Document:

exv10w7

EXHIBIT 10.7

Execution Version

AMENDMENT NO. 1

to

AGREEMENT AND PLAN OF MERGER

     This AMENDMENT NO. 1 (this “Amendment”) is made as of this 7th day of December, 2007, by and
among (i) Boston Scientific Corporation, a Delaware corporation (the “Parent”), (ii) RMI
Acquisition Corp., a California corporation and a wholly owned Subsidiary of Boston Scientific
Scimed, Inc. (which is a wholly owned Subsidiary of Parent and formerly known as Scimed Life
Systems, Inc.) (“Merger Sub”), (iii) REVA Medical, Inc., a California corporation (the
“Company”), and (iv) Robert Stockman, Gordon Nye and Brian Dovey, acting in each case in
his capacity as a member of the Stockholder Representative Committee. Unless otherwise defined
herein, capitalized terms used herein shall have the respective meanings set forth in the Merger
Agreement referred to below.

     WHEREAS, BSC, Merger Sub, the Company and the members of the Stockholder Representative
Committee entered into that certain Agreement and Plan of Merger dated October 13, 2004 (the
“Merger Agreement”);

     WHEREAS, this Amendment has been authorized by the Board of Directors of the Company in
accordance with Section 10.12 of the Merger Agreement;

     WHEREAS, the Board of Directors of the Company has determined to submit this Amendment to the
shareholders of the Company for their approval in accordance with California Law; and

     WHEREAS, each of such parties desires to modify certain provisions of the Merger Agreement to
facilitate an equity financing currently contemplated by the Company;

     NOW, THEREFORE, in consideration of the foregoing and the mutual promises made herein, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

     1. Amendment of Section 10.2. Section 10.2 of the Merger Agreement is hereby amended
to include each of the following new definitions:

               “Clinical Milestone” shall be deemed to have been satisfied as of the date occurring
ninety (90) days following the delivery by the Company to Parent of (i) all material information
(including, but not limited to, all case report forms and all data concerning imaging, death, MI,
ST and TLR) available to the Company relating to the one year follow-up of at least 200 implanted
resorbable drug coated stents of the Company from a human clinical trial conducted in accordance
with applicable laws and regulations (the “Implanted Stents”), (ii) all material
information (including, but not limited to, core lab acute gain, late loss, and binary angiographic
restenosis) relating to the 8-9 month angiographic follow-up of at least 100 of such
Implanted Stents, and (iii) all material information relating to the 8-9 month IVUS of at
least 40 of such Implanted Stents.

               “Effectiveness Time” shall be the moment in time immediately following

 

 

the later of
(a) approval by the stockholders of the Company of the execution and delivery of this Amendment by
the Company and (b) the initial closing of a Qualified Equity Financing, provided, that
such closing results in the Company actually receiving aggregate net cash proceeds (not subject to
any contingencies) equal to no less than $10,000,000.

               “IVUS” shall mean intravascular ultrasound.

               “MI” shall mean acute myocardial infarction.

               “Qualified Equity Financing” shall mean the sale for cash of a new series of Company
Preferred Stock on or after December 3, 2007 to a syndicate of investors led by a non-affiliated
third party in a transaction which may include one or more closings pursuant to which the Company
shall actually receive aggregate net proceeds (not subject to any contingencies) equal to no less
than $25,000,000; provided, however, that the initial closing (or first closing) of
a Qualified Equity Financing shall be deemed to have occurred at such time as the Company shall
have received in an initial closing (whether or not any subsequent closings actually take place)
not less than $10,000,000 pursuant to the terms and conditions set forth above.

               “Qualified IPO Financing” shall mean any initial public offering of Securities by the
Company under a registration statement filed with the SEC covering the sale of such Securities,
pursuant to which the Company shall actually receive aggregate net cash proceeds (not subject to
any contingencies) equal to no less than $50,000,000.

               “Restoration Date” shall be September 30, 2008, unless the Company has received
aggregate net cash proceeds (not subject to any contingencies) equal to no less than $25,000,000 in
a Qualified Equity Financing prior to such date, in which event the Restoration Date shall be the
third anniversary of the Effectiveness Time.

               “ST” shall mean stent thrombosis.

               “Suspension Period” shall mean the period beginning at the Effectiveness Time and
ending on the earlier of the (x) Restoration Date, or (y) Termination Date.

               “Termination Date” shall be the date of the closing of any Qualified IPO Financing,
provided, that such Qualified IPO financing closes on or before the Restoration Date.

               “TLR” shall mean target lesion revascularization.

     2. Amendment of Section 5.1. Effective as of the Effectiveness Time, Section 5.1 of
the Merger Agreement is hereby amended by deleting in their entirety each of subsections (a), (c),
(e) and (x) and by replacing such subsections with the new subsections (a), (c), (e) and (x) below:

     “(a) Charter Documents. Except in connection with a Qualified IPO Financing,
cause or permit any amendments to its Restated Articles or bylaws to the extent it could
reasonably be expected that such amendment would prevent the consummation of the Merger;
provided, however, that, for purposes of this paragraph (a),

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any amendments
made to the Company’s Restated Articles or bylaws in connection with a Qualified Equity
Financing shall not be deemed amendments that would reasonably be expected to prevent the
consummation of the Merger solely due to the closing of such Qualified Equity Financing
resulting in the commencement of the Suspension Period;”

     “(c) [Intentionally Omitted]”

     “(e) Issuance of Securities. Issue, deliver or sell or authorize or propose
the issuance, delivery or sale of, any shares of its capital stock or securities or other
instruments (including notes or other evidences of Indebtedness) convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or commitments
of any character obligating it to issue any such shares or other convertible instruments or
securities, other than Securities which would, in the event of a Merger, convert into
Merger Consideration pursuant to Section 2.1 hereof; provided, that the holders of
any such Securities, whether issued in any Qualified Equity Financing or otherwise issued
at any time during the Suspension Period, shall have executed and delivered an Instrument
of Accession to the Stockholder Option Agreement with respect to any and all of such
Securities.”

