive that
portion of the Merger Consideration to which such Former Holder is entitled
pursuant to this Agreement in connection with the sale of all or substantially
all of the assets or capital stock (or other equity securities) of such Former
Holder, or any merger, consolidation, business combination, recapitalization or
similar transaction involving such Former Holder in which such Former Holders
stockholders or other equity owners would cease to own 50% or more of the
capital stock (or other equity securities) of such Former Holder.Subsequent transfers by any such transferee of the right to receive a
portion of the Merger Consideration shall also be made pursuant to, and in
accordance with, all of the provisions of this Section 1.10(c)(ii) to
the same extent as if each such transferee were a Former Holder.  Notwithstanding any other provision of this
Agreement, where a provision in this Agreement refers to the payment of any
portion of the Merger Consideration to a Former Holder, the term Former Holder
shall be deemed to include any transferees of such Former Holder, as permitted
pursuant to this Section 1.10(c)(ii).  (d)No Liability. 
Notwithstanding anything to the contrary in this Section 1.10,
neither Acquiror nor the Surviving Corporation or any other party hereto shall
be liable to any person for any amount properly paid to a public official
pursuant to any applicable abandoned property law, escheat law or similar law.  (e)Withholding Rights.  Each of the
Acquiror and Surviving Corporation shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
Former Holder such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the Code), or any provision of state, local or foreign Tax
law.  To the extent that amounts are so
withheld by the Acquiror or Surviving Corporation, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Former Holder in respect of which such deduction and
withholding was made.  To the extent the
Acquiror or the Surviving Corporation deducts and withholds any such amounts
payable pursuant to this Agreement, the Acquiror or the Surviving Corporation,
as the case may be, shall remit to the appropriate Taxing Authority all such
amounts deducted and withheld.  1.11Lost, Stolen or Destroyed
Certificates.  In the
event any Certificate shall have been lost, stolen or destroyed, Acquiror shall
pay to the record holder of such Certificate the consideration payable pursuant
to Section 1.9, 1.14(a) or 1.14(b), as applicable, upon the making of
an affidavit of that fact by such record holder; provided,
however, that Acquiror may, in its discretion and as a condition
precedent to the payment of such consideration, require such record holder to
deliver an indemnification agreement in form and substance reasonably
acceptable to Acquiror as indemnity against any claim that may be made against
Acquiror or the Surviving Corporation with respect to such Certificate,
original option agreement or original warrant.  1.12Dissenting Shares.  Notwithstanding anything in this Agreement to
the contrary, any Dissenting Share shall not be converted into the right to
receive the consideration  
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to which the holder of such
share (a Dissenting Stockholder) would be entitled pursuant to Section 1.9,
but rather shall be converted into the right to receive such consideration as
may be determined to be due with respect to such Dissenting Share pursuant to
Delaware Law.  If any Dissenting Stockholder
fails to perfect such stockholders appraisal rights under Delaware Law or
effectively withdraws or otherwise loses such rights with respect to any
Dissenting Shares, such Dissenting Shares shall thereupon automatically be
converted into the right to receive the consideration referred to in Section 1.9,
without any interest thereon, pursuant to the exchange procedures set forth in Section 1.10.  Target shall give Acquiror (a) prompt
notice of any demand for payment of the fair value of any shares of Target
Capital Stock or any attempted withdrawal of any such demand for payment and
any other instrument served pursuant to Delaware Law and received by Target
relating to any stockholders appraisal rights, and (b) the opportunity to
participate in all negotiations and proceedings with respect to any such
demands for payment under Delaware Law.  Target shall
cooperate with Acquiror concerning, and shall not make any payment with respect
to any demands for the appraisal of shares of Target Capital Stock, or settle
or offer to settle any such demands, other than with the prior written consent
of Acquiror, by operation of law or pursuant to a final order of a court of
competent jurisdiction.  1.13Taking of Further Action.  If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises
of Target and Merger Sub, Acquiror and the Surviving Corporation are fully
authorized in their respective names to take, and will take, all such lawful
and necessary or desirable action, so long as such action is not inconsistent
with this Agreement.  1.14Target Options; 
and Target Warrants and Restricted Stock.  (a)On or prior to the Effective Time, the board of
directors of Target (or, if appropriate, any committee thereof administering
the 2008 Stock Plan) shall adopt such resolutions or take such other actions as
may be required to adjust the terms of all outstanding Target Options, whether
vested or unvested, as necessary to provide that Target Options will become
fully exercisable and may be exercised before the Effective Time at such
applicable time or times as specified in the 2008 Stock Plan, and at the
Effective Time, each Target Option outstanding immediately prior to the
Effective Time, whether or not then vested or exercisable, shall be
canceled.  The Acquiror shall not assume
any Target Options.  At the Effective
Time, the former holder of any Target Options so canceled shall then become
entitled to receive, in full satisfaction of the rights of such holder with
respect thereto, an amount, in cash equal to: 
(i) the product of (a) the number of shares of Common Stock
subject to such Target Option immediately prior to the Effective Time, multiplied by (b) the amount by which the Upfront Per
Share Price exceeds the exercise price per share of Common Stock that is
subject to such Target Option; plus (ii) any
cash disbursements required to be made from the Escrow Fund with respect to
such Target Option to the Former Optionholder thereof in accordance with the
terms of the Escrow Agreement, such amount initially equal to the Per Share
Escrow Amount, as and when such disbursements are required to be made; plus (iii) any cash disbursements required to be made
from the Committee Reimbursement Amount with respect to such Target Options to
the Former Optionholder pursuant to the terms hereof; plus(iv) a
right to a portion of any Contingent Payments under Section 9.  
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(b)At the Effective Time, each
Target Warrant outstanding immediately prior to the Effective Time, whether or
not then vested or exercisable, shall become fully exercisable and be
canceled.  Acquiror shall not assume any
Target Warrants. At the Effective Time, the former holder of a Target Warrant
so canceled shall then become entitled to receive, in full satisfaction of the
rights of such holder with respect thereto, an amount, in cash, equal to:  (i) the product of (a) the number
of shares of Target Capital Stock subject to such Target Warrant immediately
prior to the Effective Time, multiplied by (b) the
amount by which the Upfront Per Share Price exceeds the exercise price per
share of Target Capital Stock that is subject to such Target Warrant; plus (ii) any cash disbursements required to be made
from the Escrow Fund with respect to such Target Warrant to the Former
Warrantholder thereof in accordance with the terms of the Escrow Agreement,
such amount initially equal to the Per Share Escrow Amount, as and when such
disbursements are required to be made; plus(iii) any
cash disbursements required to be made from the Committee Reimbursement Amount
with respect to such Target Warrants to the Former Warrantholder pursuant to
the terms hereof; plus (iv) a right to a
portion of any Contingent Payments under Section 9.  (c)On or prior to the Effective Time, the board of
directors of Target (or, if appropriate, any committee thereof) shall adopt
such resolutions or take such other actions as may be required to adjust the
terms of all outstandingsharesof Common Stock as to which the Target retains at the
Effective Time the right (whether generally or under specified conditions) to
reacquire such shares at an amount equal to or less than their market value or
which are otherwise subject to risks of forfeiture in favor of the Target
(collectively, the Restricted Stock),
whether vested or unvested, as necessary to provide that such Restricted Stock
will become fully vested and no longer subject to any repurchase right on
behalf of the Target, and at the Effective Time, each share of Restricted Stock
outstanding immediately prior to the Effective Time, whether or not then vested
or exercisable, shall be canceled.  At
the Effective Time, the former holder of any shares of Restricted Stock so
canceled shall then become entitled to receive, in full satisfaction of the
rights of such holder with respect thereto, Merger Consideration as set forth
in Sections 1.10 and 9 hereof payable to holders of Common Stock.  1.15Escrowed Funds.  (a)Subject to the terms of this Section 1.15(a), Article 8
hereof and the Escrow Agreement, the Escrow Fund other than the Specified Tax
Claim Escrow Amount shall be held until the date that is twelve (12) months
after the Closing Date (the First Escrow Release Date) in
order to ensure the satisfaction of indemnification claims made pursuant to Article 8
of this Agreement, except that all or any portion of the Escrow Fund may be
released from such escrow prior to the First Escrow Release Date if Acquiror
and the Stockholders Committee jointly agree to such release in accordance
with the terms of the Escrow Agreement. 
Promptly following the First Escrow Release Date, the Escrow Fund other
than the Specified Tax Claim Escrow Amount shall be released to the Payment
Agent pursuant to, and in accordance with, this Agreement, the Payment Agent
Agreement and the Escrow Agreement, except for that amount required to be held
pursuant to, and in accordance with, the provisions of the Escrow Agreement to
satisfy any claims (whether or not disputed) by Acquiror for indemnification
made on or prior to such date pursuant to Article 8 of this Agreement and
that amount subject to claims of the Stockholders Committee for reimbursement
of expenses  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  12


incurred by the Stockholders Committee in accordance
with the provisions of Section 8.3(b) hereof or for indemnification
of the Stockholders Committee in accordance with the provisions of Section 8.3(b) hereof.  The portion of the Escrow Fund released on
the First Escrow Release Date shall be paid by the Payment Agent ratably to the
Former Holders in the same proportion as the payment of the Upfront Payment to
such persons in accordance with this Agreement.  (b)Subject to the terms of this
Section 1.15(b), Article 8 hereof and the Escrow Agreement, theSpecified Tax Claim Escrow Amountshall be held
until the date that is twenty four (24) months after the Closing Date (the Final
Escrow Release Date) in order to ensure the satisfaction of
indemnification claims made pursuant to Article 8 of this Agreement for
Specified Tax Claims, except that all or any portion of theSpecified Tax Claim Escrow Amountmay be
released from such escrow prior to the Final Escrow Release Date if Acquiror
and the Stockholders Committee jointly agree to such release in accordance
with the terms of the Escrow Agreement. 
Promptly following the Final Escrow Release Date, theSpecified Tax Claim Escrow Amountshall be
released to the Payment Agent pursuant to, and in accordance with, this
Agreement, the Payment Agent Agreement and the Escrow Agreement, except for
that amount required to be held pursuant to, and in accordance with, the
provisions the Escrow Agreement to satisfy any claims (whether or not disputed)
by Acquiror for indemnification made on or prior to such date pursuant to Article 8
of this Agreement and that amount subject to claims of the Stockholders
Committee for reimbursement of expenses incurred by the Stockholders Committee
in accordance with the provisions of Section 8.3(b) hereof or for
indemnification of the Stockholders Committee in accordance with the
provisions of Section 8.3(b) hereof.The portion of the Escrow Fund released on the Final
Escrow Release Date shall be paid by the Payment Agent ratably to the Former
Holders in the same proportion as the payment of the Upfront Payment to such
persons in accordance with this Agreement. This Section 1.15(b) shall
not be applicable if before the first anniversary of the Closing Date Acquiror
shall have made Specified Tax Claims in an aggregate amount equal to or greater
than the Special Tax Claim Escrow Amount.  2.Representations and Warranties
of Target.Target represents and
warrants to Acquiror and the Merger Sub as of each of the Agreement Date and
the Closing Date that, except as disclosed in the disclosure schedule of even
date herewith delivered by Target to Acquiror with this Agreement and complying
with the provisions of Section 10.2(a) (the Target Disclosure
Schedule):  2.1Organization, Standing and
Power. Each of Target and its Subsidiaries is a corporation or a limited
company duly organized, validly existing and in good standing, if applicable,
under the laws of the jurisdiction of its formation.  Target and its Subsidiaries have the
corporate or limited company power to own their properties and to carry on
their business as currently being conducted (collectively, the Current
Target Business).  Each of Target
and its Subsidiaries is duly qualified to conduct business, and is in good
standing (if such concept is applicable in the relevant jurisdiction), in each
jurisdiction where such qualification is required, except where the failure to
be so qualified would not reasonably be expected to be materially adverse to
Target and its Subsidiaries, taken as a whole, or the Current Target
Business.  Target has delivered, or made
available for review in the Data Room, to Acquiror or its advisors true and
correct copies of the certificate of incorporation and bylaws or other
equivalent organizational documents, as applicable, of Target and each of its
Subsidiaries.  The minute  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  13


books of Target and each of
its Subsidiaries have been made available in the Data Room for review by
Acquiror or its advisors and contain a materially complete and accurate summary
of all meetings of directors and stockholders or actions by written consent
since the time of incorporation of Target and each Subsidiary,
respectively.  Target has no
Subsidiaries, other than those listed in Section 2.1 of the Target
Disclosure Schedule, and Target does not directly or indirectly own any equity
or similar interest in, or any interest convertible or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity other than
as set forth on Section 2.1 of the Target Disclosure Schedule.  2.2Authority.Target has all requisite corporate power and authority
to enter into this Agreement and, subject to receiving the Required Stockholder
Vote, to consummate the transactions contemplated hereby, including the
Merger.  The affirmative vote or consent
of the holders of (a) a majority of the shares of Common Stock and Series A
Preferred Stock (voting together as a single class on an as-converted basis)
outstanding on the record date chosen for purposes of determining the
stockholders of Target entitled to vote on the adoption of this Agreement and (b) sixty-six
and two-thirds percent (66 2/3%) of the shares of Series A Preferred Stock
(voting separately as a class) outstanding on the record date chosen for
purposes of determining the stockholders of Target entitled to vote on the
adoption of this Agreement and (c) sixty-six and two-thirds percent (66
2/3%) of the shares of Series A Preferred Stock (voting separately as a
class) outstanding on the record date chosen for purposes of waiving the
transactions, including the Merger, contemplated by this Agreement, as a Liquidating
Transaction as defined in and pursuant to Article V, Section 2 of
Targets certificate of incorporation as in effect as of the Agreement Date are
the only votes of the holders of any Target Capital Stock necessary under
Delaware Law, Targets certificate of incorporation and bylaws to approve this
Agreement and the Merger (the Required Stockholder Vote).  The board of directors of Target has
unanimously (a) adopted this Agreement and approved its execution and
delivery and the performance by Target of its obligations under this Agreement,
and the consummation of the Merger; and (b) declared the advisability of
the Merger. This Agreement has been duly executed and delivered by Target and,
assuming this Agreement constitutes a valid and binding obligation of the other
parties hereto, this Agreement constitutes a valid and binding obligation of
Target, enforceable against Target in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to creditors rights generally and general
principles of equity, regardless of whether asserted in a proceeding in equity
or at law.  2.3Noncontravention. Except as set
forth in Section 2.3 of the Target Disclosure Schedule, neither the
execution and delivery by Target of this Agreement, nor the consummation by Target
of any of the transactions contemplated hereby, will:  (a)conflict with or violate any provision of the
certificate of incorporation or bylaws of Target;  (b)require on the part of
Target any registration, declaration or filing with, or any permit, order,
authorization, consent or approval of, any Governmental Entity, except for (i)  any
registration, declaration, filing, permit, order, authorization, consent or
approval which if not made or obtained would not reasonably be expected to be
materially  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  14


adverse to Target and its
Subsidiaries, taken as a whole, or the Current Target Business, and (ii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware;  (c)(i) in any material
respect, conflict with, result in a breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of
obligations under any Material Contract, or (ii) create in any party any
right to terminate or modify, in any material respect, any Material Contract,
or (iii) require any notice, consent, approval or waiver under any
Material Contract that is necessary for the consummation by Target of the
Merger and the transactions contemplated under this Agreement, including, but
not limited to, all consents, waivers, notices and approvals that are necessary
or required on the part of Target in connection with, or as a result of, the
Merger to preserve all of Targets rights and benefits in its business, assets,
properties, leases and Material Contracts following the Merger;  (d)violate any order, writ,
injunction or decree applicable to Target or any of its properties or assets,
except for any violation that would not reasonably be expected to be materially
adverse to Target and its Subsidiaries, taken as a whole, or the Current Target
Business;  (e)violate any statute, rule or
regulation applicable to Target or its properties or assets, except for any
violation that would not reasonably be expected to be materially adverse to
Target and its Subsidiaries, taken as a whole, or the Current Target Business.  2.4Governmental Authorizations.  Target and its Subsidiaries have obtained
each material federal, state, county, local or foreign governmental consent,
license, permit, grant or other authorization of a Governmental Entity that is
required for the operation by Target and its Subsidiaries of the Current Target
Business, and all of such consents, licenses, permits, grants and
authorizations obtained by Target or its Subsidiaries are in full force and
effect.  Target and each of its
Subsidiaries are in material compliance with all such consents, licenses,
permits, grants and authorizations.  2.5Financial Statements.  (a)Attached as Section 2.5
of the Target Disclosure Schedule is a copy of each of (a) the audited
consolidated balance sheets and related statements of operations and statements
of cash flows of Target as of and for the fiscal year ended December 31,
2008, (b)  the audited consolidated balance sheets and related statements
of operations and statements of cash flows of Target as of and for the period
from July 11, 2007 (inception) to December 31, 2007, (c)(i) the
unaudited consolidated balance sheet of Target as of September 30, 2009together with all footnotes thereto, (ii) the
unaudited consolidated statements of operations of Target for the nine-month periods ended September 30,
2009 and September 30, 2008 together with all footnotes thereto and (iii) the
unaudited consolidated statements of cash flows of Target for the nine-month
periods ended September 30, 2009 and September 30, 2008 and (d)(i) the
unaudited consolidated balance sheet of Target as of November 30, 2009
(the Target Balance Sheet) and (ii) the unaudited consolidated
statement of operations of Target for the eleven-month period ended November 30, 2009 (collectively, the Target
Financial Statements).  The  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  15


Target Financial Statements
fairly and accurately present, in all material respects and in accordance with
GAAP, the financial condition of Target and its Subsidiaries as of the dates
indicated therein and the operating results of Target and its Subsidiaries for
the periods indicated therein, subject to normal year-end audit adjustments,
the effect of which are not expected to be material in amount individually and
in the aggregate, and, with respect to the unaudited consolidated balance sheet
and statement of operations of Target  as
of and for the ten-month period
ended November 30, 2009, the absence of footnotes.  No financial statements of any person other
than Target and its Subsidiaries listed on Section 2.1 of the Target
Disclosure Schedule are required by GAAP to be included in the Target Financial
Statements.  The Target Financial
Statements were derived from the books and records of Target and its Subsidiaries,
which books and records are maintained in all material respects in accordance
with sound business practices.  (b)The Monthly Financials, the Closing Balance Sheet and
2009 Unaudited Statements, if any, when delivered in accordance with Section 5.19
will fairly and accurately present, in all material respects and in accordance
with GAAP,the financial condition of Target and its Subsidiaries as of the dates
indicated therein and the operating results of Target and its Subsidiaries for
the periods indicated therein,subject to normal year-end audit adjustments,
the effect of which are not expected to be material in amount individually and
in the aggregate, and the absence of footnotes. The Monthly Financials, the Closing Balance Sheet
and the 2009 Unaudited Statements, if any, when delivered in accordance with Section 5.19,
will include all financial statements of any person other than Target that are
required by GAAP to be included in such financials.  The Monthly Financials, the Closing Balance
Sheet and the 2009 Unaudited Statements, if any, will be derived from the books
and records of Target and its Subsidiaries, which books and records will have
been maintained in all material respects in accordance with sound business
practices.  2.6Capitalization; Shares and Stockholder Information.  (a)Capitalization.  The authorized capital stock of Target
consists of (i) 40,000,000 shares of Common Stock, of which there were
issued and outstanding as of the close of business on the Agreement Date,
9,022,000 shares, and (ii) 28,669,726 shares of designated Series A
Preferred Stock, of which as of the close of business on the Agreement Date,
there were issued and outstanding, 27,752,294 shares of Series A Preferred Stock.  All outstanding shares of Common Stock and Series A
Preferred Stock (i) are duly authorized, validly issued, fully paid and
non-assessable, (ii) are free of any liens or encumbrances created by
Target, and, to the Knowledge of Target, free of any liens or encumbrances
created by or imposed upon the holders thereof, and (iii) were not issued
in violation of any Applicable Laws, including securities laws, preemptive
rights or rights of first refusal created by statute, the certificate of
incorporation or bylaws of Target or any agreement to which Target is a party
or by which it is bound.  As of the
Agreement Date, there were 576,000 shares of Common Stock reserved for issuance
under the 2008 Stock Plan, of which
547,838 shares of Common Stock were subject to outstanding options and
28,162 shares of Common Stock were reserved for future option grants. As of the
Agreement Date, there were outstanding warrants to purchase 917,432 shares of Series A
Preferred Stock at an exercise price of $1.09 per share.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  16


(b)Target has delivered to
Acquiror or its advisors (or made available in the Data Room) true and complete
copies of the 2008 Stock Plan and each form of agreement evidencing each Target
Option.  Except for the rights created
pursuant to this Agreement and the options, warrants and other rights disclosed
in the preceding sentences, in Section 2.6(a) or in Section 2.6(b) of
the Target Disclosure Schedules, there are no options, warrants, calls, rights,
commitments or agreements that are outstanding to which Target is a party or by
which it is bound, obligating Target to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of Target Capital Stock or obligating Target to grant, extend,
accelerate the vesting of, change the price of, or otherwise amend or enter
into any option, warrant, call, right, commitment or agreement regarding shares
of Target Capital Stock.  All shares of
Common Stock issuable upon conversion of the outstanding shares of Series A
Preferred Stock or upon exercise of the options described in this Section 2.6
will be, when issued pursuant to the respective terms of such Series A
Preferred Stock or options, duly authorized, validly issued, fully paid and
nonassessable.  Except as set forth in Section 2.6(b) of
the Target Disclosure Schedule, there are no other contracts, commitments or
agreements relating to the voting, purchase or sale of Targets capital stock (a) between
or among Target and any of its stockholders; and (b) to the Knowledge of
Target, between or among any of Targets stockholders.  (c)Shares and Stockholder
Information.  Section 2.6(c) of
the Target Disclosure Schedule sets forth: (i) the name of each current
stockholder of Target and the number of shares of Target Capital Stock that
such current stockholder of Target holds of record; (ii)the name of each person who holds any
option, warrant or other right to acquire shares of Target Capital Stock or
other securities, the number and type of shares or securities subject to such
option or right, the per-share exercise price payable therefor and, in the case
of warrants, the amount of consideration to be payable upon exercise thereof;and (iii) to
the Knowledge of Target, the address and state of residence of each such
stockholder, optionholder, warrantholder or other securityholder.  Each share of Series A Preferred Stock
is convertible into one share of Common Stock.  2.7Absence of Certain Changes. 
Except as set forth in Section 2.7(a) of the Target Disclosure
Schedule, since the Target Balance Sheet Date, Target and its Subsidiaries have
conducted their business in the ordinary course consistent with past practice,
and there has not occurred any event that has had a Target Material Adverse
Effect. Except as set forth in Section 2.7(b) of the Target
Disclosure Schedule, between the Target Balance Sheet Date and the Agreement
Date, there has not occurred (a) any acquisition, sale or transfer of any
material asset of Target or its Subsidiaries other than in the ordinary course
of business; (b) any amendment to the certificate of incorporation or
bylaws or equivalent organizational documents of Target or its Subsidiaries; (c) any
material increase in, or material modification of, the compensation or benefits
payable by Target or its Subsidiaries to any of their respective employees,
consultants, directors or executive officers; (d) any declaration, setting
aside or payment of a dividend or other distribution with respect to shares of
Target Capital Stock or otherwise other than the Permitted Dividend; (e) any
damage, destruction or loss, whether or not covered by insurance, materially
and adversely affecting, either in any case or in the aggregate, the Current
Target Business or any material asset of Target or its Subsidiaries; (f) any
material loss of the services of any executive officer, key employee or key
consultant; (g) issuance of any shares of the capital stock of Target or
any redemption, purchase, or other acquisition by Target of any such  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  17


capital stock; (h) forgiveness or cancellation of
any debts or claims by the Target or any intentional waivers of any material
rights; (i) entry by Target into any transaction with any of its
Affiliates; (j) incurrence or imposition of any lien or encumbrance on any
of the material assets, tangible or intangible, of Target or any of its
Subsidiaries, except for Permitted Encumbrances; (k) any adoption of any
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring or other reorganization of Target (other than in connection with
the Merger); (l) any capital expenditures, capital additions or capital
improvements, other than expenditures in the ordinary course of business; (m) any
grant or payment
ofany severance or termination pay or benefits to any consultant or
Employeesof Target or
its Subsidiaries, except for payments and benefits contractually required to be
made pursuant to agreements existing as of the Target Balance Sheet Date and
are disclosed on the Target Disclosure Schedule; or (n) any failure to make any payment with respect
to any of Targets accounts payable or its Indebtedness in a timely manner in
accordance with their respective terms and consistent with past practice.  2.8Absence of Undisclosed
Liabilities; No Indebtedness.Neither Target nor any of its Subsidiaries has any
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than: (a) those set forth or adequately provided for
in Target Balance Sheet or in Section 2.8 of the Target Disclosure
Schedule; (b) thosenot required to be reflected in the
liabilities column of a balance sheet prepared in accordance with GAAP; (c) thoseincurred in the ordinary course of
business since Target Balance Sheet Date; (d) those under or pursuant to
any contract or agreement of Target that are to be performed or incurred after
the Agreement Date; and (e) those incurred pursuant to or in connection
with the execution, delivery or performance of this Agreement.  Neither Target nor its Subsidiaries have any
outstanding indebtedness that if outstanding immediately prior to the Closing
would constitute Closing Debt. There are no Transactional Expenses other than
as set forth in the Target Determination.  2.9Litigation; Orders.  There is no private or governmental action,
suit, proceeding, litigation, arbitration or, to the Knowledge of Target,
investigation, pending before any Governmental Entity or other person (or, to
the Knowledge of Target, being overtly threatened) against Target or its
Subsidiaries or, to the Knowledge of Target, against any of their respective
Employees or Consultants (in their capacities as such), and to Targets
Knowledge there is no factor or circumstance relating to Target or the Current
Target Business that would reasonably be expected to give rise to any such
private or governmental action, suit, proceeding, litigation, arbitration or
investigation.  There is no judgment,
decree or order against Target or its Subsidiaries or, to the Knowledge of
Target, against any of their respective Employees or Consultants (in their
capacities as such), that specifically names Target or its Subsidiaries or such
Employees or Consultants.  2.10Intellectual Property.  (a)For purposes of this Agreement, the following terms
shall be defined as follows:  (i)IP Rights means any and all Patents,
know-how, inventions, trademarks, trade names, domain names, service marks,
trade dress, slogans, designs, concepts, compilations of information,
copyrights, or any application or registration thereof.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  18