     “(x) Other Activities. Except for a Qualified IPO Financing, knowingly engage
in any other activity which could reasonably be expected to materially impair the ability
of Parent, the Merger Sub or the Company to consummate the Merger; provided,
however, that, for purposes of this paragraph (x), the closing of a Qualified
Equity Financing shall not be deemed an activity which could reasonably be expected to
materially impair the ability of Parent, the Merger Sub or the Company to consummate the
Merger solely due to such closing resulting in the commencement of the Suspension Period.”

     3. Amendment of Section 5.1. Section 5.1 of the Merger Agreement is hereby amended to
include the following subsections (z) and (aa) as follows:

     “(z) Use of Proceeds from a Qualified Equity Financing. The Company shall
commit and use no less than $25,000,000 of the proceeds of any Qualified Equity Financing
to develop, conduct pre-clinical and clinical testing of and gain global regulatory
approvals for a bioresorbable stent for use in the coronary arteries.”

     “(aa) Effect of Suspension Period. Notwithstanding anything to the contrary
elsewhere in this Agreement or in the Related Agreements, at all times during the
Suspension Period, (i) the Company shall not be bound by any of the restrictions or
obligations contained in Sections 5.2, 5.3, 5.4, 6.3, 6.4, 6.7, 6.8, 6.9, 6.11, 6.12 (but
solely to the extent that Section 6.12 would otherwise prohibit disclosures required by the
Securities Act of 1933, as amended, to be included in a registration statement filed under
such act in connection with such Qualified IPO Financing), 6.13 and subsections (b), (c),
(d), (f) through (w) and (y) of this Section 5.1, and any action on the part of the Company
in contravention of such provisions during the Suspension Period shall not be deemed a
breach of the terms of this Agreement, and (ii) Parent’s rights under Section 1.1 shall be
suspended, and Parent shall not be permitted to exercise its rights under such section
during such period.”

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     4. Amendment of Section 6.10. Effective as of the Effectiveness Time, Section 6.10 of
the Merger Agreement is hereby amended to include subsection (c) as follows:

     “(c) Notwithstanding anything to the contrary elsewhere in the Agreement, in the event that,
during the Option Period, the Parent has not delivered a Merger Election Notice to the Company on
or before the later of the achievement by the Company of the Clinical Milestone or the third
anniversary of the Effectiveness Time, the obligations of the Company under this Section 6.10 shall
thereupon terminate.”

     5. Amendment of Section 8.1. Effective as of the Effectiveness Time, Section 8.1 of
the Merger Agreement is hereby amended to include the following subsection (k) as follows:

          “(k) automatically, upon the closing of a Qualified IPO Financing prior to the Restoration
Date.”

     6. Amendment of Section 10.4. Section 10.4 of the Merger Agreement is hereby amended
by deleting Section 10.4 and by replacing it in its entirety with the following new section:

     “10.4 Entire Agreement; Assignment. This Agreement, together with Amendment
No. 1 thereto, dated as of December 7, 2007, the Confidentiality Agreement and the Related
Agreements, constitutes the entire agreement among the parties with respect to the subject
matter hereof and thereof and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject matter
hereof and thereof. This Agreement shall not be assigned by operation of law or otherwise,
except that (a) Parent and Merger Sub may assign all or any of their rights and obligations
hereunder to any Affiliate of Parent; provided, that no such assignment to an
Affiliate shall relieve the assigning party of its obligations hereunder, and (b) Parent
may assign all of its rights and obligations hereunder to a person that acquires all of the
capital stock, or substantially all of the assets, of Parent or of the division or business
unit of Parent responsible for the business of the Company; provided, that such
person assumes this Agreement, in writing, and agrees to be bound by and to comply with all
of the terms and conditions hereof.”

     7. Conditions to Effectiveness. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent:

          (a) the execution and delivery by the parties hereto of this Amendment;

          (b) approval by the shareholders of the Company of this Amendment and the transactions
contemplated hereby in accordance with California Law by written consent of the holders of (i) more
than 50% of the total outstanding shares of the Company Preferred Stock, voting together as a
single class and on an as-converted basis and not as separate series, (ii) more
than 50% of the total outstanding shares of Common Stock, and (iii) more than 50% of the
outstanding Company Common Stock and Company Preferred Stock voting together as a single class.

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     8. Restoration of Original Language upon the Restoration Date. Notwithstanding
anything to the contrary herein, in the event that no Qualified IPO Financing has been closed prior
to such date, from and after the Restoration Date, the amendments set forth in Sections 2, 4 and 5
hereof shall have no further effect, and the language originally included in the sections of the
Agreement referenced in such sections shall be restored in its entirety, as though never amended.

     9. No Other Amendments. Except to the extent amended hereby, all of the definitions,
terms, provisions and conditions set forth in the Merger Agreement are hereby ratified and
confirmed and shall remain in full force and effect. The Merger Agreement and this Amendment shall
be read and construed together as a single agreement and the term “Merger Agreement” shall
henceforth be deemed a reference to the Merger Agreement as amended by this Amendment.

     10. Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Amendment shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Amendment, express or implied, is intended
to confer upon any party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this Amendment, except as
expressly provided in this Amendment.

     11. Governing Law. This Amendment shall for all purposes be construed in accordance
with and governed by the laws of the State of California.

     12. Counterparts. This Amendment may be executed in two or more counterparts and the
signatures delivered by facsimile, each of which shall be deemed an original, with the same effect
as if the signatures were upon the same instrument and delivered in person.

     13. Severability. If one or more provisions of this Amendment are held to be
unenforceable under applicable law, such provision shall be excluded from this Amendment and the
balance of the Amendment shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.

[remainder of page intentionally left blank]

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     In Witness Whereof, the parties have caused this Amendment to be executed and
delivered by their duly authorized representatives, as applicable, all as of the day and year
written above.

	 	 	 	 	 
	 	Boston Scientific Corporation

 	 
	 	By: 	/s/ Jim Gilbert
 	 
	 	 	Name:  	Jim Gilbert 	 
	 	 	Title:  	Executive Vice President and Group President,
Cardiovascular 	 
	 
	 	RMI Acquisition Corp.

 	 
	 	By:	/s/ Vance Brown
 	 
	 	 	Name:  	Vance Brown 	 
	 	 	Title:  	Asst Secretary 	 
	 
	 	REVA Medical, Inc.

 	 
	 	By:	/s/ Robert K. Schultz
 	 
	 	 	Name:  	Robert K. Schultz 	 
	 	 	Title:  	President 	 
	 
	 	Stockholder Representative Committee

 	 
	 	/s/ Robert B. Stockman
 	 
	 	Name: Robert B. Stockman 	 
	 	 	 
	 	         /s/ Brian Dovey
 	 
	 	Name: Brian Dovey 	 
	 	 	 
	 	         /s/ Gordon Nye
 	 
	 	Name: Gordon Nye 	 
	 	 	 

[Amendment 1 to Agreement and Plan of Merger]

6exv10w8

EXHIBIT 10.8

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is made and entered into as of
October 13, 2004 (the “Agreement Date”), by and between Boston Scientific
Corporation, a Delaware corporation (the “Buyer”), and Reva Medical, Inc., a California
corporation (the “Company”).

     Whereas, the Company, Buyer, RMI Acquisition Corp., and Robert Stockman, Gordon Nye
and Brian Dovey, in each case acting in his capacity as a member of the stockholder representative
committee, are parties to that certain Agreement and Plan of Merger of even date herewith (the
“Merger Agreement”), pursuant to which the Company granted Buyer an exclusive
option (the “Company Option”) to cause a transaction to occur in which a newly-formed subsidiary of
Scimed Life Systems, Inc., a wholly owned subsidiary of Buyer (“Merger Sub”) is merged with and
into the Company (the “Merger”);

     Whereas, the board of directors of the Company (the “Company Board”)
has approved and adopted the Merger Agreement and the consummation of the transactions contemplated
thereby, and will be submitting the execution and delivery of the Merger Agreement and the
performance of the transactions contemplated thereby to the holders of the shares of Company Common
Stock and Company Preferred Stock (collectively, the “Company Stockholders”) for
their approval by written consent in accordance with California Law;

     Whereas, following the effectiveness of such Company Stockholders’ approval, Buyer
and certain holders of Securities (the “Stockholders”) may enter into a Stockholder Option
Agreement, of even date herewith (the “Stockholder Option Agreement”), pursuant to which, among
other things, (a) Buyer will receive options to acquire all of the outstanding Securities held by
such Stockholders, and (b) the Stockholders will agree to assume certain obligations with respect
to the voting of the capital stock and other securities held by such Stockholders;

     Whereas, subject to and upon the terms and conditions set forth herein, at the
Closing referred to herein, Buyer will purchase 1,014,199 shares (the “Purchased Shares”) of Series
G-1 Preferred Stock, no par value per share, of the Company (the “Series G-1 Preferred Stock”), for
an aggregate purchase price of approximately $10,000,000 (a portion of which will be paid through
surrender for cancellation of the principal amount, and any accrued interest, owing under (i) that
certain Convertible Promissory Note, dated as of June 4, 2004, in the principal amount of
$2,500,000, and (ii) that certain Convertible Promissory Note, dated as of September 16, 2004, in
the principal amount of $500,000 (collectively, the “Bridge Notes”), each issued by
the Company to Buyer);

     Whereas, on the Closing Date (as defined below), certain convertible promissory notes
issued by the Company and outstanding as of the Closing Date shall become convertible into shares
of Series F Preferred Stock in accordance with their terms; and

     Whereas, subject to and upon the terms and conditions set forth herein, Buyer may
make certain Loans (as defined below) to the Company of up to an aggregate principal amount of
$15,000,000 and may elect to make an additional loan in the principal amount of $10,000,000, in
exchange for the issuance by the Company to Buyer of certain convertible promissory notes.

     Now, Therefore, in consideration of the mutual promises and agreements set forth
herein, the parties hereto agree as follows:

 

 

1. COMPANY DISCLOSURE SCHEDULE.

     1.1 General. Attached hereto is a schedule of disclosures and exceptions to the
representations and warranties made by the Company in Section 4 (the “Company Disclosure
Schedule”). Pursuant to the terms and conditions herein, in connection with the delivery by the
Company of a Loan Request, the Company shall prepare an updated schedule of disclosures and
exceptions to the representations and warranties of the Company contained in Section 4 hereof
(each, an “Updated Company Disclosure Schedule”), as if such representations and warranties were
made as of the date of such Updated Company Disclosure Schedule, except to the extent any such
representations and warranties expressly refer to an earlier date. Any Updated Company Disclosure
Schedule shall refer only to (a) disclosures of actual facts contained in the Company Disclosure
Schedule attached to this Agreement, and (b) disclosures of actual facts in existence on the date
of such Updated Company Disclosure Schedule that have occurred or been discovered since the
Agreement Date, and the Updated Company Disclosure Schedule shall not otherwise limit or modify any
of the representations and warranties made in this Agreement. No disclosure of a fact or event on
any Updated Company Disclosure Schedule shall be deemed to cure any failure to disclose such fact
or event on any previously delivered Company Disclosure Schedule or Updated Company Disclosure
Schedule, or otherwise amend any previously delivered Company Disclosure Schedule or Updated
Company Disclosure Schedule.