(ii)Licensed IP Rights means any IP Rights for
which Target or its Subsidiaries have an exclusive or non-exclusive license or
other right to use.  (iii)Patents means the patents and patent
applications in any country in the world, together with any patents that may
issue therefrom and any future patent filings claiming priority to existing
patents or patent applications in any country in the world, including any and
all extensions, renewals, continuations, continuations-in-part, divisionals,
patents-of-additions, reissues, supplementary protection certificates or
foreign counterparts of any of the foregoing and any patents based on
applications that claim priority from any of the foregoing, and the right to
claim priority to any Patent.  (iv)Target IP Rights means (1) all material
IP Rights owned solely by Target or its Subsidiaries, or owned jointly by
Target or its Subsidiaries and any third party; and (2) all material
Licensed IP Rights.  (b)Section 2.10(b) of the Target Disclosure
Schedule sets forth an accurate and complete list of all Target IP Rights,
including, but not limited to, the following:  (i)all Patents owned or filed by, or on behalf of, Target
or used in the Current Target Business, including the country of filing, owner,
filing number, date of issue, expiration date and title;  (ii)all registered trademarks and applications for
registration of trademarks owned or filed by, or on behalf of, or used by
Target, including country of filing, description of goods or services,
registration or application number and date of issue;  (iii)all license or other agreements pursuant to which
Target has outstanding rights to any Licensed IP Rights; and  (iv)all license or other agreements pursuant to which
Target has granted to any person any outstanding right to any Target IP Rights.  (c)Except as otherwise set forth in Section 2.10(c) of
the Target Disclosure Schedule:  (i)No third party has brought any claim in any suit or
action that has been served on Target, or to the Knowledge of Target, overtly
threatened in writing to make a claim, that would materially and adversely
affect (1) the right, title or interest of Target or its Subsidiaries in
any of Target IP Rights; or (2) the validity, enforceability or claim
construction of any Patent included in Target IP Rights, either through
ownership or exclusive license, and to Targets Knowledge
there is no factor or circumstance relating to Target or the Current Target
Business that would reasonably be expected to give rise to any such suit or
action; nor, to the
Knowledge of Target, has any Patent included in the Target IP Rights been, or
is currently, the subject of any administrative or judicial proceeding relating
to validity, enforceability or claim construction, including reissue,
reexamination or opposition proceedings, and to Targets Knowledge
there is no factor or circumstance relating to Target or the Current Target
Business that would reasonably be expected to give rise to any such
administrative or judicial proceeding;  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  19


(ii)To Targets Knowledge, Target IP Rights constitute all
of the IP Rights necessary to enable Target and its Subsidiaries to conduct the
Current Target Business (other than those which, individually or in the
aggregate, are not material to the conduct of the Current Target Business) or
to develop Products in accordance with Targets development plans as made
available to the Acquiror for review in the Data Room;  (iii)To Targets Knowledge, the conduct of Current Target
Business does not, and the development of Products in accordance with Targets
development plans as made available to the Acquiror for review in the Data Room will
not, infringe, misappropriate or violate the IP Rights of any other person, and
neither Target nor its Subsidiaries has received any written notice or other
written communications asserting any of the foregoing, and to Targets
Knowledge there is no factor or circumstance relating to Target or the Current
Target Business that would reasonably be expected to give rise to any such
infringement, misappropriation or violation;  (iv)To Targets Knowledge, no Target IP Rights are being
infringed or misappropriated by any third party;  (v)All Employees and Consultants of Target and its
Subsidiaries have executed and delivered to Target or its Subsidiaries an agreement
regarding the protection or proprietary information and the assignment by such
persons to Target or its Subsidiaries of any IP Rights arising from services
performed for Target or its Subsidiaries by such persons; and  (vi)Neither the execution, delivery or performance of this
Agreement by Target nor the consummation by Target of the transactions
contemplated by this Agreement will contravene, conflict with or result in any
limitations on Targets right, title or interest in or to any Target IP Rights.  (d)Except as otherwise set forth in Section 2.10(d) of
the Target Disclosure Schedule, Target and its Subsidiaries have the full right
to control the maintenance, prosecution and enforcement of the IP Rights and
the Licensed IP Rights.  2.11Interested Party
Transactions.  Neither
Target nor its Subsidiaries is indebted to any of their respective Employees or
Consultants (except for amounts due as payments, fees, salaries and bonuses
under employment or consulting contracts or employee benefit plans and amounts
payable in reimbursement of ordinary expenses), and no such Employee or
Consultant is indebted to Target or its Subsidiaries.  2.12Material Contracts.  (a)Section 2.12(a) of
the Target Disclosure Schedule lists all of the Material Contracts currently in
effect.  Target has delivered to
Acquiror, or made available to Acquiror or its advisors in the Data Room, a
complete and accurate copy of each such Material Contract and all amendments or
modifications thereto that exist.  (b)With respect to each
Material Contract (i) such Material Contract is in full force and effect
and is binding and enforceable against Target and its Subsidiaries, as  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  20


the case may be, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to creditors rights generally and
general principles of equity, regardless of whether asserted in a proceeding in
equity or at law; and (ii) to the Knowledge of Target, (A) no party
to such Material Contract is in material breach or material default of such
Material Contract, and (B) no event has occurred that with notice or lapse
of time would constitute a material breach or material default thereunder by
Target or any Subsidiary that is party to such Material Contract, or would
permit the modification or premature termination of such Material Contract by
any other party thereto.  Except as
otherwise accrued for in accordance with GAAP in the Target Financials
Statements , allpayments required under each Material Contract that is legally enforceable by
or against or otherwise binding on Target or any of its Subsidiaries in excess
of $100,000 are set forth on Section 2.12(b) of the Target Disclosure
Schedule.  (c)Material Contract
means any written or oral legally binding, executory contract, agreement,
understanding or commitment to which Target or any of its Subsidiaries is a
party and which is material to the Current Target Business and specifically
includes, without limitation, such agreements, contracts, understanding or
commitments (i) under which expected receipts or expenditures exceed $50,000 in the current or any future calendar year; (ii) pursuant to
which Target or any of its Subsidiaries has obtained or granted any right,
title or interest in, under or to any Target IP Rights or Licensed IP Rights,
other than nonexclusive licenses that are available to the public generally; (iii) evidencing
indebtedness for borrowed or loaned money or capital leases of $50,000 or more, including guarantees
of such indebtedness by Target or any of its Subsidiaries; (iv) creating
or relating to any partnership or joint venture or any sharing of profits or
losses by Target or its Subsidiaries with any third party; (v) with any
Governmental Entity (including any public university or college); (vi)with any current Employee or consultant
(other than agreements terminable by Target upon 30 days notice or less and
which termination does not result in any continuing material obligations or
liabilities to Target or in any termination or severance fees or payments or
material penalties); (vii) under which Target agrees to refrain from
competing with any party; (viii) for the purchase, lease or other
acquisition of any or substantially all of the assets or capital stock of any
other person or for the sale, lease or other transfer, conveyance or
disposition of any material assets of Target or Target Capital Stock; (ix) creating
or relating to any distribution, joint marketing, research collaboration or
development arrangements with any third party;(x) agreements under which the primary obligation
of Target is to indemnify any party or to share tax liability of any party;
(xi) any agreements relating to venture capital and other equity financings by
Target (but excluding any compensatory plans or other agreements, contracts,
understandings or commitments); (xii) any stockholder agreements or other
agreements with any of Targets stockholders pertaining to the shares of Target
Capital Stock held by them or their rights as stockholders of Target (but
excluding any compensatory plans or other agreements, contracts, understandings
or commitments); (xiii) to the Knowledge of Target, related to any voting
trust or voting agreements among Targets stockholders; and (xiv)that if
terminated, would reasonably be expected to be materially adverse to Target and
its Subsidiaries, taken as a whole, or the Current Target Business.  2.13Suppliers; Licensors.  No material current supplier of Target or its
Subsidiaries has canceled or otherwise terminated, or made any written threat
to Target or its Subsidiaries to cancel or otherwise terminate, its
relationship with Target or its Subsidiaries or  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  21


has at any time on or after
Target Balance Sheet Date, decreased materially its services or supplies to
Target or its Subsidiaries in the case of any such supplier.  No such material supplier has indicated in a
writing delivered to Target or any of its Subsidiaries that such supplier
intends to cancel or otherwise terminate its relationship with Target or its
Subsidiaries or to decrease materially its delivery of services or supplies to
Target or its Subsidiaries.No licensor under a material license agreement with Target or its
Subsidiaries has canceled or otherwise terminated, or made any written threat
to Target or its Subsidiaries to cancel or otherwise terminate, its
relationship with Target or its Subsidiaries. 
No such licensor has indicated in writing delivered to Target or any of
its Subsidiaries that such licensor intends to cancel of otherwise terminate
its relationship with Target of its Subsidiaries or to substantially alter
Targets or its Subsidiaries rights under such material license.  2.14Title to Property.  Target and its Subsidiaries have (a) good
and valid title to all of their tangible owned properties, real and personal,
reflected in Target Balance Sheet or acquired after Target Balance Sheet Date
(except properties sold or otherwise disposed of  in the ordinary course of business consistent
with past practices since Target Balance Sheet Date), and (b) with respect
to tangible leased properties, valid leasehold interests therein, free and
clear of all mortgages, liens, pledges, charges or other encumbrances of any
kind or character, except, as to clause (a) and clause (b) of this Section 2.14,
for the following (collectively, Permitted Encumbrances):  (i) liens for current Taxes not yet due
and payable or that are being contested in good faith by appropriate
proceedings or that are otherwise not material; (ii) encumbrances that do
not materially impair the ownership or use of the assets to which they relate; (iii) statutory
or common law liens to secure obligations to landlords, lessors or renters
under leases or rental agreements; (iv) deposits or pledges made in
connection with, or to secure payment of, workers compensation, unemployment
insurance or similar programs mandated by applicable law; and (v) statutory
or common law liens in favor of carriers, warehousemen, mechanics and
materialmen, to secure claims for labor, materials or supplies, and other like
liens.All such properties and assets, taken as a whole, are
in good condition and repair, reasonable wear-and-tear excepted, and are, and
as of the Closing Date will be, adequate and sufficient to carry on the Current
Target Business.  2.15Real Estate.  (a)Section 2.15 of the
Target Disclosure Schedule lists all leases for real property (each a Lease
and collectively, Leases) to which Target or any of its Subsidiaries
is a party.  All of the Leases are in
full force and effect and are binding and enforceable against Target and, to
the Knowledge of Target, against the lessors, except as such enforceability may
be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to creditors rights generally and general principles of
equity, regardless of whether asserted in a proceeding in equity or at
law.  True and correct copies of all such
Leases, as amended or modified, have been made available in the Data Room for
review by Acquiror.  Neither Target nor
any of its Subsidiaries owns any real property.  (b)Neither Target nor any of
its Subsidiaries nor, to the Knowledge of Target, any other party to the Leases
is in material default under any of the terms of the Leases.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  22


2.16Tax Matters.  (a)All Tax Returns required to
be filed with any Taxing Authority (determined without regard to extensions) by
or on behalf of Target or any Subsidiary, have been filed when due (determined
with regard to valid extensions) in compliance with all Applicable Laws.  All such Tax Returns are true and complete in
all respects. Target and each Subsidiary have timely paid, or withheld and
remitted to the appropriate Taxing Authority, all Taxes owed by Target or any
Subsidiary (whether or not shown, or required to be shown, on any Tax Return).
Neither Target nor any Subsidiary is or will be liable for any additional Taxes
in respect of any Taxable period or any portion thereof ending on or before the
date of Target Financial Statements in an amount that exceeds the corresponding
reserve therefor separately identified in Section 2.16(a) of the
Target Disclosure Schedule, if any, as reflected on Target Financial
Statements, and any Taxes of Target or any Subsidiary arising after such date
and at or before the Effective Time have been or will be incurred in the
ordinary course of business of Target or any Subsidiary.  No claim has ever been made to Target or any
Subsidiary in writing by a Taxing Authority representing a jurisdiction where
Target or any Subsidiary does not pay Tax or file Tax Returns that Target or
any Subsidiary is or may be subject to Tax in that jurisdiction.  (b)Neither Target nor any
Subsidiary has: (i) requested or been granted any extension of time within
which to file any Tax Return that has not yet been filed; or (ii) consented
to any extension or waiver of the statute of limitations period applicable to
any Tax Return, which period (after giving effect to such extension or waiver)
has not yet expired.  There are no
outstanding rulings or requests for rulings of any Taxing Authority with
respect to Target or any Subsidiary or any tax liability of Target or any
Subsidiary.No deficiency or adjustment in respect of Taxes has
been proposed, asserted or assessed by any Taxing Authority in writing against
Target or any Subsidiary.  Neither Target
nor any Subsidiary has received any written notice indicating an intent to open
a Tax audit or administrative proceeding or any written request from any Taxing
Authority for information related to Tax matters.Since its formation, neither Target nor any
Subsidiary has, for U.S. federal income Tax purposes, filed any amended Tax
Return, entered into any closing agreement relating to Tax, settled any Tax
claim or assessment, or surrendered any right to claim a Tax refund, offset or
other reduction in Tax liability.  (c)Target and any Subsidiary
have timely and properly withheld and paid all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to any Employee,
independent contractor, creditor, shareholder or other person.  (d)Neither Target nor any
Subsidiary has ever been a member of an affiliated group of corporations (as
defined in Section 1504(a) of the Code) or filed or been included in
a consolidated, combined or unitary Tax Return.Neither Target nor any Subsidiary is a party to or
bound by any Tax sharing, Tax indemnity, or Tax allocation agreement.  Neither Target nor any Subsidiary is
presently liable, or potentially liable, for the Taxes of another person (i) under
Treasury Regulations Section 1.1502-6 (or a comparable provision of state,
local or foreign law), (ii) as transferee or successor, or (iii) by
contract or indemnity or otherwise.  (e)Neither Target nor any
Subsidiary (i)has
participated in any way in (A) any reportable transaction within the
meaning of Treasury Regulations Section  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  23


1.6011-4(b) (other than a reportable transaction
described in Treasury Regulations Section 1.6011-4(b)(5)) or any
comparable laws of any state, local or foreign jurisdiction or (B) to the
Knowledge of Target, a reportable transaction described in Treasury Regulations
Section 1.6011-4(b)(5) or any comparable laws of any state, local or
foreign jurisdiction; (ii)has been a distributing
corporation or a controlled corporation in a transaction intended to be
governed by Section 355 of the Code;or (iii) has participated in or cooperated with
an international boycott within the meaning of Section 999 of the Code or
has been requested to do so in connection with any transaction or proposed
transaction.  (f)Neither Target nor any
Subsidiary will be required to include: (i) any adjustment in taxable
income for any Post-Closing Tax Period under Section 481(c) of the
Code (or any similar provision of state, local or foreign Tax Law) as a result
of a change in method of accounting for a Pre-Closing Tax Period; (ii) for
a Post-Closing Tax Period taxable income economically attributable to a
Pre-Closing Tax Period as a result of the installment method or the look-back
method (as defined in Section 460(b) of the Code) or any prepaid
amount received on or prior to the Closing Date; or (iii) any amount in
income for any Post-Closing Period as a result of entering into any closing
agreement within the meaning of Section 7121 of the Code (or any similar
provision of state, local or foreign Tax Law) on or prior to the Closing Date.  (g)No election has been made
under Treasury Regulations Section 301.7701-3 or any similar provision of
state, local or foreign Tax law to treat Target or any Subsidiary as an
association, corporation or partnership, and neither Target nor any Subsidiary
is disregarded as an entity for Tax purposes.All elections with respect to Taxes affecting Target
or any Subsidiary that were not made in the income Tax Returns made available
in the Data Room are described in Section 2.16(g) of the Target
Disclosure Schedule.  (h)Neither Target nor any
Subsidiary owns, directly or indirectly, any interests in an entity that is or
has been a passive foreign investment company within the meaning of Section 1297
of the Code or a controlled foreign corporation within the meaning of Section 957
of the Code.  (i)Target has delivered to
Acquiror or made available for review in the Data Room, correct and complete
copies of all income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by Target, filed by or received by
Target since Targets inception.  (j)There are no liens for Taxes (other than current Taxes
not yet due and payable) on any of the assets of Target or any Subsidiary.  (k)Target and each Subsidiary arein compliance in all material respects with all terms and conditions of
any Tax exemptions, Tax holidays or other Tax reduction agreements, approvals
or orders of anyTaxingAuthority
and, to Targets Knowledge, the consummation of the Merger will not have any
adverse effect on the validity and effectiveness of any such Tax exemptions,
Tax holidays or other Tax reduction agreements or orders.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  24


(l)Neither Target nor any Subsidiary has an office or
fixed place of business in any country with which the United States of America
has a relevant Tax treaty or otherwise operates or conducts business through
any branch in any country other than the United States of America.  (m)None of the assets of Target or any Subsidiary
directly or indirectly secures any indebtedness, the interest on which is tax
exempt under Section 103(a) of the Code, and neither Target nor any
Subsidiary is directly or indirectly an obligor or guarantor with respect to
any such indebtedness.  (n)Neither Target nor any
Subsidiary has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it to
make any payments, that will not be deductible under Section 280Gof the Code or
that could be subject to Section 4999 of the Code.  (o)To the Knowledge of Target, all persons who have
purchased shares of Targets stock that at the time of such purchase were and
at the Effective Time will be subject to a substantial risk of forfeiture under
Section 83 of the Code have timely filed elections under Section 83(b) of
the Code and any analogous provisions of applicable foreign, state and local
Tax law.  (p)The exercise price of each Target Option is no less
than the fair market value of a share of Target Common Stock determined on the
date of grant of such Target Option (and as of any later modification thereof
within the meaning of Section 409A of the Code).Each plan, program,
arrangement or agreement that constitutes in any part a nonqualified deferred
compensation plan within the meaning of Section 409A of the Code is
identified as such onSection 2.16(p) of
the Target Disclosure Schedule.  Since December 31, 2004 and through December 31,
2008, each plan, program, arrangement or agreement identified or required to be
identified onSection 2.16(p) of
the Target Disclosure Schedulehas been operated and
maintained in accordance with a good faith, reasonable interpretation of Section 409A
of the Code and its purpose with respect to amounts deferred (within the
meaning of Section 409A of the Code) after December 31, 2004.  By December 31, 2008, each plan,
program, arrangement or agreement identified or required to be identified onSection 2.16(p) of the Target
Disclosure Schedulehas been amended to the extent necessary or
appropriate to comply with Section 409A of the Code and the final
regulations promulgated thereunder.  From
and after January 1, 2009, each plan, program, arrangement or agreement
identified or required to be identified onSection 2.16(p) of the Target Disclosure
Schedulehas been operated and maintained in accordance with Section 409A
of the Code and applicable guidance thereunder, including but not limited the
final regulations promulgated thereunder.  2.17Employee and Labor Matters; Benefit Plans.  (a)The name and current annual salary and other
compensation payable by Target to each of its Employees and Consultants
including, but not limited to, wages, salary, commissions, normal bonus, profit
sharing, deferred compensation, and other extra compensation, are as set forth
in Section 2.17(a) of the Target Disclosure Schedule.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  25


(b)Target has delivered to Acquiror or its advisors or
made available for review in the Data Room, copies of all employee manuals and
handbooks, policy statements, forms, severance plans, Reduction in Force plans
and other materials whether prepared or made available in hard copy or
electronic form or scheduled to be in effect thereafter, relating to the
employment or engagement of the current Employees or Consultants of Target.  (c)Target and its Subsidiaries are and have been in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions and classification of
employment, wages and hours, and nondiscrimination in employment, and are not
and have not been engaged in any unfair labor practice.  Neither Target nor any Subsidiary is
delinquent in any material payments to any of its Employees or Consultants for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed for Target or its Subsidiaries.  There are no material grievances, complaints
or charges pending against Target or any Subsidiary under any dispute
resolution procedureand to Targets Knowledge there is no factor or
circumstance relating to Target or the Current Target Business that would
reasonably be expected to give rise to any such grievance, complaint or charge. There are no inquiries or
investigations of any kind, by any agency or office of the federal, state or
local government, pending against or, to Targets Knowledge, scheduled to be
commenced against Target or any of its Subsidiaries with respect to one or more
employment practices or workplace safetyand to Targets Knowledge
there is no factor or circumstance relating to Target or the Current Target
Business that would reasonably be expected to give rise to any such inquiry or
investigation.
Neither Target nor any Subsidiary is a party to a collective bargaining
agreement. There is no strike or other labor dispute involving Target or any
Subsidiary pending, or to the Knowledge of Target threatened, nor is Target
aware of any labor organization activity involving its Employees and
Consultants. Except as set forth in Section 2.17(c) of the Target
Disclosure Schedule, the employment or engagement of each Employee or
Consultant of Target or any Subsidiary is terminable at will without
compensation or other payment following or as a result of such termination by
Target or any Subsidiary, except as may be required by Applicable Law.  (d)Section 2.17(d) of the Target Disclosure
Schedule sets forth each Benefit Plan. For the purposes of this Section 2.17(d),
the term Benefit Plan shall not include a Government Plan.  (e)Target has delivered to Acquiror or its advisors or
made available for review in the Data Room: (i) correct and complete
copies of each Employment Agreement and each Benefit Plan, including all
amendments thereto (or if such Benefit Plan is not written, an accurate
description of the material terms thereof), and any associated trust,
custodial, insurance or service agreements; (ii) the most recent annual
actuarial valuations, if any, prepared for each Benefit Plan; (iii) the
three most recent annual reports (Series 5500 and all schedules thereto),
if any, required under ERISA or the Code, or any similar Applicable Laws of
other jurisdictions applicable to Target, in connection with each Benefit Plan
or related trust; (iv) if any Benefit Plan is funded, the most recent, if
any, annual and periodic accounting of Benefit Plan assets; (v) the most
recent summary plan description for Benefit Plans for which a summary plan
description is required by Applicable Law, together with all summaries of
material modifications, if any, with respect to each such Benefit Plan; (vi) all
IRS determination, opinion, notification and advisory letters and rulings from
the IRS or any similar Governmental Entity  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  26


having jurisdiction over Target relating to Benefit
Plans and copies of all applications and correspondence regarding actual or
potential audits or investigations to or from the IRS, DOL or any other
Governmental Entity with respect to any Benefit Plan, in each case sent or
received in the three years prior to the Agreement Date; (vii) all
policies pertaining to fiduciary liability insurance covering the fiduciaries
of each Benefit Plan, (viii) all discrimination and qualification tests,
if any, prepared for each Benefit Plan described in Section 401(k) of
the Code for the plan year ended December 31, 2008 and (ix) any
written policies or procedures used in Benefit Plan administration. For the
purposes of this Section 2.17(e), the term Benefit Plan shall not
include a Government Plan.  (f)Each Benefit Plan has been established and maintained
in all material respects in accordance in with its terms and all Applicable
Laws, including ERISA and the Code (whether as a matter of substantive law or
as necessary to secure favorable tax treatment).  Each Benefit Plan intended to qualify under Section 401(a) of
the Code and each trust intended to qualify under Section 501(a) of
the Code is so qualified and has either (a) received a favorable
determination letter or opinion letter from the IRS with respect to such
Benefit Plan as to its qualified status under the Code, including all
amendments to the Code effected by the so called GUST and EGTRRA
legislation, or has a period of time remaining under applicable Treasury
regulations or IRS pronouncements in which to apply for and obtain such a
letter or (b) been maintained pursuant to a prototype plan document that
is subject to a reliance letter from the IRS to the prototype sponsor on which
the Target is entitled to rely, and to the Knowledge of Target nothing has
occurred as to each which has resulted or is likely to result in the revocation
of such qualification or which requires or could require action under the
compliance resolution programs of the IRS to preserve such qualification.  No non-exempt prohibited transaction,
within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any Benefit Plan.  To the Knowledge of Target, there are no
audits or legal proceedings pending or being threatened in writing by the IRS
or DOL or any other similar Governmental Entity having jurisdiction over Target
or any Subsidiary with respect to any Benefit Plan, or to the Knowledge of
Target any fiduciary or service provider thereof and, to the Knowledge of
Target, there is no basis for any such legal action or proceeding.  All annual reports and other material filings
required to be filed since their respective dates of formation, by the DOL or
the IRS or any other similar Governmental Entity having jurisdiction over
Target or any Subsidiary have been timely made. 
Neither Target, nor any Subsidiary, nor any of its ERISA Affiliates is
subject to any penalty or Tax with respect to any Benefit Plan under Section 501(i) of
ERISA or Section 4975 through 4980D of the Code or any similar Applicable
Laws and no Benefit Plan is sponsored or maintained by any person that is or
was considered to be a co-employer with Target or any Subsidiary.  (g)No communication, report or disclosure has been made which,
at the time made, did not accurately reflect the material terms and operations
of any Benefit Plan.  Target has not
announced its intention, or undertaken (whether or not legally bound) to modify
or terminate any Benefit Plan or adopt any arrangement or program which, once
established, would come within the definition of a Benefit Plan.  Target has not undertaken to maintain any
Benefit Plan for any period of time and each such Plan is terminable at the
sole discretion of the sponsor thereof, subject only to such constraints as may
imposed by applicable law, and without penalty or cost (other than routine
administrative costs or full vesting of benefits in the case of a Qualified
Plan).  Target has no liability,
including under any Benefit Plan or any Employment  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  27


Agreement or agreement with any Consultant or other
independent contractor, arising out of the treatment of any service provider as
a consultant or independent contractor and not as an employee, or vice-versa.  (h)No Benefit Plan provides, or has any obligation to
provide, life insurance, medical or other employee welfare benefits to any
Employee or Consultant or his, her or its beneficiaries upon any Employees
retirement or termination of employment for any reason, or upon any Consultants
cessation of services for any reason, except as may be required by Applicable
Law, and neither Target nor any Subsidiary has notified any Employee or
Consultant (either individually or to Employees or Consultants as a group) in
writing that such Employee(s)  or Consultant(s) would be provided
with life insurance, medical or other employee welfare benefits upon any
Employees retirement or termination of employment or any Consultants
cessation of services, except to the extent required by Applicable Law.  (i)With respect to each Benefit Plan for which a separate
fund of assets is or is required to be maintained, full and timely payment has
been made of all amounts required of Target or any Subsidiary, under the terms
of each such Benefit Plan or Applicable Law, as applied through the Closing
Date. The fair market value of the assets of each such Benefit Plan, as of the
end of the most recently ended plan year of that Benefit Plan, equals or
exceeded the present value of all benefits liabilities under that Benefit Plan
as of that same date.  (j)No Benefit Plan to which Target or any Subsidiary is
party constitutes a nonqualified deferred compensation plan subject to Section 409A
of the Code.  Neither Target nor any
Subsidiary has elected to or is required to defer payment of amounts from a
foreign entity which will be subject to the provisions of Section 457A of
the Code.  Neither Target nor any
Subsidiary has an obligation to gross-up or otherwise reimburse any person for
any tax incurred by such person pursuant to Section 409A of the Code.  (k)Section 2.17(k) of the Target Disclosure
Schedule sets forth a list of each agreement providing for a change in control
payment.  (l)No Benefit Plan is a multiple employer plan, or a plan
subject to Section 412 of the Code, or Section 302 or Title IV of
ERISA, and neither Target nor any ERISA Affiliate has in the past contributed
to any multiple employer plan, or plan subject to Section 412 of the Code,
or Section 302 or Title IV of ERISA.  2.18Insurance.Section 2.18 of the Target Disclosure Schedule
lists the policies of products liability, theft, fire, liability, workers
compensation, life, property and casualty, directors and officers, and other
insurance owned or held by Target.There is no material claim
pending under any of Targets insurance policies or fidelity bonds, nor to
Targets Knowledge is there any factor or circumstance relating to Target or
the Current Target Business that would reasonably be expected to give rise to
any such claim, as to which coverage has been questioned, denied or disputed by
the underwriters of such policies or bonds. 
Target is in compliance in all
material respects with the terms of such policies and bonds.  Target has no Knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies or bonds and to Targets Knowledge there is no factor or circumstance
relating to Target or the Current Target Business that would reasonably be
expected to give rise to any  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  28


such right of termination or
premium increase.All
such policies are in full force and effect; are valid, outstanding, and
enforceable policies and will not in any way be materially affected by, or
terminate or lapse as a result of the consummation of, the transactions
contemplated by this Agreement.  2.19Compliance With Laws.  Target and its Subsidiaries are in material
compliance with, and have not received any written or oral notices of any
material pending violation with respect to, any federal, state, local or foreign
statute, law or regulation, except for violations that have been cured or are
no longer being asserted.  2.20Brokers and Finders Fee.  No broker, finder or investment banker is
entitled to brokerage or finders fees or agents commissions or investment
bankers fees or any similar charges from Target or any Subsidiary in
connection with the Merger, this Agreement or any transaction contemplated
hereby.  2.21Regulatory Compliance.  (a)All biological and drug
products being developed by Target (Target Products) that are subject
to the jurisdiction of the FDA are being manufactured, labeled, stored, tested,
and distributed in compliance in all material respects with all applicable
requirements under the FD&C Act, the Public Health Service Act, their
applicable implementing regulations and all comparable state laws and
regulations.  (b)All human clinical trials
conducted by or on behalf of Target have been, and are being, conducted in
material compliance with the applicable requirements of Good Clinical Practice,
Informed Consent and all other applicable requirements relating to protection
of human subjects contained in 21 CFR Parts 50, 54, 56, 58 and 312and all other applicable foreign, state
and local laws and regulations.  (c)All manufacturing operations
conducted by or for the benefit of Target with respect to Target Products being
used in human clinical trials have been and are being conducted in accordance,
in all material respects, with the FDAs recommended current Good Manufacturing
Practices continuum for drug and/or biological products.  (d)Target has not received any
written notice that the FDA or any other Governmental Entity has initiated, or
is threatening to initiate, any action to suspend any clinical trial, suspend
or terminate any Investigational New Drug Application sponsored by Target or
otherwise restrict the preclinical research on or clinical study of any Target
Product, or to suspend or otherwise restrict the manufacture of any Target
Product. Target has no Knowledgeof any act, omission, event, or circumstance relating
to Targets activities and conduct that Target reasonably expects would give
rise to or lead to any Governmental Entity taking any such action.  (e)To Targets Knowledge,
neither Target nor any of its officers, key employees, consultants, agents or
clinical investigators acting for Target, has committed any act, made any
statement or failed to make any statement that would reasonably be expected to
provide a basis for the FDA to invoke its policy with respect to Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities set forth in 56
Fed. Reg. 46191 (September 10,  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  29


1991) and any amendments
thereto.  Neither Target nor, to the
Knowledge of Target, any officer, key employee or agent of Target has been
convicted of any crime or, to the Knowledge of Target, engaged in any conduct that
would reasonably be expected to result in (i) debarment under the Generic
Drug Enforcement Act of 1992, as amended, in 21 U.S.C. Section 335a or any
similar state law or (ii) exclusion under 42 U.S.C. Section 1320a-7
or any similar state law or regulation.  (f)There are no proceedings
pending with respect to a violation by Target of the FD&C Act, FDA
regulations adopted thereunder, the Controlled Substance Act or any other
legislation or regulation promulgated by any other Governmental Entity.  (g)Target and its contractors and agents have submitted
to the FDA, any other Governmental Entity and any institutional review board,
or accreditation body, all material supplemental applications, notices, and
annual or other reports and information, including adverse experience reports
and product deviation reports, related to the manufacture, testing, sale,
marketing, distribution, import, or export of any Target Product.  (h)Target is not a covered entity, as defined under
Health Insurance Portability and Accountability Act of 1996 and the regulations
promulgated thereunder (HIPAA), and Target has not received any
requests or demands from a covered entity or Governmental Entity to make
available its internal practices, books, and/or records relating to its use and
disclosure of health information for purposes of determining a covered entitys
or Targets compliance with HIPAA or with other applicable privacy laws.  (i)Target has provided to Acquiror copies of regulatory
filings and applications and all material written communications to and from
the FDA and/or any other Governmental Entity relating specifically to Target
Products or the Target and its Subsidiaries and their respective operations or
business, including any official notices, citations, decisions, warning or
untitled letters, material reports of inspection observations and establishment
inspections. Target has provided to Acquiror all material Information that has
resulted from any research or development activities conducted with respect to
CXA-101, CXA-201 and all other Target Products.  2.22Bank Accounts, Signing
Authority, Powers of Attorney.  Section 2.22 of the Target Disclosure
Schedule sets forth a complete and accurate list of all bank, brokerage, and
other accounts, and all safe-deposit boxes, of Target and its Subsidiaries and
the persons with signing or other authority to act with respect thereto.  Except as so listed, Target and its
Subsidiaries do not have any account or safe deposit box in any bank, and no
person has any power, whether singly or jointly, to sign any checks on behalf
of Target or its Subsidiaries, to withdraw any money or other property from any
bank, brokerage, or other account of Target or its Subsidiaries, or to act
under any agency or power of attorney granted by Target or its Subsidiaries at any
time with respect to such accounts.  2.23Distribution of Merger Consideration. 
The Merger Consideration, when distributed in accordance with the terms
of this Agreement and the Merger Consideration Certificate, will have been
distributed to the Former Holders in accordance with the provisions of Targets
certificate of incorporation in effect immediately prior to the Effective Time
and any  
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other document or agreement among Target and the
Former Holders related to the distribution of the Merger Consideration.  3.Representations
and Warranties of Acquiror and Merger Sub.  Acquiror and Merger Sub jointly and severally
represent and warrant to Target as of each of the Agreement Date and the
Closing Date that, except as disclosed in the disclosure schedule of even date
herewith delivered by Acquiror with this Agreement and complying with the
provisions of Section 10.2(b) (the Acquiror Disclosure Schedule):  3.1Organization, Standing and
Power.  Each of Acquiror and Merger
Sub is a corporation duly organized, validly existing and in good standing, if
applicable, under the laws of the state in which it was incorporated.  There is no pending or, to the Knowledge of
Acquiror or Merger Sub, threatened, action for the dissolution, liquidation or
insolvency of either Acquiror or Merger Sub. Each of Acquiror and Merger Sub is
duly qualified to do business, and is in good standing (if such concept is
applicable in the relevant jurisdiction), in each jurisdiction where the
operation of its business and ownership of its properties requires such
qualification, except where the failure to so qualify would reasonably be
expected to be materially adverse to Acquiror or Merger Sub or their respective
ability to consummate the Merger or any of the transactions contemplated hereby
(the Acquiror Material Adverse Effect).  3.2Authority.  Acquiror and Merger Sub have all requisite
corporate power and authority to enter into and deliver this Agreement and to
consummate the Merger.  The execution and
delivery by Acquiror and Merger Sub of this Agreement and the consummation by
Acquiror and Merger Sub of the Merger have been duly authorized by all
necessary corporate action on the part of Acquiror and Merger Sub, and no other
authorization or consent of Acquiror, Merger Sub or their respective
stockholders is necessary.  This
Agreement has been duly executed and delivered by Acquiror and Merger Sub, and,
assuming this Agreement constitutes the valid and binding obligation of Target,
this Agreement constitutes a valid and binding obligation of each of Acquiror
and Merger Sub, enforceable against each of Acquiror and Merger Sub in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to creditors rights generally and general principles of equity, regardless of
whether asserted in a proceeding in equity or at law.  3.3Noncontravention.  Neither the execution and delivery by
Acquiror and Merger Sub of this Agreement, nor the consummation by Acquiror or
Merger Sub of any of the transactions contemplated hereby, will:  (a)conflict with or violate any provision of the
certificate of incorporation or bylaws of Acquiror or the certificate of
incorporation or bylaws of Merger Sub;  (b)require on the part of
Acquiror or Merger Sub any registration, declaration or filing with, or any
permit, order, authorization, consent or approval of, any Governmental Entity,
except for (i)the
filing by Acquiror of such reports and information with the SEC under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the SEC thereunder, as may be required in connection with this
Agreement, the Merger and the other transactions contemplated by this
Agreement, (ii)any registration,  
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declaration, filing, permit,
order, authorization, consent or approval which if not made or obtained would
not reasonably be expected to have an Acquiror Material Adverse Effect, and (iii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware;  (c)(i) in any material
respect, conflict with, result in a breach of, constitute (with or without due
notice or lapse of time or both) a default under any material contract or
agreement to which Acquiror or Merger Sub is a party or by which Acquiror or
Merger Sub is bound, (ii) create in any party any right to terminate or
modify in any material respect any such material contract or agreement or (iii) require
any notice, consent or waiver under any such material contract or agreement;  (d)violate any order, writ,
injunction or decree applicable to Acquiror or Merger Sub or any of their
respective properties or assets, except for any violation that would not
reasonably be expected to have an Acquiror Material Adverse Effect;  (e)violate any statute, rule or
regulation applicable to Acquiror or Merger Sub or any of their respective
properties or assets, except for any violation that would not reasonably be
expected to have an Acquiror Material Adverse Effect; or  (f)render Acquiror insolvent or
unable to pay its debts as they become due.  3.4Litigation.  (a)There is no private or
governmental action, suit, proceeding, claim, arbitration or, to the Knowledge
of Acquiror, investigation, pending before any Governmental Entity or, to the
Knowledge of Acquiror, overtly threatened in a communication with Acquiror,
against Acquiror or its Subsidiaries or any of their respective properties or
any of their respective officers or directors (in their capacities as such),
and that would reasonably be expected to result in an Acquiror Material Adverse
Effect, nor to Acquirors Knowledge is there any factor or circumstance
relating to Acquiror or Merger Sub that would reasonably be expected to give
rise to any such governmental action, suit, proceeding, litigation, arbitration
or investigation.  (b)There is no judgment, decree
or order against Acquiror or Merger Sub or, to the Knowledge of Acquiror and
Merger Sub, against any of their respective directors or officers (in their
capacities as such) that specifically names Acquiror or its Subsidiaries or
such directors or officers and that would reasonably be expected to result in
an Acquiror Material Adverse Effect.  3.5Merger Sub.  Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement, has engaged in no other business activities and has
conducted its operations only as contemplated by this Agreement.  3.6Adequacy of Funds.  Acquiror currently has, and will at Closing
continue to have, adequate financial resources to satisfy its monetary and
other obligations under this Agreement, including its obligations to pay the
Merger Consideration as contemplated by Section 1.9 and to make the
payments required by Section 1.14, andAcquiror will have adequate  
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financial resources to satisfy its payment obligations
under Section 9 hereof, when such payment obligations are due.  4.Conduct Prior
to the Effective Time.  4.1Conduct of Business of
Target.  During the period from the
Agreement Date through the Effective Time (the Pre-Closing Period),
except (i) to the extent necessary to comply with Targets obligations
under this Agreement, (ii) as reasonably necessary to ensure that Target
complies with Applicable Laws and regulations and pre-existing contractual
obligations, (iii) as set forth on Section 4.1 of the Target
Disclosure Schedules or (iv) as consented to in writing by Acquiror (which
consent shall not be unreasonably withheld or delayed), (A) Target shall (1) carry
on its business in the ordinary course consistent with past practices, (2) use
commercially reasonable efforts to preserve intact its present business
organization, (3) use commercially reasonable efforts to preserve its
relationships with customers, suppliers, distributors, licensors, licensees,
and others to whom Target or its Subsidiaries has contractual obligations and (4) use
commercially reasonable efforts to prevent and not permit any damage,
destruction or loss, whether or not covered by insurance any material asset of
Target or its Subsidiaries; (B) Target shall promptly advise Acquiror in
writing of any event or occurrence of which it becomes aware which results in
or is reasonably likely to result in a Target Material Adverse Effect, in a
breach of any representation or warranty or covenant set forth in this
Agreement or in the failure or inability of any of the conditions precedent set
forth in Section 6.2 to be satisfied; and (C) Target shall not and
shall cause its Subsidiaries to not:  (a)Charter Documents.  Amend its certificate of incorporation or
bylaws or equivalent organizational documents;  (b)Dividends; Certain Changes
in Capital Stock.  Declare or
pay any dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock or other securities, or split,
combine or reclassify any of its capital stock or other securities, other than (i) the
grant of Target Options in the ordinary course of business and issuance of
Target Capital Stock pursuant to the exercise of any Target Warrants or Target
Options and (ii) the declaration and payment of the Permitted Dividend;  (c)Intellectual Property Rights.  Enter into or amend any agreements pursuant
to which Target (i) transfers or licenses to any person any Target IP
Rights, or (ii) otherwise grants to any person rights in any Target IP
Rights;  (d)Dispositions.  Sell, lease, license or otherwise transfer to
any person, or grant or permit the imposition of any security interest, or any
lien or encumbrance (other than Permitted Encumbrances) on, any of its
properties or assets that are material, individually or in the aggregate, to
the Current Target Business;  (e)Indebtedness; Preservation
of Claims and Rights.  Incur any
indebtedness for borrowed money, or guarantee any such indebtedness, or issue
or sell any debt securities or guarantee any debt securities of others, in each
case in excess of $50,000; or forgive  
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or cancel any debts or
claims by Target or its Subsidiaries or knowingly waive any material rights of
Target or its Subsidiaries;  (f)Capital Expenditures.  Make any capital expenditures, capital
additions or capital improvements, in each case in excess of $50,000 in the
aggregate, other than expenditures in the ordinary course of business;  (g)Insurance.  Reduce the amount of any insurance coverage
provided by existing insurance policies other than upon the expiration of any
such policy;  (h)Waiver.  Knowingly waive any material right under any
Material Contract;  (i)Employee Benefit Plans; New
Hires; Pay Increases.  Except as
contemplated by Section 1.14 or Section 5.9(d), amend any Benefit
Plan or adopt any Benefit Plan, hire any new employee or consultant or
terminate any Employee or Consultant, pay any special bonus, special
remuneration or special noncash benefit (except payments and benefits
contractually required to be made pursuant to existing written agreements that
are disclosed on the Target Disclosure Schedule), or increase the benefits,
salaries or wage rates of Targets or its Subsidiaries consultants or
Employees;  (j)Severance Arrangements.  Grant or pay any severance or termination pay
or benefits to any consultant or Employee of Target or its Subsidiaries,
except for payments and benefits contractually required to be made pursuant to
existing agreements that are disclosed on the Target Disclosure Schedule;  (k)Lawsuits.  Commence a lawsuit other than (i) for
the routine collection of bills, (ii) in such cases where Target in good
faith determines that failure to commence suit would result in the material
impairment of a valuable aspect of Targets business, provided that it consults
with Acquiror prior to the filing of such a suit or (iii) for a breach of
this Agreement;  (l)Acquisitions.  Acquire or agree to acquire by merging with,
or by purchasing a substantial portion of the stock or assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or agree
to acquire any assets that are material individually or in the aggregate, to
its business, taken as a whole;  (m)Taxes.  Make or change any election in respect of
Taxes, adopt or change any accounting method or its accounting period in
respect of Taxes, file any amendment to any Tax Return, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, surrender any
right to claim a Tax refund, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes;  (n)Obligations.Enter into or amend any contracts or commitments,
other than any contracts or commitments entered into, in each case in the
ordinary course of business with persons other than Affiliates of Target that
involve payments orpotential payments  
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to or by Target or any
Subsidiary in any single instance of less than $50,000 or in the aggregate for
all such contracts or commitments, less than $100,000;  (o)Accounts Payable.  Fail to make
any payment with respect to any of Targets accounts payable or its
Indebtedness in a timely manner in accordance with their respective terms and
consistent with past practice;  (p)Extraordinary Transactions. Adopt any
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring or other reorganization of Target (other than in connection with
the Merger);  (q)New Agreements; Amendments;
Defaults.  Enter into
or modify, or permit any Subsidiary to enter into or modify, any Material
Contract, including any supply, license, development, research or collaboration
agreement, with any other person or take or omit to take any action, or permit
any Subsidiary to take or omit to take any action, that would be reasonably
likely to cause a material default under or a material breach of any of its
Material Contracts;  (r)Subsidiaries.  Establish or create any Subsidiaries;  (s)Securities.  Sell or issue any securities of Target,
including, without limitation, any shares of capital stock of Target and any
stock options, warrants, subscription rights or other securities exercisable,
convertible or exchangeable for any shares of capital stock of Target, in any
case that would increase the aggregate amount of the Merger Consideration or
would be reasonably likely to cause a delay in the Closing of the Merger or
that would adversely affect or be reasonably likely to adversely affect the
ability of Targets stockholders as of the Agreement Date to vote a sufficient
number of shares of Target Capital Stock to provide the Required Stockholder
Vote or to continue to own at all times prior to the Effective Time shares of
Target Capital Stock  having voting power
no less than the Required Stockholder Vote;  (t)Agreements with Affiliates.  Enter into any agreements with any Affiliates
of Target or its Subsidiaries (other than stock option, stock award, or similar
agreements entered into with Affiliates of Target or its Subsidiaries in the
ordinary course of business); or  (u)Other.  Agree to take, take or permit any Subsidiary
to take or agree to take, any of the actions described in Sections 4.1(a) through
4.1(t).  5.Additional
Agreements.  5.1Satisfaction of Conditions. 
Each of the Parties will use reasonable best efforts to cause the
satisfaction as promptly as possible of the conditions contained in Sections
6.1 through 6.3 hereof that impose obligations on it or require action on its
part or the part of any of its stockholders or Affiliates.  5.2Further Assurances.  Subject to
the terms and conditions set forth in this Agreement, from time to time both
before and after the Effective Time, Target, Acquiror and  
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Merger Sub and the Stockholders Committee, and their respective
proper members, officers and directors, will use reasonable best efforts, to
take or cause to be taken all actions, and to do or cause to be done all other
things, as are necessary or required to consummate the Merger and the other
transactions contemplated hereby.  5.3Access to Information.  During the Pre-Closing Period, Target shall
afford Acquiror and its personnel, accountants, counsel and other
representatives reasonable access, upon request and reasonable notice to (i) all
of Targets properties, assets (including, without limitation, patents, patent
applications, other intellectual property, manufacturing know how, trade
secrets, preclinical and clinical data and results and other confidential
information), books, records (including, without limitation, regulatory filings
and correspondence, patent prosecution files and correspondence, other
intellectual property files and correspondence and manufacturing records),
contracts, and documents of Target or pertaining to the Compound, all clinical
and pre-clinical trials or studies relating to the Compound, the Current Target
Business or the development and commercialization of Products, and a reasonable
opportunity to make such investigations, and will furnish or cause to be
furnished to Acquiror and its authorized representatives all such information
with respect to Targets affairs, the Compound, all clinical and pre-clinical
trials of studies relating to the Compound, the development and
commercialization of Products and the Current Target Business asAcquiror reasonably
requests; provided, however, that in exercising
access rights under this Section 5.3, Acquiror shall not be permitted to
interfere unreasonably with the conduct of the business of Target.  Notwithstanding the foregoing, any such
access shall be conducted at Acquirors expense, at a reasonable time, under
the supervision of appropriate personnel of Target and in such a manner as to
maintain the confidentiality of this Agreement and the transactions
contemplated hereby in accordance with the terms hereof and not to interfere
with the normal operation of the business of Target and its Subsidiaries.  The Parties shall use reasonable best efforts
to take any steps necessary prior to disclosing or providing access to
information pursuant to this Section 5.3, to preserve attorney-client
privilege under any circumstances in which such privilege may be jeopardized by
such disclosure or access.  5.4Stockholder Consent; Section 280G
Approvals.  (a)Target shall, in accordance
with its certificate of incorporation, bylaws and Applicable Law, solicit the
Required Stockholder Vote by written consent immediately after the execution of
this Agreement and shall use reasonable best efforts to obtain the Required
Stockholder Vote within 24 hours after the execution of this Agreement.  Subject to Section 5.12 hereof, Targets
board of directors will recommend to Targets stockholders the adoption and
approval of this Agreement and the transactions contemplated herebyand the other matters to be submitted to
such Targets stockholders in connection therewith.  (b)Notwithstanding anything to
the contrary contained in this Agreement, if, in connection with the Merger,
Target is obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate it to make any payments, that will
not be deductible under Section 280G of the Code if the stockholder
approval requirements of Section 280G(b)(5)(B) of the Code are not
satisfied, then Target shall use its reasonable best efforts to obtain
stockholder approval of the excess payments (as hereafter defined) on a basis
consistent with the requirements of Section 280G(b)(5)(B) of the Code
and  
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the regulations issued
thereunder, which approval may be by written consent action of the stockholders
if allowed by applicable corporate law. For this purpose, the excess payments
are those payments described in Section 280G of the Code but only to the
extent they equal or exceed three times the base amount (as defined in Section 280G(b)(3)(A) of
the Code) for the relevant individual. Any form of waiver of benefits,
disclosure material, and form of consent or vote prepared in connection with
seeking the foregoing vote shall be subject to the review and approval of the
Acquiror, not to be unreasonably withheld, conditioned or delayed.  5.5Notice of Merger and Appraisal Rights; Notice of
Stockholder Approval.  As promptly as practicable after the Required
Stockholder Vote has been obtained, Target shall prepare and deliver to the
holders of Target Capital Stock (i) a Notice of Merger and Appraisal
Rights (the Stockholder Notice), which Stockholder Notice shall comply
in all material respects with the requirements of Delaware Law and (ii) a
notice under Section 228(e) of Delaware Law  informing those Targets stockholders that
did not execute the written consent obtaining the Required Stockholder Vote of
such action by written consent, in compliance in all material respects with the
applicable requirements of Delaware Law.  5.6Public Disclosure.  Except as may be required by law or by
obligations pursuant to any listing agreement with The Nasdaq Global Market or
any applicable national securities exchange andother than with respect to the issuance of the agreed
press release attached hereto as Exhibit F,during the
Pre-Closing Period, (a) Acquiror and Target shall consult with each other
before issuing any other press release or otherwise making any other public
statement or making any other public (or non-confidential) disclosure (whether
or not in response to an inquiry) regarding the terms of this Agreement and the
transactions contemplated hereby and (b) without limiting Acquirors
obligations under that certain confidentiality agreement, dated May 19,
2009, between Target and Acquiror (the Confidentiality Agreement),
neither Acquiror nor Target shall issue any such press release or make any such
public statement or disclosure without the prior approval of Target or
Acquiror, as the case may be (which approval shall not be unreasonably withheld
or delayed).  Any and all non-public
information disclosed or made available by Acquiror to Target or by Target to
Acquiror as a result of the negotiations or due diligence investigations
leading to the execution of this Agreement, or in furtherance thereof,
including any information disclosed or made available pursuant to Section 5.3
hereof, shall remain subject to the terms and conditions the Confidentiality
Agreement.  5.7Regulatory Approval; Further
Assurances.Acquiror, Target and the Stockholders Committee, and their respective
members, officers and directors shall use reasonable best efforts to consummate
the Merger and the other transactions contemplated by this Agreement as soon as
practicable following the Agreement Date and in no event later than one
Business Day after the satisfaction or waiver of the conditions to Closing set
forth in Section 6.  Subject to the
terms and conditions set forth in this Agreement, from time to time both before
and after the Effective Time, Target, Acquiror and Merger Sub, will use their
respective reasonable best efforts, as promptly as is practicable, to take or
cause to be taken all actions, and to do or cause to be done all other things,
as are necessary or required to consummate the Merger and the other
transactions contemplated hereby. Without limiting the generality of the
foregoing, each party to this Agreement shall: (i) make any filings and
give any notices required to be made or given by such party in connection with
the Merger and the other transactions contemplated by  
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this Agreement; (ii) subject to Section 5.14
below, use reasonable best efforts to obtain any material consents required to
be obtained (pursuant to any applicable legal requirement, contract or
otherwise) by such party in connection with the Merger or any of the other
transactions contemplated by this Agreement; and (iii) use reasonable best
efforts to lift any restraint, injunction or other legal bar to the
Merger.  Each of Acquiror and Target
shall promptly deliver to the other a copy of each such filing made, each such
notice given and each such consent obtained during the Pre-Closing Period.  5.8Escrow Agreement; Payment
Agent Agreement.  At or
before the Effective Time, Acquiror, Merger Sub and the Stockholders Committee
shall, and shall use reasonable best efforts to cause Escrow Agent and the
Payment Agent to, execute and deliver the Escrow Agreement and Payment Agent
Agreement, respectively.  5.9Employees.  (a)Attached as Section 5.9(a) of the Acquiror Disclosure
Schedule is a list of those employees Acquiror wishes to continue to employ
after the Effective Time (such employees, the Designated Continuing
Employees).  (b)Except as set
forth herein, at or after the Effective Time, Acquiror shall enroll each
Designated Continuing Employee who accepts Acquirors offer of continued
employment after the Closing and has not resigned as an employee of Acquiror
within 60 days following the Closing (each a Continuing Employee) in
the Acquiror plans, programs, policies, practices, contracts, agreements or
other arrangements providing for employment, compensation, retirement, deferred
compensation, loans, severance, separation, termination pay, performance
awards, bonus, incentive, stock option, stock purchase, stock bonus, phantom
stock, stock appreciation right, supplemental retirement, fringe benefits,
cafeteria benefits or other benefits, whether written or unwritten, including
each employee benefit plan within the meaning of Section 3(3) of
ERISA (the Acquiror Employee Plans), to the extent applicable, which
are provided to similarly situated employees of Acquiror based on levels of
responsibility and shall (i) use commercially reasonable efforts to cause
any pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of Acquiror or its affiliates to be waived with
respect to Continuing Employees and their eligible dependents, (ii) to the
extent permissible under Acquirors health and welfare plans, give each
Continuing Employee credit for the plan year in which the Effective Time occurs
towards applicable deductibles and annual out-of-pocket limits for medical
expenses incurred prior to the Effective Time for which payment has been made,
and (iii) give such Continuing Employees service credit for their
employment with Target for eligibility and vesting purposes (but not for
benefit accrual) under any such applicable Acquiror Employee Plan, as if such
service had been performed with Acquiror. Until the effective date of the
enrollment of the Continuing Employees in a particular Acquiror Employee Plan,
Acquiror shall continue in effect without amendment or reduction in benefits
the existing Benefit Plan covering the same or similar benefits as would be
covered by such Acquiror Employee Plan. 
Nothing in this Section 5.9 is intended to prevent Acquiror from
terminating any of its benefit plans in a manner that does not affect the
vested or other pre-existing rights of any Target Employee. Notwithstanding any
of the foregoing, Acquiror shall have the option to enroll any Continuing
Employee in its medical and dental plans or keep them on the existing medical
and dental plans offered by Target prior to the Closing.  
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(c)No provision of this Section 5.9 shall create any
third-party beneficiary rights in any Employee or former Employee (including
any beneficiary or dependent thereof) of Target or any Subsidiary of Target in
respect of continued employment (or resumed employment) with Acquiror, the
Surviving Corporation or any of Acquirors Subsidiaries, and no provision of
this Section 5.9 shall create such rights in any such persons in respect
of any benefits that may be provided, directly or indirectly, under any
employee program or any plan or arrangement that may be maintained or
established by Acquiror or any of its Subsidiaries or be deemed to constitute
an amendment of any such program, plan or arrangement.  (d)At the Closing, Target shall provide Acquiror with
evidence that Targets board of directors has terminated of any and all Target
employee benefit plans intended to include a Code Section 401(k) arrangement
(each a Target 401(k) Plan and collectively, the Target 401(k) Plans),
effective as of the day immediately preceding the day on which the Effective
Time occurs subject to the occurrence of the Effective Time, and a copy of the
notice that Target has prepared and signed to notify the plan administrator(s) for
such Target 401(k) Plan(s) of such termination; such notices to be
sent immediately following the Closing Date. 
In the event that termination of a Target 401(k) Plan would
reasonably be anticipated to trigger liquidation charges, surrender charges or
other fees, then Target shall take such actions as are necessary to reasonably
estimate the amount of such charges and/or fees and provide such estimate in
writing to Acquiror on the Closing Date.  5.10FIRPTA Matters.  At the Closing, Target shall deliver to
Acquiror: a properly executed statement, dated as of the Closing Date, in a
form reasonably acceptable to Acquiror, conforming to the requirements of
Treasury Regulations Sections 1.1445-2(c)(3) and 1.897-2(h).  5.11Indemnification of Officers
and Directors of Target and its Subsidiaries.  (a)From and after the Effective
Time, Acquiror shall cause the Surviving Corporation to fulfill and honor in
all respects the obligations to the extent legally permissible of Target and
its Subsidiaries pursuant to any indemnification provisions under the
certificate of incorporation and bylaws of Target and the equivalent
organizational documents of its Subsidiaries, each as is in effect on the
Closing Date (the persons entitled to be indemnified pursuant to such
provisions, and all other current and former directors and officers of Target
and its Subsidiaries, being referred to collectively as the Indemnified
Parties).  Acquiror shall cause the
certificate of incorporation and bylaws of Merger Sub and the Surviving
Corporation to contain the provisions with respect to indemnification and
exculpation from liability set forth in Targets certificate of incorporation
and bylaws on the Closing Date, which provisions shall not be amended, repealed
or otherwise modified during the period ending on the sixth anniversary of the
Effective Time in any manner that would adversely affect the rights of any
Indemnified Party under such provisions.  (b)Through the sixth
anniversary of the Effective Time, Acquiror shall cause to be maintained in
effect, for the benefit of the Indemnified Parties, the current level and scope
of directors and officers liability insurance coverage as set forth in Targets
current directors and officers liability insurance policy in effect as of the
Agreement Date; provided, however, that in no event shall Acquiror be required
pursuant to this Section 5.11(b) to expend in  
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any one year an amount in
excess of 200% of the annual premium currently payable by Target with respect
to such current policy, it being understood that if the annual premiums payable
for such insurance coverage exceed such amount, Acquiror shall be obligated to
obtain a policy with the greatest coverage available for a cost equal to such
amount.  (c)This Section 5.11 shall
survive the consummation of the Merger and the Effective Time, is intended to
benefit and may be enforced by the Indemnified Parties, and shall be binding on
all successors and assigns of Acquiror and the Surviving Corporation.  5.12No Solicitation by Target; Board Recommendation;
Fiduciary Exceptions.  (a)Subject to Section 5.12(b),
Target shall not, nor shall it authorize or permit any of its Subsidiaries or
any of their respective directors or officers to (and Target shall use its
reasonable efforts to cause its employees and any investment banker, financial
advisor, attorney, accountant or other advisor, agent or representative
retained by it or any of its Subsidiaries not to), directly or indirectly, (i) solicit,
initiate or knowingly encourage, or take any other action designed to
facilitate, any Takeover Proposal (as defined below) or (ii) enter into
any discussions or negotiations with any third party regarding, or furnish to
any person any information in connection with, any Takeover Proposal.  Target shall, and shall cause its
Subsidiaries to immediately cease and cause to be terminated all existing
discussions or negotiations with any person conducted heretofore with respect
to any Takeover Proposal or that may lead to a Takeover Proposal.  (b)The term Takeover Proposal means any proposal
or offer from any person that wouldreasonably be expected to
lead to any acquisition or purchase, in one transaction or a series of related
transactions, of assets or businesses that constitute 15% or more of the
revenues, net income or the assets of Target and its Subsidiaries, taken as a
whole, or 15% or more of any class of equity securities of Target, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of Target, or
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution, joint venture, binding share exchange or similar transaction
involving Target pursuant to which any person or the stockholders of any person
would own 15% or more of any class of equity securities of Target or of any
resulting parent of Target, other than the transactions contemplated by this
Agreement.  (c)Notwithstanding the provisions of clause (a) of
this Section 5.12 or anything else in this Agreement, in response to any
bona fide written Takeover Proposal 
received before the Required Stockholder Vote is obtained that the board
of directors of Target determines in good faith (after consultation with a
financial advisor of nationally recognized reputation and outside legal
counsel) constitutes or would reasonably be expected to lead to a Superior
Proposal, and which Takeover Proposal did not result from a breach of this Section 5.12
by Target and was not in any way solicited by Target or its Subsidiaries,
Affiliates, agents or representatives, Target may, if its board of directors
determines in good faith (after consultation with outside legal counsel) that
failure to do so is reasonably likely to be inconsistent with its fiduciary
duties to the stockholders of Target under Applicable Laws, (x) furnish
information with respect to Target and its Subsidiaries to the person making
such Takeover Proposal and such persons representatives pursuant to a
customary confidentiality agreement, provided that  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  40