     1.2 Disclosure Schedule Request. At any time and from time to time during the Option
Period (but no more than twice in a single calendar year), Buyer may, upon notice to the Company (a
“Disclosure Schedule Request”), require the Company to prepare an Updated
Company Disclosure Schedule to the representations and warranties of the Company contained in
Section 4 hereof, as if such representations and warranties were made as of the date of such
Updated Company Disclosure Schedule, except to the extent any such representations and warranties
expressly refer to an earlier date. The Company shall prepare and deliver to Buyer an Updated
Company Disclosure Schedule as soon as reasonably practicable, but in any event within thirty (30)
days of receipt of a Disclosure Schedule Request. Such Updated Company Disclosure Schedule shall
refer only to (a) disclosures of actual facts contained in the Company Disclosure Schedule attached
to this Agreement, and (b) disclosures of actual facts in existence on the date of such Updated
Company Disclosure Schedule that have occurred or been discovered since the Agreement Date, and
such Updated Company Disclosure Schedule shall not otherwise limit or modify any of the
representations and warranties made in this Agreement. No disclosure of a fact or event on any
Updated Company Disclosure Schedule shall be deemed to cure any failure to disclose such fact or
event on any previously delivered Company Disclosure Schedule or Updated Company Disclosure
Schedule, or otherwise amend any previously delivered Company Disclosure Schedule or Updated
Company Disclosure Schedule.

2. PURCHASE AND SALE OF PURCHASED SHARES.

     2.1 Sale and Issuance of the Purchased Shares.

          (a) On the Closing Date (as defined below), subject to the conditions set forth in this
Section 2, Buyer or its designee shall purchase, and the Company shall sell and issue to Buyer or
its designee, the Purchased Shares for the aggregate purchase price of $10,000,002.14, which shall
be paid through (i) surrender for cancellation of the Bridge Notes, and (ii) payment in cash of an
amount equal to $10,000,002.14 minus the principal amount and any accrued interest under
the Bridge Notes on the Closing Date.

          (b) The parties acknowledge and agree that the aggregate fair market value of the Purchased
Shares as of the Closing Date is equal to the purchase price for such Purchased Shares, and the
parties agree to file all Tax Returns in a manner consistent with this sentence and not to take any
Tax position inconsistent with this sentence.

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     2.2 Closing of the Purchase of the Purchased Shares. The closing of the purchase and
sale of the Purchased Shares (the “Closing”) shall take place at the offices of Bingham McCutchen
LLP in Boston, Massachusetts, at 12:00 p.m. (Eastern Time), as soon as practicable following the
satisfaction by the Company of all the conditions in Section 2.3, or at such other time, date and
place as are mutually agreed upon by the Company and Buyer (the “Closing Date”).
At the Closing, the Company shall deliver to the Buyer a certificate representing the Purchased
Shares against the surrender for cancellation of the Bridge Notes to the Company and payment by
Buyer of the balance of the purchase price of the Purchased Shares in cash by check or wire
transfer pursuant to wiring instructions provided by the Company.

     2.3 Conditions to Purchase of the Purchased Shares. The obligation of Buyer to
purchase the Purchased Shares on the Closing Date is conditioned upon the satisfaction by the
Company of each of the following conditions, and the waiver of satisfaction of such conditions
shall not be effective against Buyer unless consented to in writing by Buyer:

          (a) Representations and Warranties. Each of the representations and warranties of the
Company contained in this Agreement and each of the representations and warranties of the
Stockholders contained in the Stockholder Option Agreement shall have been true and correct in all
material respects at the time originally made, or an earlier date if such representation or
warranty expressly refers to an earlier date (in either case without giving effect to any
qualifications as to materiality or lack of Material Adverse Effect contained therein), and shall
be true and correct in all material respects (without giving effect to any qualifications as to
materiality or lack of Material Adverse Effect contained therein) as of the Closing Date with the
same force and effect as if such representations and warranties had been made at and as of the
Closing Date, or an earlier date if such representation or warranty expressly refers to an earlier
date;

          (b) Restated Articles. The Restated Articles in the form of Exhibit A
hereto (the “Restated Articles”) shall have been filed with and accepted by the
Secretary of State of the State of California on or prior to the Closing Date;

          (c) Merger Agreement. The Company shall have duly executed and delivered the Merger
Agreement, and the entrance by the Company into this Agreement and the Merger Agreement and the
consummation of the transactions contemplated hereby and thereby, including the Merger, shall have
been adopted and approved by the requisite majority of each class of the Company’s outstanding
capital stock in accordance with California Law and the Company’s articles of incorporation, and
such approval shall not have been annulled, rescinded or invalidated;

          (d) Stockholder Option Agreement. The holders of at least eighty percent (80%) of the
outstanding shares of the Company Common Stock (including shares of Company Common Stock issuable
upon conversion of the outstanding shares of Company Preferred Stock), on a fully-diluted basis,
shall have entered into the Stockholder Option Agreement and the Stockholder Option Agreement shall
be in full force and effect;

          (e) Effectiveness. This Agreement and each of the Related Agreements shall be in full
force and effect as of the Closing Date;

          (f) Performance of Obligations. The Company and each Stockholder shall have performed
and complied with all agreements, obligations and conditions contained in this Agreement or any of
the Related Agreements to which it is a party that are required to be performed or complied with by
it on or before the Closing Date;

          (g) No Material Breach. The Company shall not be in material breach of its
obligations to Buyer under this Agreement or under the Merger Agreement, and none of the
Stockholders shall be in material breach of their respective obligations to Buyer under the
Stockholder Option Agreement;

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          (h) No Material Adverse Effect; No Proceedings. No Material Adverse Effect shall have
occurred or been discovered by Buyer since the Agreement Date, and no order, stay, decree, judgment
or injunction shall have been entered, issued or enforced by any court of competent jurisdiction
prohibiting the transactions contemplated by this Agreement or the Related Agreements (the
“Transactions”), and no action shall have been taken by any Governmental Authority, or any
statute, regulation or order enacted, entered, enforced or deemed applicable to the Transactions,
that makes the consummation of any of the Transactions illegal or substantially deprives Buyer of
any of the material anticipated benefits of the Transactions, taken as a whole;

          (i) Reservation of Shares. The Company shall have reserved a sufficient number of
authorized shares of Company Common Stock for issuance upon conversion of the Purchased Shares,
based on the conversion price, if any, for such shares then in effect;