all such information has previously been provided to
Acquiror or is provided to Acquiror prior to or substantially concurrent with
the time it is provided to such person and (y) participate in discussions
or negotiations with the person making such Takeover Proposal (and such persons
representatives) regarding such Takeover Proposal.  Notwithstanding anything to the contrary
expressed or implied in this Agreement, the provisions of this Section 5.12(c) and
the rights of Target and the board of directors of Target under this Section 5.12(c) shall
terminate immediately upon receipt of the Required Stockholder Vote.  (d)The term Superior
Proposal means any bona fide written proposal made by a third party that
if consummated would result in such person (or its stockholders) owning,
directly or indirectly, (A) all or substantially all of the shares of
capital stock of Target then outstanding, or (B) all or substantially all
of the assets of Target and its Subsidiaries, taken as a whole, in each case
which was not solicited in any way by Target or any of its Subsidiaries,
Affiliates, agents or representatives and did not otherwise result from a
breach of this Agreement and which the board of directors of Target determines
in good faith (after consultation with a financial advisor of nationally
recognized reputation) to be (x) on terms, taking into account all the
terms and conditions of such proposal and this Agreement (including any proposal
by Acquiror to amend the terms of this Agreement and the transactions
contemplated hereby), more favorable to the stockholders of Target from a
financial point of view than the transactions contemplated by this Agreement
and (y) reasonably capable of being completed, taking into account all
financial, legal, regulatory and other aspects of such proposal.  (e)Except as permitted by this Section 5.12(e),
neither the board of directors of Target nor any committee thereof shall (i) (A) withdraw
(or modify in a manner adverse to Acquiror), or publicly propose to withdraw
(or modify in a manner adverse to Acquiror), the approval, recommendation or
declaration of advisability by such board of directors or any such committee
thereof of this Agreement, the Merger or the other transactions contemplated by
this Agreement or (B) recommend, adopt or approve, or propose publicly to
recommend, adopt or approve, any Takeover Proposal or (ii) allow, cause or
authorize Target or any of its Subsidiaries to execute or enter into, any
letter of intent, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement, option agreement, joint venture agreement,
partnership agreement or other similar agreement providing for or contemplating
the consummation of any Takeover Proposal (other than a confidentiality
agreement as provided in Section 5.12(c)). 
Notwithstanding the foregoing or any other provision of this Agreement
other than the termination provisions set forth below in this Section 5.12(e),
(x) the board of directors of Target may take the actions set forth in
clause (i)(A) above, or take the actions set forth in clause (i)(B) above
with respect to a Superior Proposal, if (I) a Superior Proposal has
actually been received, (II) in light of such Superior Proposal the board
of directors of Target determines in good faith (after consultation with
outside legal counsel) that the failure to do so would constitute a breach by
the board of directors of Target of its fiduciary duties to the stockholders of
Target under Applicable Laws, (III) Target has notified Acquiror in
writing of such determination by the board of directors of Target, (IV)at least three Business Days following
receipt by Acquiror of the notice referred to in clause (III) above, and
taking into account any revised proposal made by Acquiror since receipt of the
notice referred to in clause (III) above, such Superior Proposal remains a
Superior Proposal and the board of directors has again made the determinations
referred to in clause (II) above, (V) Target is in compliance with
this Section 5.12 and (VI) Acquiror is not at such time entitled to
terminate this Agreement  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  41


pursuant to Section 7.1(f)and (y) if
the board of directors of Target receives a bona fide written Takeover Proposal
that the board of directors of Target determines in good faith (after
consultation with a financial advisor of nationally recognized reputation)
constitutes a Superior Proposal, and which Takeover Proposalwas not in any way solicited by Target or
its Subsidiaries, Affiliates, agents or representatives, and otherwisedid not result
from a breach of this Agreement, Target may, contemporaneously with the
termination of this Agreement pursuant to Section 7.1(e) and within
24 hours of the three Business Day period described below, enter into a
definitive agreement with respect to such Superior Proposal, provided, however, that Target may not enter into any such
agreement until the third Business Day following Acquirors receipt of written
notice from Target advising Acquiror that the board of directors of Target has
received a Superior Proposal, specifying the material terms and conditions of
the Superior Proposal, identifying the person making such Superior Proposal and
stating that the board of directors intends to exercise its right to enter into
an agreement with respect to such Superior Proposal (it being understood that,
prior to entering into any such agreement, any amendment to the price or any
other material terms of a Superior Proposal shall require a new notice to
Acquiror and a new three Business Day period).In the event that during such three Business Day
period Acquiror offers in good faith to amend this Agreement to match such
Superior Proposal, Target, the board of directors of Target and the
Stockholders Committee shall accept such amendment and cease all discussions
with the person making such Superior Proposal and shall not enter into any
agreement (other than a termination agreement if necessary) with respect to
such Superior Proposal. Notwithstanding anything to the contrary expressed or
implied in this Agreement, the provisions of this Section 5.12(e) and
the rights of Target and the board of directors of Target under this Section 5.12(e),
including the provisions of this Section 5.12(e) that allow Target
and the board of directors of Target to take the actions described in clause (x) or
clause (y) above shall terminate immediately upon receipt of the Required
Stockholder Vote.  (f)In addition to the
obligations of Target set forth in this Section 5.12, Target shall
promptly advise Acquiror orally and in writing after any director, agent or
officer of Target becomes aware of any Takeover Proposal, the material terms
and conditions of any such Takeover Proposal (including any changes to the
price or other material terms thereof) and the identity of the person making
any such Takeover Proposal.  Target shall
keep Acquiror reasonably informed of the status and details of any such
TakeoverProposal and
provide to Acquiror as soon as practicable after receipt or delivery thereof
with copies of all correspondence and other written material sent or provided
to Target from any third party in connection with any Takeover Proposal or sent
or provided by Target to any third party in connection with any Takeover
Proposal.  Notwithstanding anything in
this Section 5.12, the board of directors of Target may not take any
action that would result in Targets stockholders no longer being legally
capable under Delaware Law of validly approving the Merger.  5.13Tax Returns.  During the
Pre-Closing Period, Target shall, and shall cause each Subsidiary to, (a) timely
file all of its Tax Returns as they become due (taking all timely filed proper
extension requests into account), all such Tax Returns to be true, correct and
complete, (b) timely pay and discharge as they become due and payable all
Taxes (other than Taxes contested in good faith by Target or its Subsidiary in
appropriate proceedings) imposed upon it or its income or any of its property
and (c) timely and properly withhold and pay all Taxes required to be
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, supplier, shareholder or other person.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  42


5.14Consents.  Target shall use commercially reasonable
efforts to obtain all material consents, waivers and approvals necessary for
the consummation of the Merger and the transactions contemplated under this
Agreement (all of such consents, waivers and approvals having been set forth in
Section 5.14 of the Target Disclosure Schedule), including, but not
limited to, all consents, waivers and approvals that are necessary or required
in connection with, or as a result of, the Merger to preserve all of Targets
rights and benefits in its business, assets, properties, leases and Material
Contracts following the Merger and without incurring any additional or special
liability, or accelerating any existing liability or obligation, in connection
with or under its business, assets properties, leases and Material Contracts
following the Merger; provided that,
Target shall not be required to pay any material amounts, incur any additional
or special liability, or suffer the acceleration of any existing liability or
obligation in order to obtain any such consents, waivers and approvals.  5.15Notification of Certain
Matters.  Between the Agreement Date and
the Effective Time, each of Acquiror and Target shall, upon obtaining Knowledge
of any of the following, promptly notify the other of:  (a)any notice or other
communication from any person alleging that the consent of such person is or
may be required in connection with the Merger;  (b)any actions, suits, claims,
investigations or other judicial proceedings to have commenced or have been
threatened against such person or any of its Subsidiaries which, if pending on
the Agreement Date, would have been required to have been disclosed pursuant to
Section 2.9 hereof or which relate to the consummation of the Merger;  (c)any breach or inaccuracy of
any representation or warranty made  by
such person as of the Agreement Date;  (d)the occurrence or
non-occurrence of any other event which is likely to cause any representation
or warranty of such person contained in this Agreement to be materially untrue
or inaccurate at or prior to the Effective Time; and  (e)any failure of such person
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder.  Additionally, Target shall promptly notify Acquiror
of any adverse determination or recommendation in connection with any
governmental proceeding to license any of Targets products and any report
filed with the FDA regarding any adverse event with respect to any such
product.  The delivery of any notice
pursuant to this Section 5.15 shall not limit or otherwise affect any
rights, obligations, or remedies available to a party.  5.16Diligence Regarding Products.The Acquiror shall, and shall
cause any of its transferees or assignees, as required in Section 9.4(b) to,
comply with and satisfy, in all respects,the obligations set forth in
Section 9 as provided therein.  5.17Payment of Transactional
Expenses.  Acquiror
shall pay up to $[]* of Transactional Expenses at the Closing and Target shall
pay all other Transactional Expenses at Closing.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  43


5.18Resignation of Directors and
Officers.  Except as otherwise
requested by Acquiror at or prior to the Closing, at the Closing, Target shall
deliver to Acquiror the written resignation of each director and officer from
such positions of Target and its Subsidiaries,provided,
however, that in no case shall any such resignations have any effect
with respect to change in control arrangements between such directors and
officers on the one hand, and Target, on the other hand, that are disclosed on Section 2.17(k) of
the Target Disclosure Schedule.  5.19Financial Statements; Further Assurances.  (a)On or prior to the third Business Day following the
last day of each calendar month ending after the Agreement Date until the
Closing, Target shall deliver to Acquiror an unaudited balance sheet of Target
as of the end of the immediately preceding calendar month and the related
unaudited statements of income and cash flows, respectively, of Target, for
such period then ended (the Monthly Financials).  (b)At the Closing, Target shall deliver to Acquiror an
unaudited balance sheet of Target as of the Closing Date (the Closing Balance
Sheet).  (c)In the event that the Closing is to occur after December 31,
2009, on or prior to the third Business Day prior to the Closing, Target shall
deliver to Acquiror (i) all Supporting Materials and (ii) in the
event that the Closing is to occur after December 31, 2009, an unaudited
balance sheet of Target as of December 31, 2009 and the related unaudited
statements of income and cash flows, respectively, of Target, for the fiscal year
ended on such date (the 2009 Unaudited Statements).  (d)Prior to the Closing, Target shall use reasonable
efforts to cause Targets auditors to agree to deliver all necessary consents
to allow Acquiror to include the 2008 Audited Financials, the 2007 Audited
Financials and all other Target financial statements (and such auditors
reports with respect thereto) in Acquirors current and future registration
statements filed with the SEC on Forms S-1, S-3, S-8 or any successor forms by
incorporation by reference to any Current Report on Form 8-K to be filed
with the SEC within four Business Days of the date hereof, as may be amended or
otherwise.  (e)At the Closing, Target shall deliver to Acquiror all
of the applicable materials, work papers, documents, books, records, files
(physical or electronic), information and other supporting materials, including
financial accounting and other information with respect to Target and its
Subsidiaries and all of their respective predecessors that are necessary or required
to produce the audited and unaudited consolidated financials statements of
Target for all periods prior to the Effective Time (the Supporting
Materials).  6.Conditions to the Merger.  6.1Conditions to Obligation of Each Party to Effect the
Merger.  The respective obligations of Acquiror and
Merger Sub, on the one hand, and Target, on the other hand, to effect the
Merger and otherwise to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions (it being understood that (i) any one or
more of the following conditions may be waived by the agreement of Acquiror and
Target and (ii) by proceeding with the Closing,  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  44


Acquiror, Merger Sub and Target will be deemed to have
waived any of such conditions that remain unsatisfied):  (a)No Injunctions or
Restraints; Illegality.  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 have been issued
and remain in effect, and no petition or request for any such injunction, order
or other legal restraint or prohibition shall be pending, nor shall there be
any statute, rule or regulation enacted or deemed applicable to the Merger
that prohibits or prevents the consummation of the Merger or makes the
consummation of the Merger illegal.  (b)Required Stockholder Vote.  The Required Stockholder Vote shall have been
obtained.  6.2Additional Conditions to the
Obligations of Acquiror and Merger Sub.  The obligations of each of Acquiror and
Merger Sub, respectively, to effect the Merger and otherwise to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions (it
being understood that (i) any one or more of the following conditions may
be waived by Acquiror and (ii) by proceeding with the Closing, Acquiror
and Merger Sub will be deemed to have waived any of such conditions that remain
unsatisfied):  (a)Representations and Warranties. 
The representations and warranties of Target in this Agreement (i) that
are qualified as to materiality or Target Material Adverse Effect shall be true
and correct when made and as of the Closing Date as though each such
representation and warranty had been made on and as of the Closing Date (except
to the extent any such representation or warranty speaks as of any other
specific date, in which case such representation or warranty shall have been
accurate as of such date), and (ii) that are not so qualified shall be
true and correct in all material respects when made and as of the Closing Date
(except to the extent any such representation or warranty speaks as of any
other specific date, in which case such representation or warranty shall have
been accurate as of such date), except to the extent that such inaccuracies
(considered collectively) do not have an Target Material Adverse Effect as of
the Closing Date.  (b)Compliance with Agreement. 
Target shall have performed and complied in all material respects with
all of its obligations under this Agreement to be performed or complied with by
it before or at the Closing.  (c)Closing Certificates.  Target will
have executed and delivered to Acquiror, at and as of the Closing,  (i)a certificate certifying that the conditions referred
to in Sections 6.1(b), 6.2(a), 6.2(b) and 6.2(d) hereof have been
satisfied;  (ii)a certificate that incorporates by reference the
representations and warranties set forth in Section 2.6 hereof and sets
forth the information required to be set forth in Section 2.6 of the
Target Disclosure Schedule as of the Effective Time,  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  45


which certificate shall be deemed to be a
representation and warranty of Target hereunder (the Capitalization
Certificate); and  (iii)a certificate that sets forth (i)the respective
portions of the Closing Payment and each Contingent Payment payable to each
Former Holder and (ii) each Former Holders percentage interest in the
Escrow Fund and the Committee Reimbursement Amount(the Merger  Consideration  Certificate).  (d)Stockholder Approval.  The Merger,
this Agreement and the other transactions contemplated hereby shall have been
approved by Targets stockholders who collectively hold shares of Target
Capital Stock representing at least 97% of the issued and outstanding shares of
Target Capital Stock.  (e)Resignation of Directors and Officers. 
The directors and officers of Target in office immediately prior to the
Effective Time shall have resigned as directors and officers of Target
effective as of the Effective Time.  (f)Escrow Agreement and Payment
Agent Agreement.  Acquiror
and Escrow Agent shall have entered into the Escrow Agreement and Acquiror and
Payment Agent shall have entered into the Payment Agent Agreement.  (g)Third Party Consents.  Acquiror
shall have been furnished with evidence reasonably satisfactory to it that
Target has obtained the consents, approvals and waivers identified as required
consents in Section 6.2(g) of the Acquiror Disclosure Schedule.  6.3Additional Conditions to the
Obligations of Target.  The
obligations of Target to effect the Merger and to otherwise consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions (it
being understood that (i) any one or more of the following conditions may
be waived by Target and (ii) by proceeding with the Closing, Target will
be deemed to have waived any of such conditions that remain unsatisfied):  (a)Representations and Warranties. 
The representations and warranties of Acquiror and Merger Sub in this
Agreement (i) that are qualified as to materiality or Acquiror Material
Adverse Effect shall be true and correct when made and as of the Closing Date
as though each such representation and warranty had been made on and as of the
Closing Date (except to the extent any such representation or warranty speaks
as of any other specific date, in which case such representation or warranty
shall have been accurate as of such date), and (ii) that are not so
qualified shall be true and correct in all material respects when made and as
of the Closing Date (except to the extent any such representation or warranty
speaks as of any other specific date, in which case such representation or
warranty shall have been accurate as of such date), except to the extent that
such inaccuracies (considered collectively) do not have an Acquiror Material
Adverse Effect as of the Closing Date.  (b)Compliance with Agreement. 
Acquiror and Merger Sub shall have performed and complied in all
respects with their respective payment obligations, and in all material
respects with all of their other respective obligations, under this Agreement
to be performed or complied with by them before or at the Closing.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  46


(c)Closing Certificate.  Acquiror and
Merger Sub shall have executed and delivered to Target, at and as of the
Closing, a certificate certifying that the conditions referred to in Sections
6.3 (a) and 6.3(b) hereof have been satisfied.  (d)Escrow Agreement and Payment
Agent Agreements.  Escrow
Agent and the Stockholders Committee shall have entered into the Escrow
Agreement and Payment Agent and the Stockholders Committee shall have entered
in the Payment Agent Agreement.  7.Termination.  7.1Termination.  This Agreement may be terminated at any time
prior to the Closing (with respect to Sections 7.1(b) through 7.1(f), by
prior written notice from the terminating person to the other persons party
hereto setting forth a brief description of the basis for termination):  (a)by the mutual written
consent of Acquiror and Target;  (b)by either Acquiror or Target
if the Merger shall not have been consummated by the date which is 60 days
after the Agreement Date; provided, however,
that the right to terminate this Agreement under this Section 7.1(b) shall
not be available to either Acquiror or Target whose material breach of a
representation or warranty or failure to comply with or perform any covenant
under this Agreement,
including with respect to Target, the delivery of the Monthly Financials, the
Closing Balance Sheet, the 2009 Unaudited Statements (if required by Section 5.19
hereof) or the Supporting Materials pursuant to Section 5.19 hereof,has been the
cause of, or resulted in the failure of, the Merger to occur on or before such
date;  (c)by either Acquiror or Target
if a court of competent jurisdiction shall have issued a non-appealable final
and permanent injunction, or other binding legal restraint or prohibition,
having the effect of permanently prohibiting or preventing the consummation of
the Merger or the other transactions contemplated hereby;  (d)without limiting the right
of either Acquiror or Target to terminate this Agreement pursuant to Section 7.1(b),
by Target if (i) there is an inaccuracy in any of the representations or
warranties of Acquiror or Merger Sub in this Agreement such that the condition
set forth in Section 6.3(a) would not be satisfied, or there has been
a breach by Acquiror or Merger Sub of any of their respective covenants in this
Agreement such that the condition set forth in Section 6.3(b) would
not be satisfied, (ii) Target shall have delivered to Acquiror a written
notice of breach, and (iii) at least 60 days shall have elapsed since the
delivery of such notice without such breach having been cured;  (e)by Target if (i) Target
previously has not breached any of its obligations under Section 5.12, (ii) Target
previously has solicited the Required Stockholder Vote in full compliance with
all of Targets obligations under Section 5.4 and the Required Stockholder
Vote has not been obtained and (iii) concurrently with such termination
Target enters into a definitive agreement with respect to a Superior Proposal
in accordance with Section 5.12;  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  47


(f)without limiting the right
of either Acquiror or Target to terminate this Agreement pursuant to Section 7.1(b),
by Acquiror if (i) there is an inaccuracy in any of the representations or
warranties of Target in this Agreement such that the condition set forth in Section 6.2(a) would
not be satisfied, or there has been a breach by Target of any of its covenants
in this Agreement such that the condition set forth in Section 6.2(b) would
not be satisfied, (ii) Acquiror shall have delivered to Target a written
notice of breach, and (iii) at least 60 days shall have elapsed since the
delivery of such notice without such breach having been cured;  (g)by Acquiror, at any time prior to (but not following)
11:59 p.m. Boston time on the day immediately following the Agreement
Date, if the Required Stockholder Vote shall not have been obtained by such
time; or  (h)by Acquiror:  (i)if Target shall have breached Section 5.12;  (ii)if the board of directors of Target or any committee
thereof withdraws or modifies, in a manner adverse to Acquiror, or proposes to
withdraw or modify, in a manner adverse to Acquiror, its approval or
recommendation of this Agreement, fails to recommend to Targets stockholders
that they adopt this Agreement or approves or recommends, or proposes to
approve or recommend, any Takeover Proposal; or  (iii)if the board of directors of Target fails to reaffirm
publicly and unconditionally its recommendation to Targets stockholders that
they adopt this Agreement promptly after Acquirors request to do so (which
request may be made at any time), which public reaffirmation must also include
the unconditional rejection of any Takeover Proposal if so requested by
Acquiror.  7.2Effect of Termination.  (a)If this Agreement is validly terminated by Target
pursuant to Section 7.1(e) hereof, then Target shall pay to Acquiror,
in cash, a fee in the amount equal to Five Million Dollars ($5,000,000).  Any fee due under this Section 7.2(a) shall
be paid by wire transfer of same-day funds on the date of termination of this
Agreement.  (b)In the event of termination of this Agreement as
provided in Section 7.1, then (i) the provisions of this Section 7.2,
Section 7.3 and Section 10 shall survive any such termination, (ii) such
termination shall not relieve any party hereto from liability arising from
willful breach by such person of its representations or warranties under this
Agreement or from any breach of a covenant of such person under this Agreement,
if such breach occurred prior to such termination, (iii) each party hereto
will return all documents, work papers and other material of the other party or
parties relating to the transactions contemplated hereby including such
memoranda, notes, lists, records or other documents compiled or derived from
such material, whether so obtained before or after the execution hereof, to the
party furnishing the same and (iv) all information received by any party
hereto with respect to the business of the other parties hereto or their
affiliated companies shall remain subject to the terms of the Confidentiality
Agreement.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  48