          (j) Consents and Waivers. The Company shall have obtained all consents, permits and
waivers necessary or appropriate for the consummation of the purchase and sale of the Purchased
Shares and the same shall be effective as of the Closing Date;

          (k) Qualifications. The Company shall deliver to Buyer copies of all authorizations,
approvals or permits, if any, of any Governmental Authority or regulatory body of the United States
or of any state that are required prior to closing in connection with the lawful issuance and sale
of the Purchased Shares to Buyer pursuant to this Agreement;

          (l) Good Standing Certificates. The Company shall have delivered to Buyer
certificates of good standing of the Company issued as of a date not more than two (2) days prior
to the Closing Date by the California Secretary of State;

          (m) Secretary’s Certificate; Proceedings and Documents. The Company shall deliver to
Buyer a certificate executed by the Secretary of the Company, dated as of the Closing Date,
certifying as to and, where appropriate, attaching certified copies of, (i) the resolutions duly
adopted by the Company Board authorizing the execution, delivery and performance of this Agreement
and those of the Related Agreements to which the Company is a party, the filing of the Restated
Articles with the California Secretary of State, the issuance and sale of the Purchased Shares, and
the consummation of all other Transactions, (ii) the Company’s Restated Articles and bylaws, each
as in effect at the Closing Date, (iii) the name, title, incumbency and signatures of the officers
authorized to execute this Agreement, and (iv) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the transactions hereunder
(including, without limitation, all blue sky law filings and waivers of all preemptive rights and
rights of first offer);

          (n) Compliance Certificate. The Company shall have delivered to Buyer a certificate,
dated as of the Closing Date and signed by the Company’s President or Chief Executive Officer,
certifying to the fulfillment of the conditions specified in Sections 2.3(a), (f), (g), (i) and
(j);

          (o) Opinion of Company Counsel. The Company shall have delivered to Buyer an opinion
of Heller Ehrman White & McAuliffe LLP, counsel for the Company (the “Company’s
Counsel”), dated as of the Closing Date, in substantially the form attached hereto as
Exhibit B;

          (p) Investors’ Rights Agreement. Buyer shall have become a party to that certain
Investors’ Rights Agreement, dated June 13, 2001, among the Company and the investors set forth
therein, as amended from time to time (the “Investors’ Rights Agreement”);

     2.4 Use of Proceeds. The proceeds to the Company from the sale of the Purchased
Shares shall be used solely to finance the Principal Business and not used for any other purpose.

     2.5 Voting Agreement. At the Closing, Buyer shall execute and deliver a Voting
Agreement with the Company in substantially the form attached hereto as Exhibit C.

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3. LOANS TO THE COMPANY.

     3.1 Making of Loans by Buyer.

          (a) Initial Loans and Second Loans. Provided that Buyer has not previously delivered
a Merger Election Notice to the Company, or a Stockholder Option Notice to the Stockholders, and
the Option Period has not otherwise expired or been terminated, at any time and from time to time
prior to the second anniversary of the Agreement Date, the Company shall be entitled to deliver one
or more “Loan Requests”, in the form attached hereto as Exhibit D,
to Buyer and requesting loans in an aggregate principal amount not to exceed $10,000,000 (the
“Initial Loans”), provided, that the Company shall be entitled to request
no more than an aggregate principal amount of $4,000,000 of Initial Loans prior to the first
anniversary of the Agreement Date. In addition, in the event that the Company has failed to
achieve the Third Milestone prior to the twentieth (20th) month anniversary of the
Agreement Date, Buyer has not previously delivered a Merger Election Notice to the Company, or a
Stockholder Option Notice to the Stockholders, and the Option Period has not otherwise expired or
been terminated, for a period of twelve (12) months following the twentieth (20th) month
anniversary of the Agreement Date, the Company shall be entitled to deliver one or more additional
Loan Requests, requesting loans in an aggregate principal not to exceed $5,000,000 (the
“Second Loans”). The principal amount of Initial Loans or Second Loans requested
in each Loan Request shall be at least $1,000,000, and in no event shall the Company be permitted
to deliver more than one Loan Request relating to Initial Loans and Second Loans per calendar
quarter. Within thirty (30) days following the date on which the Company delivers each such Loan
Request to Buyer (the “Loan Election Period”), Buyer shall be entitled to elect, in
the exercise of its sole discretion, to make the Initial Loan or Second Loan, as the case may be,
requested thereby, pursuant to the provisions of this Section 3. During such Loan Election Period,
Buyer shall be provided with such additional information relating to the business of the Company as
it may reasonably request of the Company and shall be entitled to ask questions of officers of the
Company with respect to such matters during such period. In the event that Buyer elects to make
the Initial Loan or Second Loan requested in any Loan Request, Buyer shall provide notice of such
election to the Company (a “Loan Election Notice”), and, subject to the
conditions set forth in Section 3.8 below, Buyer shall make the Initial Loan or Second Loan, as the
case may be, in the principal amount requested in such Loan Request no later than five (5) business
days after such election. In the event that Buyer does not deliver a Loan Election Notice with
respect to the Initial Loan or Second Loan requested in any Loan Request within the Loan Election
Period, Buyer shall be deemed to have elected not to make such Initial Loan or Second Loan. In
addition, in the event that Buyer elects to make any Initial Loan requested in the first Loan
Request, if any, delivered after the first anniversary of the Agreement Date, then Buyer shall be
deemed to have elected to make any and all Initial Loans (subject to the $10,000,000 aggregate
maximum principal amount for all Initial Loans described above and subject to the conditions set
forth in Section 3.8 below) that may be requested by the Company thereafter. Notwithstanding
anything to the contrary herein, in no event shall a Loan Request be deemed to be delivered to
Buyer hereunder until such time as Buyer has also been delivered the Updated Company Disclosure
Schedule prepared by the Company in connection therewith pursuant to Section 1.1, and in no
event
shall Buyer be required to make Initial Loans and Second Loans in an aggregate original principal
amount greater than $15,000,000.