7.3Costs and Expenses. 
Except as otherwise provided in this Agreement and whether or not the
transactions contemplated by this Agreement are consummated, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be borne by the person incurring such expenses.  The fees and expenses of the Escrow Agent and
the Payment Agent shall be borne and paid by Acquiror.  8.Escrow and
Indemnification  8.1Escrow Fund.  The Escrow Fund:  (A) shall be held by the Escrow Agent in
accordance with the terms of this Agreement and the Escrow Agreement; (B) shall
be held as an interest bearing trust fund and shall not be subject to any lien,
attachment, trustee process or other judicial process of any creditor of any
person; and (C) shall be held and disbursed solely for the purposes and in
accordance with the terms of this Agreement and the Escrow Agreement.  8.2Indemnification.  (a)Expiration of Representations, Warranties and
Covenants.  All representations and warranties (except
for those representations and warranties set forth in Section 2.6, the
Capitalization Certificate, Section 2.16 and Section 2.20, each of
which shall survive until the date on which the last Contingent Payment, if any,
is made) by Target in this Agreement shall expire on the one year anniversary
of the Closing Date (as applicable to any representation or warranty, the Representation
Termination Date); provided, however, that if at any time prior to the applicable Representation
Termination Date, Acquiror delivers to the Stockholders Committee a notice
stating the existence of an inaccuracy in any of the representations and
warranties made by Target (and setting forth in reasonable detail the basis for
Acquirors determination that such inaccuracy exists and the amount of the
Damages incurred by Acquiror as a result of such inaccuracy) and asserting a
claim for recovery under this Section 8.2 based on such inaccuracy, then
the claim asserted in such notice shall survive the applicable Representation
Termination Date until such time as such claim is fully and finally
resolved.  All obligations of the parties
under the covenants contained herein (including the covenants set forth in
Sections 4 and 5) shall expire at the Effective Time, except to the extent that
any such covenant expressly specifies that it is to be (or is otherwise
required by this Agreement to be) performed after the Effective Time; provided, however, that notwithstanding the expiration of
the parties obligations under such covenants, claims for breaches of any
covenants of Target prior to their expiration may be brought after the
Effective Time and until the date on which the last Contingent Payment, if any,
is made. Notwithstanding anything to the contrary expressed or implied in this Section 8.2(a),
nothing in this Section 8.2(a) shall limit Acquirors ability to
assert a Fraud Claim at any time prior to the date on which the last Contingent
Payment, if any, is paid.  (b)Indemnification.  (i)Subject to the limitations set forth in Sections 8.2(a) and 8.2(c) and
the other limitations set forth in this Agreement, the Escrow Fundhas been
deposited with the Escrow Agent for the purpose of, and all of the Escrow Fund
(as well as a portion of the Contingent Consideration subject to, and in
accordance with, the provisions of this Section 8) shall be available for,
indemnifying, defending, protecting and holding harmless Acquiror, Merger Sub,
the Surviving Corporation and each of the directors, officers, employees,  
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agents, representatives and
Affiliates of Acquiror, the Surviving Corporation and/or Merger Sub(all persons entitled to indemnification
under this Section 8.2(b)(i) being hereinafter referred to as the Acquiror
Indemnified Parties) from and against any and all Damages related to or
arising, directly or indirectly, out of or in connection with (A) any
inaccuracy in any representation or warranty of Target set forth in Section 2,
(B) the breach of any covenant of Target in this Agreement required to be
performed at or prior to the Effective Time, and (C)(1)any inaccuracy in any representation or
warranty of Target set forth inSection 2.16(p) (disregarding
for all purposes of this Section 8 any disclosures on the Target
Disclosure Schedule or otherwise with respect to the representations and
warranties made in such Section 2.16(p)), (2) the misclassification
of any employee as an independent contractor for Tax purposes, or (3) an
underpayment of sales or use Taxes (each a Specified Tax Claim). 
For purposes of this Section 8, Damages shall mean any
liabilities, losses, damages, penalties, fines, costs, Taxes or expenses,
including reasonable legal, expert and consultant fees and expenses, but
excluding any special, indirect, consequential, exemplary or punitive damages
that are not recoverable under Applicable Law by virtue of not being
foreseeable;provided that for purposes of computing
the amount of any Damages incurred by Acquiror there shall be deducted an
amount equal to the amount of any insurance proceeds, indemnification payments,
contribution payments, tax benefits, or reimbursements actually received (or,
in the case of tax benefits, actually receivable) by Acquiror or any of its
Affiliates in connection with such Damages or any of the circumstances giving
rise thereto.  The parties agree that any
indemnity payment made pursuant to this Section 8, including any amounts
released to Acquiror from the Escrow Fund or offset against any Contingent
Payment pursuant to this Section 8.2 shall be treated as a reduction in
the aggregate consideration paid in connection with the Merger for all income
Tax purposes.  (ii)Any payments made from the Escrow Fund pursuant to
this Section 8.2(b) shall automatically reduce on a pro-rata basis
the interest in the Merger Consideration of each Former Holder that would have
otherwise received such payments.  In the
event that the Escrow Fund is not sufficient to indemnify, defend, protect and
hold harmless Acquiror or any of the other Acquiror Indemnified Parties from
and against any and all Damages to which Acquiror or such other Acquiror
Indemnified Party shall be entitled to indemnification under this Section 8.2(b),
then Acquiror or such other Acquiror Indemnified Party, as the case may be,
shall also be entitled to additional indemnification pursuant to the set off
provisions of Section 9.3 hereof.  (c)Limitations of Liability.  (i)Subject to Section 8.2(c)(iv),
the right of Acquiror to be indemnified from the Escrow Fund and the Contingent
Payments pursuant to this Section 8 shall be the sole and exclusive remedy
with respect to any inaccuracy of any representation or warranty of Target
contained in, or any breach by Target of any covenant or agreement contained
in, this Agreement, or otherwise in connection with the transactions
contemplated by this Agreement.  Subject
to Section 8.2(c)(iv), no current or former stockholder, optionholder,
director, officer, employee, Affiliate or advisor of Target or party to the
Escrow Agreement shall have any personal or individual liability of any nature
to Acquiror, the Surviving Corporation or any Affiliate of Acquiror or the
Surviving Corporation with respect to any inaccuracy of any representation or
warranty contained in, or any breach of, this Agreement, or otherwise in
connection with the transactions contemplated by this Agreement.  The parties acknowledge that  
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(A) except as set forth
in the Letter of Transmittal, no current or former stockholder, director,
officer, employee, Affiliate or advisor of Target or any party to the Escrow
Agreement has made or is making any representations, warranties or commitments
whatsoever regarding the subject matter of this Agreement, express or implied, (B) except
as expressly provided in Section 2 or elsewhere in this Agreement, the
Target Disclosure Schedule, the Target Determination and the Capitalization
Certificate and other certificates delivered in connection with this Agreement
and the consummation of the transactions contemplated hereby, Target has not made
and is not making any representations, warranties or commitments whatsoever
regarding the subject matter of this Agreement, express or implied, and (C) except
as expressly provided in Section 2 or elsewhere in this Agreement, the
Target Disclosure Schedule, the Capitalization Certificate and other
certificates delivered in connection with this Agreement and the consummation
of the transactions contemplated hereby and the Letter of Transmittal, Acquiror
is not relying and has not relied on any representations, warranties or
commitments whatsoever regarding the subject matter of this Agreement, express
or implied.  (ii)Without limiting the effect
of any other limitation contained in this Section 8, the indemnification
provided for in this Section 8.2 shall not apply, and Acquiror shall not
be entitled to exercise any indemnification rights under this Agreement, except
to the extent that the aggregate amount of the Damages against which Acquiror
would otherwise be entitled to be indemnified under this Section 8.2
exceeds $500,000 (the Basket Amount). 
If the aggregate amount of such Damages exceeds the Basket Amount, then
Acquiror shall, subject to the other limitations contained herein (including,
without limitation, Section 9.3(a) hereof), be entitled to be
indemnified from the Escrow Fund and the Contingent Payments only against the
portion of such Damages in excess of the Basket Amount; provided, however,that
the limitations set forth in this Section 8.2(c)(ii) shall not be
applicable to any indemnification under this Section 8.2 with respect to
(and Acquiror shall be entitled to be indemnified under this Section 8.2
for any and all Damages, irrespective of the Basket Amount, related to or
arising, directly or indirectly, out of or in connection with) (A) any
breach of any covenant or agreement of Target or any of its Subsidiaries set
forth in this Agreement (a Covenant Claim), (B) any breach of
those representations and warranties set forth in Section 2.6 or the
Capitalization Certificate (a Capitalization Claim), (C) any
breach of those representations and warranties set forth in Section 2.20, (D) any
Fraud Claim (as defined in Section 8.2(c)(iv) below) or (E) any Specified Tax
Claim or any breach of the representations and warranties set forth in Section 2.16
or of the covenants set forth in Section 4.1(m) or Section 5.13
(each a Tax Claim).  (iii)Without limiting the effect
of any other limitation contained in this Section 8, the indemnification
provided for in this Section 8.2 shall not apply, and Acquiror shall not
be entitled to exercise any indemnification rights under this Agreement, with
respect to a Tax Claim, other than a Tax Claimrelated to or arising, directly or indirectly, out of
or in connection witha Specified Tax Claim (each such Tax Claim other
than a Specified Tax Claim, a Restricted Tax Claim), except to the
extent that the aggregate amount of the Damages against which Acquiror would
otherwise be entitled to be indemnified under this Section 8.2 with
respect to all Restricted Tax Claims exceeds $50,000 (the Tax Basket Amount).  If the aggregate amount of such Damages
exceeds the Tax Basket Amount, then Acquiror shall, subject to the other
limitations contained herein (including, without limitation,  
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Section 9.3(a) hereof),
be entitled to be indemnified from the Escrow Fund and the Contingent Payments
only against the portion of such Damages in excess of the Tax Basket Amount.  (iv)Nothing in this Section 8.2(c) shall
limit any remedy Acquiror may have against any person who committed fraud for
such fraud (a Fraud Claim), nor shall it limit any Partys remedies
under Section 10.6 hereof.  (d)Defense of Third-Party
Claims.  Promptly after Acquiror
obtains knowledge of any actual or possible claim, demand, suit, action,
arbitration, investigation, inquiry or proceeding that has been or may be
brought or asserted by a third party against Acquiror or any of Acquirors
Subsidiaries or other Affiliates and that may be subject to indemnification
hereunder (a Third-Party Claim), Acquiror shall promptly give notice
of such Third-Party Claim to the Stockholders Committee, stating the nature
and basis of such Third-Party Claim and the dollar amount of such Third-Party
Claim, to the extent known.  The
Stockholders Committee shall have the right at its election, exercisable at
any time prior to the 30thday after the Stockholders Committee obtains
knowledge of such Third Party Claim, to defend any Third-Party Claim (other than a Third-Party
Claim that, if decided in a manner adverse to Acquiror or any of the other
Acquiror Indemnified Parties, could reasonably result in either an obligation
to pay monetary damages in an amount greater than the aggregate cash amount
remaining in the Escrow Fund and available to pay such damages or would
materially adversely affect any of the Acquiror Indemnified Parties or their
respective businesses), in which case: (i) Stockholders Committee shall
diligently and in good faith defend such Third-Party Claim; (ii) the
attorneysfees of counsel reasonably acceptable to Acquiror (approval of such
counsel not to be unreasonably withheld), other professionals and experts
fees and court or arbitration costs incurred by the Stockholders Committee in
connection with defending such Third-Party Claim shall be payable from the
Escrow Fund, without the requirement of any consent or approval by Acquiror; (iii) Acquiror
shall not be entitled to be indemnified (from the Escrow Fund or otherwise) for
any costs or expenses incurred by Acquiror in connection with the defense of
such Third-Party Claim; (iv) Acquiror shall be entitled to monitor such
defense at its expense; (v) Acquiror shall make available to the
Stockholders Committee all books, records and other documents and materials
that are under the direct or indirect control of Acquiror or any of its
Subsidiaries or other Affiliates and that the Stockholders Committee considers
necessary or desirable for the defense of such Third-Party Claim; (vi) Acquiror
shall execute such documents and take such other actions as the Stockholders
Committee may reasonably request for the purpose of facilitating the defense
of, or any settlement, compromise or adjustment relating to, such Third-Party
Claim; (vii) Acquiror shall otherwise fully cooperate as reasonably
requested by the Stockholders Committee in the defense of such Third-Party
Claim; (viii) Acquiror shall not admit any liability with respect to such
Third-Party Claim; and (ix) the Stockholders Committee shall not enter
into any settlement agreement providing for the settlement of such Third-Party
Claim without the prior written consent of Acquiror (which consent shall not beunreasonably
withheld) if such settlement agreement imposes on Acquiror or any of its
Subsidiaries or other Affiliates any obligation, other than an obligation to
pay monetary damages in an amount less than the aggregate cash amount remaining
in the Escrow Fund and available to pay such damages.  If the Stockholders Committee elects not to
defend such Third-Party Claim or otherwise fails or is unable or unwilling to
defend such Third Party Claim,then Acquiror shall have
the right at its election, at any time, to defend such Third-Party Claim, in which case the provisions
of clauses (ii)-(viii) set forth above in this Section 8.2(d)  
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shall not be applicable to such Third Party Claim and
Acquiror shall have the right to settle and compromise such Third-Party Claim, provided
that Acquirorshall have no right to seek indemnification under
this Section 8 in respect of such Third-Party Claim for any settlement
entered into without the prior written consent of the Stockholders Committee,
which consent shall not be unreasonably withheld.  (e)Subrogation.  To the extent
that Acquiror obtains indemnification pursuant to this Section 8 with respect
to any Damages, the Stockholders Committee shall be entitled to exercise, and
shall be subrogated to, any rights and remedies (including rights of indemnity,
rights of contribution and other rights of recovery) that Acquiror or any of
Acquirors Subsidiaries or other Affiliates may have against any other person
with respect to such Damages. Acquiror shall take such actions as the
Stockholders Committee may reasonably request for the purpose of enabling the
Stockholders Committee to perfect or exercise the right of subrogation of the
Stockholders Committee under this Section 8.2(e).  (f)Payment of Indemnification Claims Made by Acquiror
Indemnified Parties.  In the event of any claim for indemnification
pursuant to Section 8.2 hereof, the Acquiror Indemnified Party will notify
the Stockholders Committee and, if applicable, the Escrow Agent in writing
with reasonable specificity of the amount and circumstances surrounding such
claim, provided, however, that failure to give such notice shall not affect
such Acquiror Indemnified Partys right to indemnification hereunder, except to
the extent that the indemnifying party is prejudiced thereby.  If within thirty (30) days of receipt by the
Stockholders Committee of any such notice of any claim for indemnification the
Stockholders Committee has not contested such claim in writing to Acquiror and
the Escrow Agent, the full amount thereof shall be paid to the Acquiror
Indemnified Party out of the Escrow Fund to the extent available and subject to
the limitations set forth in Section 8.2(c) hereof, within two (2) days
after the expiration of such 30-day period. In the event the Stockholders
Committee objects to the payment of any such claim, the amount of any claim not
contested shall be paid to the Acquiror and any amount so contested shall
remain with the Escrow Agent until the settlement or final adjudication of the
dispute as evidenced by the final order of a court of competent jurisdiction or
an agreement in writing signed by the Stockholders Committee and the Acquiror.
To the extent the Escrow Fund is insufficient or not available to satisfy the
full amount of such claim for indemnification, Acquiror shall be entitled to
set off, and accordingly reduce, each Contingent Paymentthat
Acquiror would otherwise be required to make pursuant to Section 9 hereof,
subject to the limitations set forth in Section 8.2(c) hereof and Section 9.3(a).  8.3Stockholders Committee.  (a)By virtue of the adoption of this Agreement by Targets
stockholders, and without further action of any Target stockholder,
optionholder, or warrantholder, each Former Holder shall be deemed to have
irrevocably constituted and appointed Eckard Weber and Dennis Podlesak (and by
execution of this Agreement they hereby accept such appointment), together, as
agents and attorneys-in-fact (Stockholders Committee) for and on
behalf of the Former Holders, with full power of substitution, to act in the
name, place and stead of each Former Holder with respect to this Section 8,
the Payment Agent Agreement and the Escrow Agreement and the taking by the
Stockholders Committee of any and all actions and the making of any decisions
required or permitted to be taken by the Stockholders  
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Committee under this Agreement, the Payment Agent
Agreement or the Escrow Agreement, including the exercise of the power to: (i) give
and receive notices and communications under this Section 8, the Payment
Agent Agreement or the Escrow Agreement; (ii) authorize delivery to
Acquiror of cash from the Escrow Fund in satisfaction of claims for
indemnification made by Acquiror under this Section 8; (iii) object
to claims for indemnification made by Acquiror under this Section 8; (iv) agree
to, negotiate, enter into settlements and compromises of, and comply with
orders of courts with respect to claims for indemnification made by Acquiror
under this Section 8; and (v) take all actions necessary or
appropriate in the good faith judgment of the Stockholders Committee for the
accomplishment of the foregoing.  The
power of attorney granted in this Section 8.3 is coupled with an interest
and is irrevocable, may be delegated by the Stockholders Committee and shall
survive the death or incapacity of any Former Holder.  The identity of members of the Stockholders
Committee and the terms of the agency may be changed, and successor members of
the Stockholders Committee may be appointed, from time to time (including in
the event of the death, disability or other incapacity of a member of the
Stockholders Committee) by Former Holders whose aggregate Pro Rata Portions
exceed 50%, and any such successor shall succeed such member of the
Stockholders Committee as a member of the Stockholders Committee
hereunder.  No bond shall be required of
the Stockholders Committee, and the Stockholders Committee shall receive no
compensation for their services.  (b)The Stockholders Committee,
both as a group and its individual members, shall not be liable for any
liability, loss, damage, penalty, fine, cost or expense incurred by the
Stockholders Committee while acting in good faith and arising out of or in
connection with the acceptance or administration of their duties hereunder (it
being understood that any act done or omitted pursuant to the advice of counsel
shall be conclusive evidence of such good faith).Each Former Holder (in the same proportion as the
portion of the Upfront Payment to which such Former Holder is entitled as of
the Effective Time bears to the portion of the Upfront Payment to which all
Former Holders collectively are entitled as of the Effective Time) agrees to
indemnify the Stockholders Committee against liability for any action taken or
not taken by him in his capacity as such agent. The Committee Reimbursement
Amount, any Contingent Payment and any amounts of the Escrow Fund being
released to the Former Holders pursuant to this Agreement and the Escrow
Agreement (prior to distribution to the Former Holders) shall be available to
indemnify andhold the Stockholders Committee, and any member
thereof, harmless against any liability, loss, damage, penalty, fine, cost or
expense incurred by the Stockholders Committee without bad faith on the part
of the Stockholders Committee and arising out of or in connection with the
acceptance or administration of their duties under this Agreement and the
Escrow Agreement.  The Stockholders
Committee shall be entitled to recover any out-of-pocket costs and expenses (Committee
Reimbursable Expenses) reasonably incurred by the Stockholders Committee
in connection with actions taken by the Stockholders Committee pursuant to the
terms of this Agreement or the Escrow Agreement (including the hiring of legal
counsel and the incurring of legal fees and costs) from theCommittee Reimbursement Amount, any
Contingent Payment and any amounts of the Escrow Fund being released to the
Former Holders pursuant to this Agreement and the Escrow Agreement(prior to distribution
to the Former Holders), without the requirement of any consent or approval by
Acquiror.  (c)From and after the Effective
Time, Acquiror shall cause the Surviving Corporation to provide the
Stockholders Committee with reasonable access to  
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information about the
Surviving Corporation and the reasonable assistance of the officers and
employees of Acquiror and the Surviving Corporation for purposes of performing
their duties and exercising their rights under this Agreement, provided
that the Stockholders Committee shallenter into a confidentiality and nondisclosure
agreement with Acquiror and the Surviving Corporation on terms satisfactory to
Acquiror and the Stockholders Committee pursuant to which the Stockholders
Committee shall agree totreat confidentially any nonpublic
information he receives from Acquiror regarding the Acquiror, the Surviving
Corporation or any of their respective officers, directors, employees or
Affiliates (except in connection with the performance by the Stockholders
Committee of their duties or the exercise of the Stockholder Committees
rights under this Agreement).  8.4Actions of the Stockholders Committee. 
From and after the Effective Time, a decision, act, consent or
instruction of the Stockholders Committee shall constitute a decision of all
Former Holders and shall be final, binding and conclusive upon each Former
Holders, and the Escrow Agent and Acquiror may rely upon any decision, act,
consent or instruction of the Stockholders Committee as being the decision,
act, consent or instruction of each Former Holders.  Acquiror and Surviving Corporation are hereby
relieved from any liability to any person for any acts done by Stockholders
Committee and any acts done by Acquiror or Surviving Corporation in accordance
with any such decision, act, consent or instruction of the Stockholders
Committee.  9.Contingent Payments; Diligence Requirements.  9.1Milestones.  As part of
the consideration being paid in respect of the shares of Target Capital Stock,
Target Options and Target Warrants outstanding immediately prior to the
Effective Time pursuant to the terms of this Agreement and the Payment Agent
Agreement, Acquiror shall pay each of the following Contingent Payments upon
the []*occurrence
of each of the following Milestone events to which such Contingent Payments
relates (whether achieved by Acquiror, the Surviving Corporation or any of
their Affiliates or licensees):  (a)Promptly (and in any event within []*Business Days thereafter) upon the
occurrence of the Completion of Current Phase II Study Milestone, Acquiror
shall []*and,
within 30 days following the occurrence of the Completion of Current Phase II
Study Milestone, Acquiror shall pay or cause to be paid to the Payment Agent
for the benefit of the Former Holdersin their Pro
Rata Portions an amount equal to the Completion of Current Phase II Study
Contingent Payment.  (b)If and only if the
Commencement of Pivotal Study - 1st Target Combo Product Indication Milestone
has not occurred previously, promptly (and in any event within []* Business
Days thereafter) upon the occurrence of theCommencement of Pivotal Study - 1stOther Product
Indication Milestone,Acquiror shall []* and, within 30 days following
the occurrence of theCommencement
of Pivotal Study - 1stOther Product Indication Milestone,Acquiror shall
pay or cause to be paid to the Payment Agent for the benefit of the Former
Holdersin their Pro Rata Portions an amount
equal to theCommencement of Pivotal Study - 1stOther Product
Indication Contingent Payment.  
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(c)Promptly (and in any event
within []* Business Days thereafter) upon the occurrence of theCommencement of Pivotal Study - 1stTarget Combo
Product Indication Milestone,Acquiror shall []* and, within 30 days
following the occurrence of theCommencement of Pivotal Study - 1stTarget Combo
Product Indication Milestone,Acquiror shall pay or cause
to be paid to the Payment Agent for the benefit of the Former Holdersin their Pro Rata Portions (1), in the event that theCommencement of Pivotal Study - 1stOther Product
Indication Contingent Paymenthas not been made previously pursuant to Section 9.1(b),
an amount equal to theCommencement
of Pivotal Study - 1stTarget Combo Product Indication Contingent
Payment or (2), in the event that theCommencement of Pivotal Study - 1stOther Product
Indication Contingent Paymenthas been made previously pursuant to Section 9.1(b),
an amount equal to (A) theCommencement of Pivotal Study - 1stTarget Combo
Product Indication Contingent Payment minus (B) the
Commencement of Pivotal Study - 1stOther Product Indication Contingent Payment.  (d)If and only if the
Commencement of Pivotal Study - 2nd Target Combo Product Indication Milestone
has not occurred previously, promptly (and in any event within []* Business
Days thereafter) upon the occurrence of theCommencement of Pivotal Study - 2nd Other Product
Indication Milestone,Acquiror shall []* and, within 30 days following
the occurrence of theCommencement
of Pivotal Study - 2nd Other Product Indication Milestone,Acquiror shall
pay or cause to be paid to the Payment Agent for the benefit of the Former
Holdersin their Pro Rata Portions an amount
equal to theCommencement
of Pivotal Study - 2nd Other Product Indication Contingent Payment.  (e)Promptly (and in any event
within []* Business Days thereafter) upon the occurrence of theCommencement of Pivotal Study - 2ndTarget Combo
Product Indication Milestone,Acquiror shall []*and, within 30 days following
the occurrence of theCommencement
of Pivotal Study - 2ndTarget Combo Product Indication Milestone, Acquiror
shall pay or cause to be paid to the Payment Agent for the benefit of the
Former Holdersin their Pro Rata Portions (1),
in the event that theCommencement
of Pivotal Study - 2nd Other Product Indication Contingent Paymenthas not been
made previously pursuant to Section 9.1(d), an amount equal to theCommencement of Pivotal Study - 2ndTarget Combo
Product Indication Contingent Paymentor (2)in the event that theCommencement of Pivotal Study - 2nd Other
Product Indication Contingent Paymenthas been made previously
pursuant to Section 9.1(d), an amount equal to (A) theCommencement of Pivotal Study - 2nd
Target Combo Product Indication Contingent Payment minus
(B) Commencement of Pivotal Study - 2nd Other Product Indication
Contingent Payment.  (f)If and only if the
Completion of Phase II Target Combo Product Pneumonia Study Milestone has not
occurred previously, promptly (and in any event within []* Business Days
thereafter) upon the occurrence of theCompletion of Phase II Other Product Pneumonia Study
Milestone,Acquiror shall []*and, within 30 days following the occurrence of theCompletion of Phase II Other Product
Pneumonia Study Milestone, Acquiror shall pay or cause to be paid to
the Payment Agent for the benefit of the Former Holdersin
their Pro Rata Portions an amount equal to theCompletion of Phase II Other Product Pneumonia Study
Contingent Payment.  
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(g)Promptly (and in any event within []*Business Days thereafter) upon the
occurrence of the Completion of Phase II Target Combo Product Pneumonia Study
Milestone, Acquiror shall []*and, within 30 days following the occurrence of the
Completion of Phase II Target Combo Product Pneumonia Study Milestone, Acquiror
shall pay or cause to be paid to the Payment Agent for the benefit of the
Former Holdersin their Pro Rata Portions (1), in
the event that the Completion of Phase II Other Product Pneumonia Study
Milestone has not been made previously pursuant to Section 9.1(f), an
amount equal to the Completion of Phase II Target Combo Product Pneumonia Study
Contingent Payment or (2) in the event that the Completion of Phase II
Other Product Pneumonia Study Contingent Payment has been made previously
pursuant to Section 9.1(f), an amount equal to (A) the Completion of
Phase II Target Combo Product Pneumonia Study Contingent Payment minus (B) the Completion of
Phase II Other Product Pneumonia Study Contingent Payment.  (h)If and only if the NDA
Acceptance Target Combo Product Milestone has not occurred previously, promptly
(and in any event within []* Business Days thereafter) upon the occurrence of
theNDA Acceptance
Other Product Milestone,Acquiror shall []*and, within 30 days following
the occurrence of theNDA
Acceptance Other Product Milestone, Acquiror shall pay or
cause to be paid to the Payment Agent for the benefit of the Former Holdersin their Pro Rata Portions an amount equal to theNDA Acceptance Other Product Contingent
Payment.  (i)Promptly (and in any event
within []* Business Days thereafter) upon the occurrence of the NDA Acceptance
Target Combo Product Milestone, Acquiror shall []* and, within 30 days
following the occurrence of the NDA Acceptance Target Combo Product Milestone,
Acquiror shall pay or cause to be paid to the Payment Agentfor the benefit of the Former Holdersin their Pro Rata Portions (1), in the event that the NDA
Acceptance Other Product Milestone has not been made previously pursuant to Section 9.1(h),
an amount equal to the NDA Acceptance Target Combo Product Contingent Payment
or (2) in the event that the NDA Acceptance Other Product Contingent
Payment has been made previously pursuant to Section 9.1(h), an amount
equal to (A) the NDA Acceptance Target Combo Product Contingent Payment minus (B) the NDA
Acceptance Other Product Contingent Payment.  (j)If and only if the First
Commercial Sale U.S. Target Combo Product Milestone has not occurred
previously, promptly (and in any event within []* Business Days thereafter)
upon the occurrence of the First Commercial Sale U.S. Other Product Milestone,
Acquiror shall []* and, within 30 days following the occurrence of the First
Commercial Sale U.S. Other Product Milestone, Acquiror shall pay or cause to be
paid to the Payment Agent for the benefit of the Former Holdersin their Pro Rata Portions an amount equal to the First
Commercial Sale U.S. Other Product Contingent Payment.  (k)Promptly (and in any event
within []* Business Days thereafter) upon the occurrence of the First
Commercial Sale U.S. Target Combo Product Milestone, Acquiror shall []* and,
within 30 days following the occurrence of the First Commercial Sale U.S.
Target Combo Product Milestone, Acquiror shall pay or cause to be paid to the
Payment Agentfor the
benefit of the Former Holdersin their Pro
Rata Portions (1), in the event that the First Commercial Sale U.S. Other
Product Milestone has not been made previously pursuant to Section 9.1(j),
an amount equal to the First Commercial Sale U.S. Target Combo Product  
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Contingent Payment or (2) in the event that the
First Commercial Sale U.S. Other Product Contingent Payment has been made
previously pursuant to Section 9.1(j), an amount equal to (A) the
First Commercial Sale U.S. Target Combo Product Contingent Payment minus (B) the First
Commercial Sale U.S. Other Product Contingent Payment.  (l)If and only if the First
Commercial Sale E.U. Target Combo Product Milestone has not occurred
previously, promptly (and in any event within []* Business Days thereafter)
upon the occurrence of the First Commercial Sale E.U. Other Product Milestone,
Acquiror shall []* and, within 30 days following the occurrence of the First
Commercial Sale E.U. Other Product Milestone, Acquiror shall pay or cause to be
paid to the Payment Agent for the benefit of the Former Holdersin their Pro Rata Portions an amount equal to the First
Commercial Sale E.U. Other Product Contingent Payment.  (m)Promptly (and in any event
within []* Business Days thereafter) upon the occurrence of the First Commercial
Sale E.U. Target Combo Product Milestone, Acquiror shall []* and, within 30
days following the occurrence of the First Commercial Sale E.U. Target Combo
Product Milestone, Acquiror shall pay or cause to be paid to the Payment Agentfor the benefit of the Former Holdersin their Pro Rata Portions (1), in the event that the First
Commercial Sale E.U. Other Product Milestone has not been made previously
pursuant to Section 9.1(l), an amount equal to the First Commercial Sale
E.U. Target Combo Product Contingent Payment or (2) in the event that the
First Commercial Sale E.U. Other Product Contingent Payment has been made
previously pursuant to Section 9.1(l), an amount equal to (A) the
First Commercial Sale E.U. Target Combo Product Contingent Payment minus (B) the First
Commercial Sale E.U. Other Product Contingent Payment.  (n)Within []* days after the
end of the fiscal quarter in any calendar year in which the First Sales
Milestone is met, Acquiror shall []* and, within []* days following the []*,
Acquiror shall pay or cause to be paid to the Payment Agent for the benefit of
the Former Holdersin their Pro
Rata Portions an amount equal to the First Sales Contingent Payment.  (o)Within []* days after the
end of the fiscal quarter in any calendar year in which the Second Sales
Milestone is met, Acquiror shall []* and, within []* days following the []*,
Acquiror shall pay or cause to be paid to the Payment Agent for the benefit of
the Former Holdersin their Pro
Rata Portions an amount equal to the Second Sales Contingent Payment.  For the avoidance of doubt, the First Sales
Milestone and the Second Sales Milestone may occur in the same calendar year,
[]*.  9.2Payment Procedures.  (a)Each Contingent Payment shall be paid in U.S. Dollars
by wire transfer of immediately available funds into an account designated in
writing by the Payment Agent pursuant to the Payment Agent Agreement.  Each Contingent Payment shall be
non-refundable and non-creditable against any other payments due under this
Agreement, but shall be subject to off set as set forth in Section 8, Section 9.3
and elsewhere in this Agreement. Each
Contingent Payment shall only be []*.  
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(b)As promptly as practicable
following receipt by the Payment Agent of each Contingent Payment, if any,
pursuant to Section 9.1, the Payment Agent shall pay pursuant to the
Payment Agent Agreement to each Former Holder such persons Pro Rata Portion of
such Contingent Payment, as applicable. 
All payments shall be made by wire transfer of immediately available
funds (or by check, as reasonably directed by such person).  The right of the Former Holders to receive
their respective Pro Rata Portions of the Contingent Payments shall not be
evidenced by any form of certificate or instrument.  (c)If any Milestone occurs
prior to the Effective Time, (1) Acquiror shall not be obligated to make
any Contingent Payment unless the Effective Time occurs, and (2) the
related Contingent Payment will be payable at the Effective Time.  (d)No interest shall accrue on any Contingent Payments,
if any, to be paid hereunder; provided such Contingent Payments are timely made
in accordance with the terms of this Agreement. 
Interest on Contingent Payments not timely made in accordance with the
terms hereof will accrue at an annual rate equal to the prime rate published in
The Wall Street Journal (or a successor publication in the event The
Wall Street Journal is no longer available) on the applicable due date of the
late payment[]*.  9.3Adjustments.  (a)Any Contingent Payment that
is payable following the completion of a Milestone (i) shall be reduced by
the aggregate amount of any claim for indemnification or reimbursement by any
Acquiror Indemnified Party pursuant to Section 8 of this Agreement not
previously paid from or reserved against the Initial Escrow Fund (each an Acquiror
Set-Off Claim), provided, however, that,
notwithstanding the foregoing, such Contingent Payment shall not be reduced
pursuant to the foregoing provisions of this Section 9.3(a) by more
than an amount equal to the sum of []* of such Contingent Payment, plus the Special
Set Off Amount (as defined below), except that the limitation set forth in this
proviso shall not apply to (A) any Covenant Claim or (B) any Fraud
Claim, and (ii) shall be reduced by the aggregate amount of any Committee
Reimbursable Expenses payable under Section 8.3 to the extent not
previously paid from the Upfront Payment, the Committee Reimbursement Amount or
any prior Contingent Payment.  The term Special
Set Off Amount shall mean (A) []*, minus (B) the aggregate amount
of all Special Tax Claims actually paid from the Escrow Fund or set off against
any prior Contingent Payment, plus (C) an amount equal to all
Acquiror Set-Off Claims (other than Special Tax Claims), provided that such
amount shall in no event exceed the aggregate amount of Special Tax Claims paid
out of the Initial Escrow Fund.For the avoidance of doubt, the Special Set Off Amount
shall only be available for payment of any Special Tax Claims and any Acquiror
Set-Off Claim described in clause (C) above.  (b)For the avoidance of doubt
to the extent that the amount of a particular Contingent Payment that is
available to satisfy any Acquiror Set-Off Claim is insufficient to satisfy in
full such Acquiror Set-Off Claim, the unsatisfied portion of such Acquiror
Set-Off Claim shall be carried forward and deducted from the portions of the
next Contingent Payments that are available to satisfy such Acquiror Set-Off
Claim in the manner provided herein.  
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(c)Within []* Business Days
following the final determination of all outstanding Acquiror Set-Off Claims
and other claims for which a Contingent Payment was reduced pursuant to Section 9.3(a),
Acquiror shall pay or cause to be paid to the Payment Agent for distribution to
the Former Holders, the net amount of such Contingent Payment (after giving
effect to all such reductions pursuant to Section 9.3(a) hereof) in
the manner set forth in Section 9.2.  (d)Subject to the provisions of Section 8 of this
Agreement: (i) the Stockholders Committee shall have []*Business Days from the date of payment
of any Contingent Payment that was reduced by an Acquiror Set-Off Claim to
accept or object to all or a portion of such Acquiror Set-Off Claim; (ii) in
the event that the Stockholders Committee, in good faith, disagrees with all
or a portion of such Acquiror Set-Off Claim, then the Stockholders Committee
shall deliver to Acquiror, by no later than the expiration of such[]*Business Day period, written notice of
such disagreement, which notice shall include in reasonable detail its reasons
for such disagreement; (iii) if the Stockholders Committee delivers a
timely notice, the Stockholders Committee and Acquiror shall have []*Business Days from the date of delivery
of the notice to resolve all disputes set forth in the notice; and (iv) if
the Stockholders Committee fails to dispute such Acquiror Set-Off Claim or any
portion thereof in accordance with the foregoing provisions, then such Acquiror
Set-Off Claim or any portion thereof shall be deemed to be finally determined
for all purposes under this Agreement.  9.4Development Diligence
Requirements.  (a)Following the Closing Date, the Stockholders
Committee shall appoint one (1) person as its representative (the Stockholder
Representative) to discuss product research, development, regulatory and
marketing activities relating to the Products pursuant to Section 9.4,
9.5, 9.6 and 9.7.  The Stockholder
Representative initially shall be Eckard Weber, M.D..  In the event that any person appointed as the
Stockholder Representative becomes unable or unwilling to serve in the capacity
provided in this Section 9, the Stockholders Committee may select another
person to succeed the Stockholder Representative in such role.  (b)Acquiror shall prepare and deliver to the Stockholder
Representative within []*days after the Closing Date a draft of the development plan in form,
detail and substance []*.  (c)Following the delivery by the Acquiror of such draft
development plan in accordance with Section 9.4(b) above, the
Stockholder Representative shall have the opportunity, within []*days following such delivery, to review
and provide comments to Acquiror on such draft development plan. After good
faith consideration of such comments by the Acquiror, the Acquiror may in its
discretion revise such draft development plan and deliver such development plan
in final form to the Stockholder Representative. The development plan delivered
in final form pursuant to this Section 9.4(c), as amended, modified, changed
or updated from time to time pursuant to Section 9.4(d), shall be referred
to as the Development Plan.  (d)The Acquiror may, at any time and from time to time,
amend, modify, change or update the Development Plan, as in effect immediately
prior to such amendment, modification, change or update, including changes to
any of the []*in good faith  
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and consistent with []*. 
On []*, or
following any []*, Acquiror shall deliver to
the Stockholder Representative a copy of the Development Plan as then in
effect.  (e)From and after the Closing Date
and subject to the provisions of Section 9.4(c) and (d) above,
the Acquirorshall []*perform the development activities []*.  (f)In the event that the Acquiror, despite complying with
its obligations under Section 9.4(e) hereof, is not able to or does
not achieve a particular Development Milestone, then the Acquiror shall not be
obligated to pay the Contingent Payment relating to such Development Milestone.  (g)From and after the
Closing Date,Acquiror shall (and shall cause its licensees to) provide
an annual written report to the Stockholder Representative, on or before []*,of all []*.  (h)The obligations of the Acquiror under
Sections 9.4(d), 9.4(e) and 9.4(g) shall terminate on the earlier of (i) the
date on which, consistent with the obligations of the Acquiror under Section 9.4(e),
[]*and (ii) the
date on which []*.  9.5Commercialization Diligence
Requirements.  (a)The Acquiror shall []*launch and commercialize any Product []*. The obligations of the Acquiror under
this Section 9.5(a) shall terminate on the earlier of (i) the
date on which, consistent with the obligations of the Acquiror under this Section 9.5(a),
[]*and (ii) the
date on which []*.  (b)In the event that the Acquiror, complying with its
obligations under Section 9.5(a) hereof, is not able to or does not
achieve a Commercialization Milestone (as defined below in this Section 9.5(b)),
then the Acquiror shall not be obligated to pay the Contingent Payment relating
to such Commercialization Milestone.  For
purposes of this Agreement, the term Commercialization Milestones
shall mean, collectively, the First Commercial Sale U.S. Target Combo Product
Milestone, the First Commercial Sale E.U. Target Combo Product Milestone, the
First Sales Milestone and the Second Sales Milestone, and the term Commercialization
Milestone shall mean any of the Commercialization Milestones.  (c)On []*after the Closing Date and []*. 
The obligations of the Acquiror under this Section 9.5(c) shall
terminate on the earlier of (i) the date on which, consistent with the
obligations of the Acquiror under Section 9.5(a), the Acquiror is not []*and (ii) the date on which []*.  9.6Other Ongoing Covenants.  Acquiror and
the Surviving Corporation covenant and agree as follows:  (a)The Acquiror may not transfer,
sell, license, convey or dispose of theProductsor
commercial rights in and to the Products except to Affiliates and except to
third party transferees, assignees or licensees that expressly agree to be
bound by the obligations with respect to the Contingent Payments and all of the
Acquirors other obligations as set forth in this  
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Section 9,
and Acquiror remains responsible for the payment of the Contingent Payments in
the event the transferees orassigneesfail to make any such
payments when due.  (b)Within 15 days after the receipt of any []*from Acquiror pursuant to Section 9.4(g) or
9.5(c), at the request of the Stockholder Representative, the Acquiror shall []*.  (c)The Stockholders Committee shall have the right to
cause an independent, certified public accountant reasonably acceptable to the
Acquiror to audit such records to confirm the correctness of any report or
payment made or to be made under this Agreement, including annual Net Sales of
any Products.  Such audits may be
exercised during normal business hours upon reasonable prior written notice to
the Acquiror only by an independent certified public accountant selected by the
Stockholders Committee who does not currently serve as the independent auditor
of the Acquiror.  The Former Holders
shall bear the full cost of such audit unless such audit discloses that a
Milestone has been satisfied and Acquiror failed to []*pay the Contingent Payment when due, in
which case, Acquiror shall bear the full cost of such audit and shall promptly
remit the Contingent Payment.  (d)If Acquiror transfers its rights to research, develop,
manufacture and/or commercialize any Product to any of its Affiliates,
transferees, assignees or licensees, Acquiror shall ensure that such Affiliate,
transferee, assignee or licensee is contractually obligated to the same
diligence obligations to which Acquiror is obligated hereunder with respect to
such activities relating to such Product, and that for this purpose, in
applying the definition of the term []* to such Affiliates, transferees,
assignees or licensees diligence obligations, any reference to Acquiror in
the definition of []* shall be replaced with a reference to such Affiliate, transferee,
assignee or licensee.  Notwithstanding
the foregoing, if any such rights are transferred to an Affiliate who is
controlled by Acquiror, then such references to Acquiror in the definition of
the term []* shall
continue to apply to Acquiror.  9.7Dispute Resolution for Section 9 Obligations.  (a)If within []* days following
delivery of []*, the Stockholder Representative in good faith
believes that the Acquiror is not using []*as required by
this Section 9, the Stockholder Representative shall provide the Acquiror
with written notice thereof specifying the reasons for such belief and a
detailed description of the activities performed or not performed forming the
basis for such belief (a Diligence Breach Notice),  If the Stockholder Representative does not deliver
a Diligence Breach Notice within such []*-day period,
Acquiror shall be deemed to have met its obligation to use []*hereunder through
the dates covered by any []*pursuant to the foregoing
sentence and the Stockholders Committee shall not be permitted to deliver a
Diligence Breach Notice with respect to activities conducted, or otherwise
claim that Acquiror failed to use []*, during the time
period covered by []*and all times prior thereto. Upon receipt of a
Diligence Breach Notice, the Acquiror will have []*days from the date
of such Diligence Breach Notice in which to reasonably demonstrate to the
Stockholder Representative that the Acquiror is meeting such diligence
obligation.During
such []*-day
period, the Acquiror may submit to the Stockholder Representative an amended []*to address any breach or alleged breach
of its obligations to use []*pursuant to this Section 9. If the Stockholder
Representative continues to dispute whether or not Acquiror was using []*pursuant to this Section 9 following  
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the delivery of []*[]*, as the case may be, or, the expiration
of such []*-day period
if no []*, the
Acquiror and the Stockholder Representative shall attempt for at least []*days, in good faith, to resolve any
dispute as to the Acquirors use of []*hereunder. Acquiror shall reasonably
respond to any requests for information by the Stockholder Representative that
could be reasonably expected to assist in evaluating such determination, and
the Stockholder Representative shall consider in good faith any further []*, as the case may be, presented to it by
Acquiror designed to address any breach or alleged breach of Acquirors
obligations to use []*pursuant to this Section 9.  (b)If at the end of the []*day period set forth in 9.7(a) (after
adding together the two[]*-day periods referred to therein), the Acquiror and
the Stockholder Representative shall not have reached agreement with respect to
the activities that are the subject of the applicable Diligence Breach Notice,
such dispute shall be determined through arbitration in New York, New
York.  The arbitration shall be conducted
in the English language and in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. 
Unless the Acquiror and the Stockholders Committee agree otherwise, the
[]*shall
consist of []*.  If []*is not appointed within the time
prescribed above, then the American Arbitration Association shall appoint []*. 
[]*shall []*with knowledge of the life sciences
industry and at least 10 years of experience in the area(s) of drug
development, process sciences, manufacturing, regulatory affairs, product
development and/or product commercialization, as applicable to the subject
matter of the dispute. The parties shall cooperate in conducting the arbitration
in an expedited manner, and the parties will use their reasonable best efforts
to cause the []*to render a final award no later than []*months after the appointment of the []*. In all arbitration proceedings
conducted under this Section 9.7(b), the Stockholders Committee shall
have the burden of proof with respect to whether or not Acquiror complied with
is obligations to use []*hereunder. A record shall be made of all hearings and all evidence
(including exhibits, deposition transcripts, affidavits admitted into evidence)
in the arbitration proceeding.  The []*required to reach a decision in
compliance with the applicable law and must render a written decision setting
forth the factual and legal bases of the award. 
Each party shall bear its own attorneys fees, costs and disbursements
incurred in the arbitration and in preparation for the arbitration.  The costs of the []*and any fees of the arbitration
institution shall be equally divided between the Parties.  Unless a timely appeal is taken under Section 9.7(c),
any court of competent jurisdiction may enter judgment on the award.  (c)An appeal may be taken under the Arbitration Appeal
Procedure of the International Institute for Conflict Prevention and Resolution
(the Appeal Procedure) from any final award of the []*in any arbitration under Section 9.7(b).  The person seeking to appeal must commence
the appeal within []*days after its receipt of the original []*final award.  The appeal shall be conducted in the English
language, and, unless otherwise agreed by the Acquiror and the Stockholders
Committee and the appeal tribunal, the appeal shall be conducted at the place
of the original arbitration.  The appeal
[]*shall
consist of []*, selected as specified in the Appeal Procedure, who shall be retired
judges or active or retired attorneys with substantial experience litigating
commercial disputes.  Each person shall
bear its own attorneys fees, costs and disbursements incurred in the
arbitration and in preparation for the arbitration.  The costs of []*and any fees of the arbitration
institution shall be equally divided between the Acquiror and the Stockholders
Committee.  The award of the original []*or of the []*shall become final in  
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the manner specified in the Appeal Procedure, and any
court of competent jurisdiction may enter judgment on such award.  10.General Provisions.  10.1Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed duly delivered (i) upon
receipt if delivered personally, (ii) one Business Day after being sent by
commercial overnight courier service or (iii) upon transmission if sent
via facsimile with confirmation of receipt to the parties at the following
addresses (or at such other address for a party hereto as shall be specified
upon like notice):  (a)if to Acquiror or Merger Sub, to:  Cubist Pharmaceuticals, Inc. 65 Hayden Avenue Lexington, Massachusetts
02421 Attention:  Chief Executive Officer Telecopier No.: 781-861-0566  with a copy sent at the same
time and by the same means to:  Cubist Pharmaceuticals, Inc. 65 Hayden Avenue Lexington, Massachusetts
02421 Attention:  General Counsel Telecopier No.: 781-861-0566  and  Bingham
McCutchen LLP 150
Federal Street Boston,
Massachusetts  02110 Attention:  Julio
E. Vega, Esq. Matthew J. Cushing, Esq. Telecopier
No.: (617) 951-8736  (b)if to Target, to:  Calixa
Therapeutics, Inc. 12481
High Bluff Drive, Suite 150 San
Diego, California 92130 Attention:
Chief Executive Officer Facsimile:
(877) 393-3519  
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with
a copy to:  Reed
Smith LLP 1901
Avenue of the Stars, Suite 700 Los
Angeles, CA 90067 Attention:
Michael Sanders, Esq. Facsimile:
310-734-5299  (c)if to the Stockholders Committee, to:  David Podlesak c/o Domain Associates,
L.L.C. One Palmer Square, Suite 515 Princeton, NJ 08542 Facsimile:     
609-683-9789  Eckard
Weber, M.D. c/o
Domain Associates, L.L.C. One
Palmer Square, Suite 515 Princeton,
NJ 08542 Facsimile:     
609-683-9789  with a copy to:  Reed Smith LLP 1901 Avenue of the Stars, Suite 700 Los Angeles, CA 90067 Attention: Michael Sanders, Esq. Facsimile: 310-734-5299  10.2Disclosure Schedules.  (a)The Target Disclosure Schedule will be arranged to
correspond to the representations and warranties in Section 2 of this
Agreement, or, in each case, as applicable to the relevant other Sections of
this Agreement, and the disclosure in any portion of the Target Disclosure
Schedule shall qualify the corresponding provision in Section 2 and any
other provision of Section 2 to which it is reasonably apparent on its
face that such disclosure relates. 
Notwithstanding any of the foregoing, Target hereby covenants to make a
good faith effort to make all appropriate cross-references within and to any
and all Sections of the applicable disclosure schedule.  (b)The Acquiror Disclosure
Schedule will be arranged to correspond to the representations and warranties
in Section 3 of this Agreement, or, in each case, as applicable to the
relevant other Sections of this Agreement, and the disclosure in any portion of
the Acquiror Disclosure Schedule shall qualify the corresponding provision in Section 3
and any  
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other provision of Section 3
to which it is reasonably apparent on its face that such disclosure
relates.  Notwithstanding any of the
foregoing, Acquiror hereby covenants to make a good faith effort to make all
appropriate cross-references within and to any and all Sections of the applicable
disclosure schedule.  10.3Counterparts.  This Agreement may be executed in one 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 hereto and delivered to the other parties hereto, it being
understood that all parties hereto need not sign the same counterpart.  10.4Entire Agreement; Nonassignability; Parties in
Interest.  This Agreement and the documents and
instruments delivered pursuant hereto, including the exhibits hereto, the
Escrow Agreement, the Payment Agent Agreement, the Target Disclosure Schedule,
the Acquiror Disclosure Schedule and the other schedules hereto: (a) together
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect in accordance with their terms and shall survive any
termination of this Agreement; (b) are not intended to confer upon any
other person any rights or remedies hereunder, except as provided in the final
sentence of this Section 10.4; and (c) shall not be assigned by
Acquiror or Merger Sub, on the one hand, or by Target, on the other hand (by
operation of law or otherwise), without the written consent of each of the
parties hereto.  Notwithstanding anything
to the contrary contained in this Agreement (but without limiting any of the
rights of the Stockholders Committee hereunder), if the Merger is consummated,
(i) the Former Holders shall be third party beneficiaries of the
provisions set forth in Section 1 and (ii) the Indemnified Parties
shall be third party beneficiaries of the provisions set forth in Section 5.11.  10.5Severability.  In the event that any provision of this
Agreement, or the application thereof becomes, or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement, and the application of such provision to other persons or
circumstances other than those as to which it is determined to be illegal, void
or unenforceable, will not be impaired or otherwise affected and will continue
in full force and effect and be enforceable to the fullest extent permitted by
law.  10.6Remedies Cumulative.  Any remedy herein expressly conferred upon a
party hereto will be deemed cumulative with, and not exclusive of, any other
remedy herein expressly conferred hereby, and the exercise by a party hereto of
any such remedy will not preclude the exercise of such remedy.  10.7Governing Law.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
applicable to parties hereto residing in the State of Delaware, without regard
to applicable principles of conflicts of law. 
Each of the parties irrevocably consents to the exclusive jurisdiction
and venue of the state and federal courts located within New Castle County,
Delaware, in connection with any matter based upon or arising out of this
Agreement or the transactions contemplated hereby and agrees that process  
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may be served upon it in any
manner authorized by the laws of the State of Delaware for such persons and
waives and covenants not to assert or plead any objection which it might otherwise
have to such jurisdiction and such process. 
Each of the parties irrevocably waives the right to trial by jury in
connection with any matter based upon or arising out of this Agreement or the
transactions contemplated hereby.  10.8Rules of Construction.  (a)The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement
or other document will be construed against the party drafting such agreement
or document. The captions of sections or subsections of this Agreement are for
reference only and will not affect the interpretation or construction of this
Agreement.  (b)For purposes of this
Agreement, whenever the context requires: 
the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.  (c)As used in this Agreement, (i) the
words include and including, and variations thereof, shall not be deemed to
be terms of limitation, but rather shall be deemed to be followed by the words without
limitation and (ii) the words hereby, herein, hereunder and hereto
shall be deemed to refer to this Agreement in its entirety and not to any
specific section of this Agreement.  (d)Except as otherwise
indicated, all references in this Agreement to Sections, Schedules and Exhibits
are intended to refer to Sections of this Agreement and Schedules and Exhibits
to this Agreement.  10.9Time is of the Essence;
Enforcement.  Time is of
the essence of this Agreement.  Each of
the parties hereto agrees that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached.  It is
accordingly agreed that the parties shall be entitled to an injunction,
injunctions, specific performance and/or other equitable relief 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.  10.10Amendment; Waiver.  This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto; provided, however, that any
amendment, modification, change, waiver or supplement to any provision or
provisions of this Agreement at any time subsequent to the time Targets
stockholders approve this Agreement may be effected and implemented if, but
only if, such amendment, modification, change, waiver or supplement is set
forth in a written instrument or agreement duly executed by Acquiror and a the
Stockholders Committee with any approval by Targets stockholders required by
applicable law.  Any waiver
of any of the terms or conditions of this Agreement must be in writing and  
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must be duly executed by or
on behalf of the party to be charged with such waiver.  Except as expressly set forth in this
Agreement, the failure of a party to exercise any of its rights hereunder or to
insist upon strict adherence to any term or condition hereof on any one
occasion shall not be construed as a waiver or deprive that party of the right
thereafter to insist upon strict adherence to the terms and conditions of this
Agreement at a later date.  Further, no
waiver of any of the terms and conditions of this Agreement shall be deemed to
or shall constitute a waiver of any other term of condition hereof (whether or
not similar).  [remainder of page intentionally left blank]  
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IN
WITNESS WHEREOF, Target, Acquiror, Merger Sub and the Stockholders Committee
(solely for the purposes of Section 8) have caused this Agreement to be
executed and delivered by each of them or their respective officers thereunto
duly authorized, all as of the date first written above.   CUBIST
  PHARMACEUTICALS, INC.By:
  /s/
  Michael W. BonneyName:
  Michael W. BonneyTitle:
  President and CEOSD
  ACQUISITION CORPORATIONBy:
  /s/
  Michael W. BonneyName:
  Michael W. BonneyTitle:
  PresidentCALIXA
  THERAPEUTICS INC.By:
  /s/
  Dennis PodlesakName:
  Dennis PodlesakTitle:
  President and CEOSTOCKHOLDERS
  COMMITTEE/s/
  Dennis PodlesakDennis
  Podlesak, as a member of the Stockholders Committee/s/
  Eckard WeberEckard
  Weber, as a member of the Stockholders Committee   [Signature Page to Agreement and Plan of
Merger]  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.