          (b) Termination Loan. In the event that Buyer elects not to make the first Initial
Loan, if any, requested by the Company after the first anniversary of the Agreement Date, then the
Company shall be entitled to deliver a Loan Request (the “Termination Loan
Request”) within thirty (30) days following the date on which Buyer elects not to make such
first Initial Loan, on one occasion, in an aggregate principal amount not to exceed $5,000,000
minus the aggregate principal amount of any Initial Loans made by Buyer prior to the first
anniversary of the Agreement Date (the “Termination Loan”). Subject to the
conditions set forth in Section 3.9 below, within thirty (30) days following the date on which the
Company delivers the Termination Loan Request to Buyer, Buyer shall make the Termination Loan in
the principal amount specified in the Termination Loan Request.

5

 

          (c) Third Loan. In the event that (i) the Company has achieved the Third Milestone,
(ii) Buyer has not previously delivered a Merger Election Notice to the Company, or a Stockholder
Option Notice to the Stockholders, and (iii) the Option Period has not otherwise expired or been
terminated, Buyer may elect to make an additional loan to the Company, on one occasion, in the
aggregate principal amount of $10,000,000 (the “Third Loan”, and together with the Initial
Loans, the Second Loans, and the Termination Loan, the “Loans”). If Buyer elects to make
the Third Loan, Buyer shall deliver a written notice of such election to the Company (the
“Third Loan Notice”) within 30 days following the Company’s completion of the Third
Milestone. If Buyer delivers a Third Loan Notice, the Third Loan shall be made within forty-five
(45) days following the date on which Buyer delivers the Third Loan Notice. The Company shall
deliver to Buyer on or prior to the closing of the Third Loan the items described in paragraphs (j)
through (n) of Section 3.8.

          (d) Loan Date. The closing, if any, of each Loan shall take place at the offices of
Bingham McCutchen LLP in Boston, Massachusetts, at 12:00 p.m. (Eastern Time), on the thirtieth
(30th) day following the delivery of a Loan Request, provided, that the Company
shall have satisfied all of the conditions in Section 3.8, in the case of the Initial Loans and the
Second Loans, and the conditions in Section 3.9 in the case of the Termination Loan, on the
forty-fifth (45th) day following the delivery of the Termination Loan Request, in the
case of the Termination Loan, and on the forty-fifth (45th) day following the delivery
of the Third Loan Notice, in the case of the Third Loan, or at such other time, date and place as
are mutually agreed upon by the Company and Buyer (each, a “Loan Date”).

     3.2 Payment of Loan Principal. The principal amount of each Loan shall be paid to the
order of the Company in cash by check or wire transfer of immediately available funds on the
applicable Loan Date against delivery to Buyer of a convertible promissory note in the form
attached hereto as Exhibit E-1, with respect to any Initial Loans and any
Termination Loan, Exhibit E-2 with respect to any Third Loan, and Exhibit
E-3 with respect to any Second Loans (each, a “Note”), executed and delivered by,
and enforceable against, the Company.

     3.3 Interest. Interest on each of the Initial Loans, Second Loans and the Termination
Loan, if any, shall accrue at an annual interest rate equal to the “Prime Rate” as announced from
time to time by Bank of America, N.A., in Boston, Massachusetts, or its successor, plus one percent
(1%), compounded annually. Interest on the Third Loan, if made, shall accrue at an annual interest
rate equal to the “Prime Rate” as announced from time to time by Bank of America, N.A., in Boston,
Massachusetts, or its successor, compounded annually.

     3.4 Repayment of Principal Amount. The Loans shall be repayable in the manner
specified in each Note. Except as provided in the applicable Note, the Company shall not be
permitted to prepay or accelerate the maturity of the interest or principal amount of any such Note
voluntarily.

     3.5 Conversion. Each of the Notes shall be convertible into shares of Series G-1
Preferred Stock or Series G-2 Preferred Stock, no par value per share, of the Company (the
“Series G-2 Preferred Stock”), as the case may be, in accordance
with the terms and subject to the conditions set forth in such Note.

     3.6 Use of Proceeds. The proceeds of the Loans shall be used solely to finance the
Principal Business and not used for any other purpose.

     3.7 Allocation of Consideration between Options and Notes. The parties acknowledge
and agree that (a) the amount of consideration paid under and in connection with this Agreement,
the Merger Agreement and the Stockholder Option Agreement by Buyer in exchange for the Company
Option or the Stockholder Options, as the case may be, is de minimis, and (b) there will be no
“original issue discount” on the Notes, as determined pursuant to Code Sections 1271-1275 and the
Treasury Regulations thereunder, by reason thereof. The parties agree (i) to file all Tax Returns
in a manner consistent with this Section 3.7, and (ii) not to take any Tax position inconsistent
with this Section 3.7.

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     3.8 Conditions to the Obligation of Buyer to Make the Initial Loans and Second Loans.
In no event shall Buyer be required to make any Initial Loan or Second Loan if any of the following
further conditions (any of which may be waived, in writing, in whole or in part by Buyer) shall not
have been satisfied in full, or waived by Buyer in writing on or prior to the applicable Loan Date:

          (a) Representations and Warranties. Each of the representations and warranties of the
Company contained in this Agreement and each of the representations and warranties of the
Stockholders contained in the Stockholder Option Agreement shall have been true and correct in all
material respects at the time originally made, or an earlier date if such representation or
warranty refers expressly to an earlier date (in either case without giving effect to any
qualifications as to materiality or lack of Material Adverse Effect contained therein), and (as
modified and qualified by the Updated Company Disclosure Schedule, if any, delivered in connection
with the applicable Loan Request) shall be true and correct in all material respects (without
giving effect to any qualifications as to materiality or lack of Material Adverse Effect contained
therein) as of such Loan Date with the same force and effect as if such representations and
warranties had been made at and as of such Loan Date, or an earlier date if such representation or
warranty refers expressly to an earlier date;