EXHIBIT A  DEFINITIONS  Certain Defined Terms.  As used in this Agreement, the following
terms shall have the following meanings:  2008 Stock Plan
means Targets 2008 Stock Plan.  2009 Unaudited
Statements has the meaning set forth in Section 5.19(c).  Accounting Referee
has the meaning set forth in Section 1.8.  Acquiror has the
meaning set forth in the introductory paragraph.  Acquiror Determination
has the meaning set forth in Section 1.7(b).  Acquiror Disclosure
Schedule has the meaning set forth in Section 3.  Acquiror Employee Plans
has the meaning set forth in Section 5.9(b).  Acquiror Indemnified
Parties has the meaning set forth in Section 8.2(b).  Acquiror Material
Adverse Effect has the meaning set forth in Section 3.1.  Acquiror Set-Off Claim
has the meaning set forth in Section 9.3(a).  Affiliatemeans any entity that directly or indirectly
controls, is controlled by, or is under common control with that party, for so
long as such control exists.  In the case
of companies and corporations control and controlled means beneficial
ownership of more than fifty percent of the voting stock, shares, interest or
equity in an entity.  In the case of any
other legal entity, control and controlled shall exist through the ability
to directly or indirectly control the management and/or business of the legal
entity.  Agreement has the
meaning set forth in the introductory paragraph.  Agreement Date has
the meaning set forth in the introductory paragraph.  Appeal Procedure
has the meaning set forth in Section 9.7(c).  Applicable Law
shall mean, with respect to any person, any law, code, rule, regulation or
other similar legal requirement enacted, adopted or promulgated by a
Governmental Entity that is binding upon or applicable to such person and its
properties or assets.  Basket Amount has
the meaning set forth in Section 8.2(c)(ii).  Benefit Plan shall
mean any legally binding plan, program, policy, practice or agreement  providing for deferred compensation, profit
sharing, bonus, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits, survivor benefits, group  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  1


or
individual welfare, pension or other employee benefits, plans, policies,
arrangements or remuneration of any kind, funded or unfunded, formal or
informal, written or oral, including each employee benefit plan within the
meaning of Section 3(3) of ERISA, in each case (i) that covers
any Employee and any current, former, or retired consultant, of any ERISA
Affiliates of Target and its Subsidiaries and (ii) that is maintained,
contributed to, or required to be contributed to by Target, its Subsidiaries or
its ERISA Affiliates, or pursuant to which Target or its Subsidiaries has any
liability.  Business
Day means any day other than Saturday, Sunday or a public holiday under
the laws of the Commonwealth of Massachusetts and the State of California.  Capitalization
Certificate has the meaning set forth in Section 6.2(c).  Capitalization
Claim has the meaning set forth in Section 8.3(c)(ii).  Certificate
has the meaning set forth in Section 1.10(a).  Certificate of Merger
has the meaning set forth in Section 1.2.  Closing has the
meaning set forth in Section 1.2.  Closing Adjustment
Amount has the meaning set forth in Section 1.7(b)(viii).  Closing Balance Sheet
has the meaning set forth in Section 5.19(b).  Closing Date has
the meaning set forth in Section 1.2.  Closing Cash Balance
means all cash and cash equivalents of Target, net of outstanding checks, as of
the Effective Time.  Closing
Debt means any Indebtedness of Target and its Subsidiary that is
outstanding as of the Effective Time and is referred to in any of clauses (a),
(b), (c), (d), (f) or (g) of the definition of the term Indebtedness.  Closing
Debt, Liability & Expense Amount means the sum of (A) the
Closing Debt plus (B) the
greater of (1) zero and (2) (x) the sum of the Closing
Liabilities, the Closing Tax Liabilities, the Target Lease Liabilities, the
Transactional Expenses to the extent greater than $[]*, and Target Severance, in each case as
determined in good faith by Acquiror, minus (y) $[]*.  Closing
Liabilities means all of the accounts payable and accrued expenses of
Target as of the Effective Time as determined in accordance with GAAP
consistently applied by Target in accordance with past practices, excluding
Transactional Expenses, Closing Tax Liabilities, Target Lease Liabilities and
Target Severance.  Closing Target Share
Number shall mean the sum of (a) the aggregate number of shares of
Common Stock issued and outstanding immediately prior to the Effective Time,
other than shares to be canceled and retired pursuant to Section 1.9(b), (b) the
aggregate number of shares of Common Stock into which each issued and
outstanding share of Series A Preferred Stock is convertible into
immediately prior to the Effective Time, and (c) the aggregate number  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  2


of
shares of Common Stock subject to all Target Options and Target Warrants (on as
converted to Common Stock basis) that are unexercised and outstanding
immediately prior to the Closing.  Closing
Tax Liabilities means all of Targets liabilities for Taxes as of the
Effective Time as determined in accordance with GAAP, whether or not then due.  Code has the
meaning set forth in Section 1.10(e).  Combination Product means (a) a
product that is not a Target Combo Product or an Other Product and that
consists of a combination of (i) Target Combo Product or an Other Product
and (b) any other compound(s), product(s) or functional component(s) that
is not a Target Combo Product or an Other Product.  Commencement of Pivotal Study - 1stOther Product
Indication Contingent Payment means a payment in the amount of $[]*.  Commencement of Pivotal Study - 1stOther Product
Indication Milestone
means []*in the
first Pivotal Study to be conducted for an Other Product for its first
indication.  Commencement of Pivotal Study - 1stTarget Combo
Product Indication Contingent Payment means a payment in the amount of $[]*.  Commencement of Pivotal Study - 1stTarget Combo
Product Indication Milestone means []*in the first Pivotal Study to be
conducted for a Target Combo Product for its first clinical indication.  Commencement of Pivotal Study - 2ndOther Product
Indication Contingent Payment means a payment in the amount of $[]*.  Commencement of Pivotal Study - 2ndOther Product
Indication Milestone
means []*in the
first Pivotal Study to be conducted for an Other Product for its second
clinical indication.  Commencement of Pivotal Study - 2ndTarget Combo
Product Indication Contingent Payment means a payment in the amount of $[]*.  Commencement of Pivotal Study - 2ndTarget Combo
Product Indication Milestone means []*in the first Pivotal Study to be
conducted for a Target Combo Product for its second clinical indication.  Committee Reimbursable
Expenses has the meaning set forth in Section 8.3(b).  Committee Reimbursement
Amount has the meaning set forth in Section 1.6(a).  Common Stock means
the common stock (par value $0.0001 per
share) of Target.  Completion of Current Phase II Study Contingent
Payment means a payment in the amount of $[]*.  Completion of Current Phase II Study Milestone
means (a) []*.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  3


Completion of Phase II Other Product Pneumonia
Study Contingent Payment means a payment in the amount of $[]*.  Completion of Phase II Other Product Pneumonia
Study Milestone means (a) []*.  Completion of Phase II Target Combo Product
Pneumonia Study Contingent Payment means a payment in the amount of $[]*.  Completion of Phase II Target Combo Product
Pneumonia Study Milestone means (a) []*.  Compound means CXA-101[]*.  Confidentiality
Agreement has the meaning set forth in Section 5.6.  Consultant means
each of the persons providing services to Target pursuant to the agreements
listed on Exhibit I.  Contingent Consideration means collectively,
all of the Contingent Payments in the aggregate.  Contingent Payment
means each or any of the Completion of Current Phase II Study Contingent
Payment, the Commencement of Pivotal Study - 1st Target Combo Product
Indication Contingent Payment, the Commencement of Pivotal Study - 1st Other
Product Indication Contingent Payment, the Commencement of Pivotal Study - 2nd
Target Combo Product Indication Contingent Payment, the Commencement of Pivotal
Study - 2nd Other Product Indication Contingent Payment, the Completion of
Phase II Target Combo Product Pneumonia Study Contingent Payment, the
Completion of Phase II Other Product Pneumonia Study Contingent Payment, the
NDA Acceptance Target Combo Product, Contingent Payment, the NDA Acceptance
Other Product Contingent Payment, the First Commercial Sale U.S. Target Combo
Product Contingent Payment, the First Commercial Sale U.S. Other Product
Contingent Payment, the First Commercial Sale E.U. Target Combo Product
Contingent Payment, the First Commercial Sale E.U. Other Product Contingent
Payment, the First Sales Contingent Payment and the Second Sales Contingent
Payment.  Continuing Employees
has the meaning set forth in Section 5.9(b).  Covenant Claim has
the meaning set forth in Section 8.3(c)(ii).  Current Phase II Study means that certain
Phase II Study referred to as CXA101-03,A Multicenter,
Double-blind, Randomized, Phase 2 Study to Compare the Safety and Efficacy of
Intravenous CXA-101 and Intravenous Ceftazidime in Complicated Urinary Tract
Infection, Including Pyelonephritis that is currently being conducted by or on
behalf of Target.  Current Target Business
has the meaning set forth in Section 2.1.  CXA-101 means the Targets pharmaceutical
compound known as CXA-101 as more fully described on Exhibit G
hereto.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  4