          (b) Restated Articles. The Restated Articles shall have been filed with and accepted
by the Secretary of State of the State of California on or prior to the Loan Date;

          (c) Merger Agreement. The Company shall have duly executed and delivered the Merger
Agreement, and the entrance by the Company into this Agreement and the Merger Agreement and the
consummation of the transactions contemplated hereby and thereby, including the Merger, shall have
been adopted and approved by the requisite majority of each class of the Company’s outstanding
capital stock in accordance with California Law and the Company’s articles of incorporation, and
such approval shall not have been annulled, rescinded, or invalidated, and the Merger Agreement
shall be in full force and effect;

          (d) Stockholder Option Agreement. The holders of at least eighty percent (80%) of the
outstanding shares of the Company Common Stock (including shares of Company Common Stock issuable
upon conversion of the outstanding shares of Company Preferred Stock), on a fully-diluted basis,
shall have entered into the Stockholder Option Agreement, and the Stockholder Option Agreement
shall be in full force and effect;

          (e) Effectiveness. This Agreement and each of the Related Agreements (including the
Investors’ Rights Agreement) shall be in full force and effect as of the Loan Date;

          (f) Performance of Obligations. The Company and each Stockholder shall have performed
and complied with all agreements, obligations and conditions contained in this Agreement or any of
the Related Agreements to which it is a party that are required to be performed or complied with by
it on or before the Loan Date;

          (g) No Material Breach. The Company shall not be in material breach of its
obligations to Buyer under this Agreement or under the Merger Agreement, and none of the
Stockholders shall be in material breach of their respective obligations to Buyer under the
Stockholder Option Agreement;

          (h) No Major Material Adverse Effect; No Proceedings. No Major Material Adverse
Effect shall have occurred or been discovered by Buyer since the Agreement Date, and no order,
stay, decree, judgment or injunction shall have been entered, issued or enforced by any court of
competent jurisdiction prohibiting the Transactions, and no action shall have been taken by any
Governmental Authority, or any statute, regulation or order enacted, entered, enforced or deemed
applicable to the Transactions, that makes the consummation of any of the Transactions illegal or
substantially deprives Buyer of any of the material anticipated benefits of the Transactions, taken
as a whole;

7

 

          (i) Consents and Waivers. The Company shall have obtained all consents, permits and
waivers necessary or appropriate for the issuance of the applicable Note and the same shall be
effective as of the Loan Date;

          (j) Qualifications. The Company shall deliver to Buyer copies of all authorizations,
approvals or permits, if any, of any Governmental Authority or regulatory body of the United States
or of any state that are required pre-closing in connection with the lawful issuance of the
applicable Note to Buyer pursuant to this Agreement;

          (k) Good Standing Certificates. The Company shall have delivered to Buyer
certificates of good standing of the Company issued as of a date not more than two (2) days prior
to the Loan Date by the California Secretary of State;

          (l) Secretary’s Certificate; Proceedings and Documents. The Company shall deliver to
Buyer a certificate executed by the Secretary of the Company, dated as of the Loan Date, certifying
to and, where appropriate, attaching certified copies of, (i) the resolutions duly adopted by the
Company Board authorizing the execution, delivery and performance of this Agreement and the Related
Agreements to which the Company is a party, the filing of the Restated Articles with the California
Secretary of State, the issuance of the applicable Note and the consummation of all other
Transactions, (ii) the Company’s Restated Articles and bylaws, each as in effect at the Loan Date,
(iii) the name, title, incumbency and signatures of the officers authorized to execute this
Agreement, and (iv) copies of all third party and governmental consents, approvals and filings
required in connection with the consummation of the transactions hereunder;

          (m) Compliance Certificate. The Company shall have delivered to Buyer a certificate,
dated as of the Loan Date and signed by the Company’s President or Chief Executive Officer,
certifying to the fulfillment of the conditions specified in Sections 3.8(a), (f), (g), (i) and
(j); and

          (n) Opinion of Company Counsel. If requested by Buyer, the Company shall have
delivered to Buyer an opinion of the Company’s Counsel, dated as of the Loan Date, in substantially
the form attached hereto as Exhibit F.

     3.9 Conditions to the Obligation of Buyer to Make the Termination Loan. In no event
shall Buyer be required to make the Termination Loan if any of the following further conditions
(any of which may be waived, in writing, in whole or in part by Buyer) shall not have been
satisfied in full, or waived by Buyer in writing on or prior to the applicable Loan Date:

          (a) Representations and Warranties. Each of the representations and warranties of the
Company contained in this Agreement and each of the representations and warranties of the
Stockholders contained in the Stockholder Option Agreement shall have been true and correct in all
material respects at the time originally made, or an earlier date if such representation or
warranty refers expressly to an earlier date (in either case without giving effect to any
qualifications as to materiality or lack of Material Adverse Effect contained therein), and (as
modified and qualified by the Updated Company Disclosure Schedule, if any, delivered in connection
with the Loan Request) shall be true and correct in all material respects (without giving effect to
any qualifications as to materiality or lack of Material Adverse Effect contained therein) as of
such Loan Date with the same force and effect as if such representations and warranties had been
made at and as of such Loan Date, or an earlier date if such representation or warranty refers
expressly to an earlier date;

          (b) Restated Articles. The Restated Articles shall have been filed with and accepted
by the Secretary of State of the State of California on or prior to the Loan Date;

8

 

          (c) Effectiveness. This Agreement and each of the Related Agreements, other than the
Merger Agreement and the Stockholder Option Agreement, shall be in full force and effect as of the
Loan Date;

          (d) Performance of Obligations. The Company and each Stockholder shall have performed
and complied with all agreements, obligations and conditions contained in this Agreement or any of
the Related Agreements to which it is a party that are required to be performed or complied with by
it on or before the Loan Date;

          (e) No Material Breach. The Company shall not be in material breach of its
obligations to Buyer under this Agreement;