CXA-201 means the Targets product candidate
known as CXA-201 which contains the Compound as an active pharmaceutical
ingredient in combination with tazobactam as more fully described on Exhibit H
hereto.  Damages has the
meaning set forth in Section 8.2(b)(i).  Data Room means the
on-line data room maintained by IntraLinks, Inc. located on the internet
at []* with appropriate security authorization.  Delaware Law has
the meaning set forth in Section 1.1.  Designated Continuing
Employees has the meaning set forth in Section 5.9(a).  Development Milestonesmeans theCompletion
of the Current Phase II Study Milestone, the Commencement of Pivotal Study - 1stTarget Combo
Product Indication Milestone, the Commencement of Pivotal Study - 2ndTarget Combo
Product Indication Milestone and the Completion of Phase II Target Combo
Product Pneumonia Study Milestone.  Development Plan
has the meaning set forth in Section 9.4(c).  Diligence Breach Notice
has the meaning set forth in Section 9.7(a).  []*.  Dissenting Share
means a share of Target Capital Stock that is issued and outstanding
immediately prior to the Effective Time and which is held by a stockholder who
did not consent to or vote in favor of the adoption of this Agreement, which
stockholder complies with all of the provisions of Delaware Law relevant to the
exercise of appraisal rights and has not, as of the applicable time, withdrawn
such stockholders exercise of such appraisal rights.  Dissenting Stockholder
has the meaning set forth in Section 1.12.  DOL shall mean the
United States Department of Labor.  Effective Time has
the meaning set forth in Section 1.2.  EMEAmeans the European Medicines Agency or its successor.  Employee shall mean
any current, former, or retired employee, officer, or director of Target and
its Subsidiaries.  Employment Agreement
shall mean each management, employment, severance, consulting, relocation,
repatriation, expatriation or similar agreement between Target and any Employee
or independent contractor.  Enrollment of the First Patient shall mean []*.  ERISA shall mean
the Employee Retirement Income Security Act of 1974.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  5


ERISA Affiliate of
any entity shall mean any other entity that, together with such entity, would
be treated as a single employer under Section 414 of the Code or Section 4001
of ERISA.  Escrow Agent has
the meaning set forth in Section 1.6(b).  Escrow Agreement
has the meaning set forth in Section 1.6(b).  Escrow Contribution
Amount means the amount equal []* percent ([]*%) of the difference between
(A) the Upfront Payment and (B) theEstimated Closing Cash Balance.  Escrow
Fundmeans the
aggregate amount being held by the Escrow Agent in escrow pursuant to this
Agreement and the Escrow Agreement.  Estimated Closing Adjustment
Amount has the meaning set forth in Section 1.7(a)(viii).  Estimated Closing Cash
Balance has the meaning set forth in Section 1.7(a)(i).  Estimated Closing Debt
has the meaning set forth in Section 1.7(a)(ii).  Estimated Closing Debt, Liability &
Expense Amount means the sum of (A) the Estimated Closing Debt plus (B) the greater of (1) zero
and (2) (x) the sum of the Estimated Closing Liabilities, the
Estimated Closing Tax Liabilities, the Estimated Target Lease Liabilities, the
Estimated Transactional Expenses to the extent greater than $[]*, and the Estimated Target Severance, minus (y) $[]*.  Estimated Closing
Liabilities has the meaning set forth in Section1.7(a)(iii)  Estimated Closing Tax
Liabilities has the meaning set forth in Section 1.7(a)(iv).  Estimated Target Lease
Liabilities has the meaning set forth in Section 1.7(a)(v).  Estimated Target
Severance has the meaning set forth in Section 1.7(a)(vii).  Estimated Transactional Expenses has the
meaning set forth in Section 1.7(a)(vi).  E.U. means the countries of the European
Union as it exists at any time.  excess payments has
the meaning set forth in Section 5.4(b).  FDA means the Food
and Drug Administration and its successor.  FD&C Actmeans the U.S. Federal Food, Drug and Cosmetic Act, as
amended, and the regulations promulgated thereunder.  Final
Escrow Release Date has the meaning set forth in Section 1.15(b).  First Commercial Salemeans the []*.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  6


First Commercial Sale E.U. Other Product
Contingent Payment means a payment in the amount of $[]*.  First Commercial Sale E.U. Other Product Milestone
means the First Commercial Sale of an Other Product in []*.  First Commercial Sale E.U. Target Combo Product
Contingent Payment means a payment in the amount of $[]*.  First Commercial Sale E.U. Target Combo Product
Milestone means the First Commercial Sale of a Target Combo Product in []*.  First Commercial Sale U.S. Other Product
Contingent Payment means a payment in the amount of $[]*.  First Commercial Sale U.S. Other Product Milestone
means the First Commercial Sale of an Other Product in the U.S.  First Commercial Sale U.S. Target Combo Product
Contingent Payment means a payment in the amount of $[]*.  First Commercial Sale U.S. Target Combo Product
Milestone means the First Commercial Sale of a Target Combo Product in the
U.S.  First
Escrow Release Date has the meaning set forth in Section 1.15(a).  First Sales Contingent Payment means a
payment in the amount of $[]*.  First Sales Milestone means the first time
when aggregate Net Sales in the Territory of all Products in the Territory
equals or exceeds $[]*.  Former Holder means
a person that is a Former Stockholder and/or a Former Optionholder and/or a
Former Warrantholder.  Former Optionholders
means those persons who shall have held an unexpired Target Option immediately
prior to the Effective Time (whether or not vested or exercisable).  Former Stockholders
means those persons who shall have held shares of Target Capital Stock
immediately prior to the Effective Time.  Former Warrantholders
means those persons who shall have held an unexpired Target Warrant immediately
prior to the Effective Time.  Fraud Claim has the
meaning set forth in Section 8.2(c)(iv).  GAAP means
generally accepted accounting principles in the U.S. as of the date hereof,
applied on a consistent basis. For avoidance of doubt, GAAP takes precedence
over Targets consistent application of accounting.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  7


Governmental Entity
meansany court,
administrative agency or commission or other governmental authority or
instrumentality.  Government Plan
means a plan or program mandated by Applicable Law and administered by a
Governmental Entity, such as the Social Security Program in the United States.  HIPAA has the
meaning set forth in Section 2.21(h)  Indebtedness, as applied to any person, means
(a) all indebtedness of such person for borrowed money, whether current or
funded, or secured or unsecured, including, without limitation, (i) the
unpaid principal amount thereof, (ii) all accrued and unpaid interest,
fees or penalties on such indebtedness, and (iii) the amount of any
unwinding costs, prepayment penalties or any other fees or costs with respect
to such indebtedness, (b) all indebtedness of such person for the deferred
purchase price of property or services represented by a note or other security,
(c) all indebtedness of such person created or arising under any
conditional sale or other title retention agreement (even if the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of specific property), (d) all
indebtedness of such person secured by a purchase money mortgage or other lien
to secure all or part of the purchase price of property subject to such
mortgage or other lien, (e) all other obligations of such person under
leases that have been or must be, in accordance with generally accepted
accounting principles, recorded as capital leases in respect of which such
person is liable as lessee, (f) any liability of such person in respect of
bankers acceptances or letters of credit, (g) any and all negative cash
balances and bank overdrafts and (h) all indebtedness referred to in
clauses (a)-(g) hereof that is directly or indirectly guaranteed by such
person or which such person has agreed (contingently or otherwise) to purchase
or otherwise acquire or in respect of which such person has otherwise assured a
creditor against loss.  Indemnified Parties
has the meaning set forth in Section 5.11(a).  Information means information and data
specifically relating to the research, development, manufacture or use, of Target Products, including, but not limited to,
test data including pharmacological, toxicological and clinical test data,
analytical and quality control data, regulatory submissions, correspondence and
communications.  Initial Escrow Fund means the Escrow Fund as
it exists at any time and from time to time during the period commencing on the
Closing Date and ending on the First Escrow Release Date.  IP Rights has the meaning set forth in Section 2.10(a)(i).  IRS shall mean the
United States Internal Revenue Service.  Knowledge means
that based on the actual knowledge of an executive officer of the applicable
person, such officer is not aware of any facts that make the statement, to
which such term is applied, materially untrue.  Lease has the
meaning set forth in Section 2.15(a).  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  8


Letter of Transmittal
has the meaning set forth in Section 1.10(b).  Licensed IP Rightshas the meaning set forth
in Section2.10(a)(ii).  MAAmeans an application to the appropriate Regulatory
Authority for approval to sell the Product (but excluding Pricing Approval) in
any particular country or regulatory jurisdiction, including such applicationfiled
with the EMEA pursuant to the Centralized Procedure or with the applicable
Regulatory Authority of a country in accordance with such countrys national
approval procedure.  Material Contract
has the meaning set forth in Section 2.12(c).  Merger has the
meaning set forth in Paragraph A of the Recitals.  Merger Consideration
means the sum of (a) the Upfront Payment plus,
(b) the Contingent Payments, if any are payable pursuant to the terms of
this Agreement.  Merger Consideration
Certificate has the meaning set forth in Section 6.2(c)(iii).  Merger Sub has the
meaning set forth in the introductory paragraph.  Milestone Abandonment
Notice has the meaning set forth in Section 9.4(e).  Milestones mean the Completion of the Current
Phase II Study Milestone, the Commencement of Pivotal Study - 1stTarget Combo
Product Indication Milestone, the Commencement of Pivotal Study - 1stOther Product
Indication Milestone, the Commencement of Pivotal Study - 2ndTarget Combo
Product Indication Milestone, the Commencement of Pivotal Study - 2ndOther Product
Indication Milestone, the Completion of Phase II Target Combo Product Pneumonia
Study Milestone, the Completion of Phase II Other Product Pneumonia Study
Milestone, the NDA Acceptance Target Combo Product Milestone, the NDA
Acceptance Other Product Milestone, the First Commercial Sale U.S. Target Combo
Product Milestone, the First Commercial Sale U.S. Other Product Milestone, the
First Commercial Sale E.U. Target Combo Product Milestone, the First Commercial
Sale E.U. Other Product Milestone, the First Sales Milestone or the Second
Sales Milestone.  Monthly Financials has the meaning set forth
in Section 5.19(a).  NDAmeans a New Drug Application in the U.S. for
authorization for marketing of a pharmaceutical product, as defined in the
Applicable Laws and regulations and filed with the FDA.  NDA Acceptance Other Product Contingent Payment
means a payment in the amount of $[]*.  NDA Acceptance Other Product Milestone means
the firstgranting by the FDA of Product Approval for an Other
Product for any indication in the U.S.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  9


NDA Acceptance Target Combo Product Contingent
Payment means a payment in the amount of $[]*.  NDA Acceptance Target Combo Product Milestone
means the firstgranting by the FDA of Product Approval for a
Target Combo Product for any indication in the U.S.  Net Sales means, with respect to the Products
sold in the Territory, the gross amount invoiced by or on behalf of Acquiror,
Surviving Corporation or any of their Affiliates, transferees, assignees,
licensees or sublicensees for sales of Products to, except as set forth below,
a third party less the
following deductions []*.  For clarity, any of the items set forth above that
would otherwise be deducted from the invoice price in the calculation of Net
Sales but which are separately charged to, and paid by, third parties shall not
be deducted from the invoice price in the calculation of Net Sales.  For purposes of determining Net Sales, Products shall
be deemed to be sold when invoiced.Upon any sale
or other disposal of the Products that should be included in Net Sales, for any
consideration other than exclusively monetary consideration on arms length
terms, such as barter or counter-trade, then for purposes of calculating the
Net Sales under this Agreement,Net Sales shall be determined by referencing Net Sales
at which substantially similar quantities of the Products are sold in an arms-length
transaction for cashduring the applicable reporting period generally
achieved for such Products in such country in which such sale or other disposal
occurred.  Net Sales shall be determined
in accordance with GAAP, consistently applied by Acquirorto other products sold by it under
similar trade terms and conditions.  Notwithstanding anything in this Agreement to the
contrary, (A) the following dispositions shall not be included in the
calculation of Net Sales: disposition of Products for use in clinical trials,
other scientific testing, or as samples, or as part of compassionate use,
patient assistance, named patient or test marketing program or any similar program
or study or other similar cases, in each case for which Acquiror or its
Affiliates or their respective sublicensees receive no revenue and (B) the
term Net Sales shall not include revenue received by Acquiror, Surviving
Corporation or any of their Affiliates, transferees, assignees, licensees or
sublicensees from transactions with any of their respective Affiliates.  If any Product is sold as
part of a Combination Product, the Net Sales from the Combination Product,
shall be determined by []*.  Net Upfront Payment means the Upfront Payment
minus the Committee Reimbursement Amount
and the Escrow Contribution Amount.  Options Exercise Price
means the total sum, for all shares of Common Stock that are subject to all
Target Options (whether vested or unvested) existing immediately prior to the
Effective Time, of the exercise price per share of each such share of Common
Stock subject to any such Target Option.  Other Product means a Product containing the
Compound as the sole active pharmaceutical ingredient or containing the
Compound in combination with another  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  10


pharmaceutical compound
as the active pharmaceutical ingredients. Notwithstanding the foregoing, the
term Other  Product shall not include any Target Combo Product.  Patentshas the
meaning set forth in Section2.10(a)(iii).  Payment Agent has
the meaning set forth in Section 1.6.  Payment Agent Agreement
has the meaning set forth in Section 1.6.  Per Share Escrow Amount
means the quotient of (a) the Escrow Contribution Amount divided by (b) the Closing Target Share Number.  Permitted Dividend
means the dividend to the holders of Target Capital Stock, each in their Pro
Rata Portion of all available cash and cash equivalents of Target on a date
that is not more than 2 Business Days prior to the Closing Date.  Permitted Encumbrances
has the meaning set forth in Section 2.14.  person means any individual
or entity.  Phase
II Studymeans, with respect to a Product,any clinical trial that satisfies the
requirements for a Phase II study as defined in 21 C.F.R. Part 312.21(b),
or any successor regulation, or the equivalent human clinical trial outside the
United States.  Phase III Studymeans, with respect to a Product, any
clinical trial that satisfies the requirements for a Phase III study as defined
in 21 C.F.R. Part 312.21(c), or any successor regulation, or the
equivalent human clinical trial outside the United States.  Pivotal Study means any clinical trial that
satisfies the requirements for []*.  Post-Closing Tax Period
shall mean any Tax period beginning after the Closing Date; and, with respect
to a Tax period that begins on or before the Closing Date and ends thereafter,
the portion of such Tax period beginning after the Closing Date.  Pre-Closing Period
has the meaning set forth in Section 4.1.  Pre-Closing Tax Period
means any Tax period ending on or before the Closing Date; and, with respect to
a Tax period that begins on or before the Closing Date and ends thereafter, the
portion of such Tax period ending on and including the Closing Date.  Pricing Approvalmeans the approval, agreement, determination or
decision from a Governmental Entity establishing the price and/or reimbursement
for a Product for sale in a given country or regulatory jurisdiction, as
required by applicable Law in such country or other regulatory jurisdiction
prior to the sale of such Product in such country or regulatory jurisdiction.  Product means any pharmaceutical preparation
containing the Compound as an active pharmaceutical ingredient, either alone or
with any combination of one or more other active pharmaceutical ingredients[]*.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  11


Product Approvalmeans, with respect to a Product, the
approval of a Governmental Entity necessary for the marketing and sale of such
Product in a given country or regulatory jurisdiction, which may include the
approval of an NDA or an MAA (but shall not include any Pricing Approvals).  Pro Rata Portion
means, with respect to any Former Holder, the fraction having:  (a) a numerator equal to the sum of (i) the
number of shares of Target Capital Stock held by such person immediately prior
to the Effective Time (including shares of Target Capital Stock that
constitute, and have never lost their status as, Dissenting Shares, held by
such person), (ii) the number of shares of Target Capital Stock subject to
an outstanding Target Warrant held by such person immediately prior to the
Effective Time, and (iii) the number of shares of Target Capital Stock
subject to an outstanding Target Option held by such person immediately prior
to the Effective Time, in each case, with all Series A Preferred Stock
being measured on an as-converted basis, as applicable; and (b) a
denominator equal to the Closing Target Share Number.  Regulatory Approvalmeans, with respect to a Product, all approvals
(including, without, limitation Product Approvals, Pricing Approvals and, in
each case any supplements and amendments thereto), licenses, registrations or
authorizations of any Governmental Entity necessary for the manufacture,
distribution, use, promotion and sale of such Product in such given country or
regulatory jurisdiction, including, without limitation, any NDA and any MAA.  Regulatory Authoritymeans, in a particular country or regulatory
jurisdiction, any applicable Governmental Entity involved in granting
Regulatory Approval in such country or regulatory jurisdiction, including,
without limiting the foregoing, (i) in the U.S., the FDA, and (ii) in
the E.U., the EMEA, the European Commission and relevant national medicines
regulatory authorities.  Representation
Termination Date has the meaning set forth in Section 8.2(a).  Required Stockholder
Vote has the meaning set forth in Section 2.2.  Restricted Stock has the meaning set forth in
Section 1.14(c).  Restricted Tax Claim has the meaning set
forth in Section 8.2(c)(iii).  SEC means the United States Securities and
Exchange Commission.  Second Sales Milestone means the first time
when aggregate Net Sales in the Territory of all Products equals or exceeds $[]*.  Second Sales Contingent Payment means a
payment in the amount of $[]*.  Series A
Preferred Stock means the Series A Preferred Stock (par value $0.0001
per share) of Target.  Special Set Off Amount
has the meaning set forth in Section 9.3.  Specified Tax Claim
has the meaning set forth in Section 8.2(b)(i).  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  12


Specified Tax Claim
Escrow Amount means $[]*.  Stockholders Committee
has the meaning set forth in Section 8.3(a).  Stockholder Notice has the meaning set forth
in Section 5.5.  Stockholder
Representative has the meaning set forth in Section 9.4(a).  Subsidiary means an
entity for which an amount of the voting securities, other voting rights or
voting partnership interests, which is sufficient to elect at least a majority
of such entitys board of directors or other governing body (or, if there are
no such voting interests, 50% or more of the equity interests of which), is
owned directly or indirectly by Target.  Superior Proposal
has the meaning set forth in Section 5.12(d).  Supporting Materials
has the meaning set forth in Section 5.19(e).  Surviving Corporation
has the meaning set forth in Section 1.1.  Takeover Proposal
has the meaning set forth in Section 5.12(b).  Target has the
meaning set forth in the introductory paragraph.  Target 401(k) Plans
has the meaning set forth in Section 5.9(d).  Target Balance Sheet
has the meaning set forth in Section 2.5.  Target Balance Sheet
Date means November 30, 2009.  Target Capital Stock
means all shares of Common Stock (including all shares of Restricted Stock) and
Series A Preferred Stock, issued and outstanding as of immediately prior
to the Effective Time.  Target Combo Product means (a) []*.  Target Completion Date
has the meaning set forth in Section 9.4(b).  Target Determination has the meaning set
forth in Section 1.7(a)(viii)  Target Disclosure
Schedule has the meaning set forth in Section 2.  Target Employees
means all persons who were, immediately prior to the Effective Time, Employees
of Target or any of its Subsidiaries.  Target Financial
Statements has the meaning set forth in Section 2.5(a).  Target IP Rights
has the meaning set forth in Section 2.10(a)(iv).  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  13


Target Lease
means that certain Office Services Agreement dated June 11, 2009 by and
between Target and Regus Management Group, LLC, as subsequently renewed October 23,
2009, relating to the premises subject thereto located at Metro Gateway Center,
1840 Gateway Dr., Suite 200, San Mateo, CA, USA.  Target Lease Liabilities means all of Targets
liabilities concerning Target Lease as of the Effective Time including, without
limitation, all accrued but unpaid lease payments at the Effective Time.  Target Material Adverse
Effect means any change, event, occurrence, or state of facts that has
caused, or is likely to result in, a change or effect that is materially
adverse to the Current Target Business, or the assets and liabilities of Target
and its Subsidiaries, taken as a whole; or adversely affects in any material
respect, the ability of Target to consummate the transactions contemplated
hereby, provided, however, that none of the
following shall be deemed, either alone or in combination, to constitute, and
none of the following shall be taken into account in determining whether there
has been or will be, a Target Material Adverse Effect:  (a) any change, effect, event,
occurrence, state of facts or development relating to the United States economy
or securities markets in general, (b) any adverse change, effect, event,
occurrence, state of facts or development reasonably attributable to conditions
affecting the industry in which Target participates, to the extent that the
effects do not disproportionately impact Target compared to other entities in
the industry in which Target operates, (c) any change, effect, event,
occurrence, state of facts or development that arises out of or results from
the announcement or pendency of this Agreement or any of the transactions
contemplated by this Agreement (including any change, effect, event,
occurrence, state of facts or development resulting from or relating to any
litigation or any departure or loss of Employees or Consultants that arises
from or by virtue of such announcement or pendency of this Agreement or any of
the transactions contemplated by this Agreement), (d) any change, effect,
event, occurrence, state of facts or development resulting from or relating to
any change in laws or regulations applicable to Target after the date hereof
that does not adversely affect Target in a materially disproportionate manner
as compared to others in the industry in which Target operates, (e) any
change, effect, event, occurrence, state of facts or development resulting from
or relating to any change in GAAP and (f) any change, effect, event,
occurrence, state of facts or development that arises out of or results from (i) any
action or failure to act on the part of Target or any of its Subsidiaries that
is expressly approved by Acquiror in writing or that is permitted or required
by this Agreement, (ii) any action or failure to act on the part of any
person acting or failing to act at the request or direction in writing of
Acquiror or any Affiliate of Acquiror or (iii) any action or failure to
act on the part of Acquiror or any Affiliate of Acquiror, and (g) any
change,  effect, event, occurrence, state
of facts or development that arises out of or results from to the extent
resulting from the introduction, commercial success or trial results of, or
action by any Governmental Entity with respect to, any product or Product (in
each case of a person other than Target or any of its Subsidiaries) similar to
or potentially competitive with any of Target Products.  Target Option means
an option granted under the 2008 Stock Plan.  Target Products has
the meaning set forth in Section 2.21(a).  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  14


Target Severance means with respect to any
Employee or Consultant terminated prior to the Effective Time, the following
amounts: (a) any and all amounts of severance or termination pay and
change in control payments and benefits to which such person is legally
entitled by agreement or Target policy by virtue of the termination of his, her
or its employment or consultancy at the Target, Acquiror or Merger Sub; (b) accrued
vacation and sick time payments to which such person is legally entitled by
virtue of the termination of his employment at Target, Acquiror or Merger Sub; (c) any
and all amounts Target, Acquiror or Merger Sub is required to pay under COBRA
benefits to which such individual is legally entitled by virtue of the
termination of his employment at the Target, Acquiror or Merger Sub; (d) any
280G payments and (e) the employer portion of any and all Taxes paid or
payable by any of Target, Acquiror or Merger Sub in respect of any amounts
referred to in the foregoing clauses (a), (b), (c), (d) and (e) of
this definition.  Target Warrant
means a warrant to purchase Common Stock or Series A Preferred Stock.  Tax or Taxes (and, with correlative
meaning Taxable and Taxing) shall mean taxes of any kind, levies or other
like assessments, customs, duties, imposts, charges or fees, including income
taxes, gross receipts,margin,
profits, ad valorem, value added, excise, real or personal property,
environmental, asset, sales, use, license, payroll, transaction, capital, net
worth, alternative or add-on minimum, withholding, estimated, social security,
utility, workers compensation, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer, stamp,
registration and gains taxes or other governmental taxes imposed or payable to
the United States, or any state, county, local or foreign government or
subdivision or agency thereof, together with any interest, penalties or
additions with respect thereto and any interest in respect of such additions or
penalties.  Tax Basket Amount has the meaning set forth
in Section 8.2(c)(iii).  Tax Claim has the
meaning set forth in Section 8.2(c)(ii).  Tax Return shall
mean any report, return, document, statement, election, disclosure, schedule,
form, declaration or other information or filing required to be supplied to any
Taxing Authority with respect to Taxes, including information returns, amended
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, statement, election,
disclosure, schedule, form, declaration or other information.  Taxing Authority
means any Governmental Entity responsible for the imposition of a Tax.  Territory has
the meaning set forth in thatcertain License Agreement dated
November 1, 2007 between Astellas Pharma Inc. and the Target as in effect
from time to time following the Closing.  Third-Party Claims
has the meaning set forth in Section 8.2(d).  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  15


Top Line Data means the study data from a
clean and locked data base that are available within 30 days of the date of a
formally executed data-base lock memorandum. 
Any such Top Line Data []*.  Transactional Expensesmeans all reasonable
and documented fees and disbursements invoiced by legal counsel and other
advisors to Target, its Subsidiaries, the Stockholder Committee and Targets
stockholders incurred by Target or any of its Subsidiaries in connection with
the preparation, execution and consummation of this Agreement, the transactions
contemplated hereby and the Closing.  Upfront Payment
shall mean an amount, in cash, equal to: 
(a) $92,500,000, plus
theEstimated Closing
Adjustment Amount.  Upfront Per Share Price
means the quotient of (a) the sum of (i) the Net Upfront Payment plus (ii) the Option Exercise Price plus(iii) the Warrant Exercise Price divided by (b) the Closing Target
Share Number.  U.S.means the United States of America and its possessions
and territories.  Warrant Exercise Price
means the total sum, for all shares of Target Capital Stock that are subject to
all Target Warrants existing immediately prior to the Effective Time, of the
exercise price per share of each such share of Target Capital Stock subject to
any such Target Warrant.  
 *Confidential
Treatment Requested.  Omitted portions
filed with the Commission.  16