          (f) No Proceedings. No order, stay, decree, judgment or injunction shall have been
entered, issued or enforced by any court of competent jurisdiction prohibiting the making of the
Termination Loan or the issuance of the Note representing the Termination Loan, and no action shall
have been taken by any Governmental Authority, or any statute, regulation or order enacted,
entered, enforced or deemed applicable to the making of the Termination Loan or the issuance of the
Note representing the Termination Loan, that makes the making of the Termination Loan or the
issuance of the Note representing the Termination Loan illegal or substantially deprives Buyer of
any of the material anticipated benefits of the Termination Loan or the issuance of the Note
representing the Termination Loan, taken as a whole;

          (g) Consents and Waivers. The Company shall have obtained all consents, permits and
waivers necessary or appropriate for the issuance of the applicable Note and the same shall be
effective as of the Loan Date;

          (h) Qualifications. The Company shall deliver to Buyer copies of all authorizations,
approvals or permits, if any, of any Governmental Authority or regulatory body of the United States
or of any state that are required pre-closing in connection with the lawful issuance of the
applicable Note to Buyer pursuant to this Agreement;

          (i) Good Standing Certificates. The Company shall have delivered to Buyer
certificates of good standing of the Company issued as of a date not more than two (2) days prior
to the Loan Date by the California Secretary of State;

          (j) Secretary’s Certificate; Proceedings and Documents. The Company shall deliver to
Buyer a certificate executed by the Secretary of the Company, dated as of the Loan Date, certifying
to and, where appropriate, attaching certified copies of, (i) the resolutions duly adopted by the
Company Board authorizing the execution, delivery and performance of this Agreement and the Related
Agreements to which the Company is a party, the filing of the Restated Articles with the California
Secretary of State, the borrowing of the Termination Loan and the issuance of the applicable Note,
(ii) the Company’s Restated Articles and bylaws, each as in effect at the Loan Date, (iii) the
name, title, incumbency and signatures of the officers authorized to execute this Agreement, and
(iv) copies of all third party and governmental consents, approvals and filings required in
connection with the consummation of the transactions hereunder;

          (k) Compliance Certificate. The Company shall have delivered to Buyer a certificate,
dated as of the Loan Date and signed by the Company’s President or Chief Executive Officer,
certifying to the fulfillment of the conditions specified in Sections 3.9(a), (f), (g), (i) and
(j); and

          (l) Opinion of Company Counsel. If requested by Buyer, the Company shall have
delivered to Buyer an opinion of the Company’s Counsel, dated as of the Loan Date, in substantially
the form attached hereto as Exhibit F.

9

 

     3.10 Consequences of Buyer Election not to Make Loans. In the event that the Company
has delivered to Buyer a Loan Request in accordance with Section 3.1(a) (other than a Termination
Loan Request with respect to a Termination Loan) and Buyer neither elects to make the Loan by
delivery of a Loan Election Notice within the applicable Loan Election Period nor is deemed to have
elected to make such Loan in accordance with the terms of Section 3.1(a), then the Company may, in
its discretion, provided, that the Company is otherwise in compliance with this Agreement,
deliver an Option Period Termination Notice to Buyer of its intention to terminate the Option
Period. Unless Buyer shall deliver a Loan Election Notice with respect to the Loan referenced in
the Loan Request within ten (10) days after receipt of the Option Period Termination Notice, the
Company may terminate the Option Period on the date that is eleven (11) days following the date on
which the Company delivers the Option Period Termination Notice to Buyer. Buyer shall be entitled
to elect not to make any Loan requested in any particular Loan Request (other than any Termination
Loan Request) in its sole discretion, and the Company shall have no recourse in connection with any
such election other than the delivery of an Option Period Termination Notice in accordance with
this Section 3.10.

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to
Buyer as follows as of each of (a) the date hereof, (b) the Closing Date, and (c) each Loan Date,
except as specifically contemplated by this Agreement; provided, that the representations
and warranties made as of the date hereof and as of the Closing Date shall be qualified by the
Company Disclosure Schedule, and the representations and warranties as of any Loan Date shall be
qualified by the Updated Company Disclosure Schedule delivered by the Company most recently prior
to the applicable Loan Request, and the references below to the Company Disclosure Schedule shall
be deemed, for purposes of determining the accuracy of such representations and warranties as of
such Loan Date, to be references to such Updated Company Disclosure Schedule. Except as may be
specifically set forth herein, each representation and warranty contained in this Article 4 shall
be deemed to be made as of each date on which representations and warranties are deemed to be made
in accordance with this paragraph. Notwithstanding any other provision of this Agreement or such
Company Disclosure Schedule, each exception set forth in the Company Disclosure Schedule or any
Updated Company Disclosure Schedule will be deemed to qualify only each representation and warranty
set forth in this Agreement (i) that is specifically identified (by cross-reference or otherwise)
in the Company Disclosure Schedule or such Updated Company Disclosure Schedule as being qualified
by such exception, or (ii) with respect to which the relevance of such exception is readily
apparent on the face of the disclosure of such exception set forth in the Company Disclosure
Schedule or such Updated Company Disclosure Schedule.

     4.1 Organization, Good Standing and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of California and has
all requisite corporate power and authority to carry on its business as now conducted. The Company
is duly qualified or licensed to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a Material Adverse Effect. The Company has all
requisite corporate power and authority to own and operate its properties and assets, to execute
and deliver this Agreement and the Related Agreements to which it is a party, to issue the
Purchased Shares and the Conversion Shares, and to perform its obligations under, and carry out the
provisions of, this Agreement and the Related Agreements to which it is a party, and to carry on
its business as presently conducted and as presently contemplated to be conducted.

     4.2 Capitalization and Voting Rights.

          (a) The authorized capital of the Company consists of (except as otherwise disclosed in the
Company Disclosure Schedule):

               (i) Preferred Stock. 10,276,918 shares of Company Preferred Stock, of which
1,814,558 shares have been designated Series A Preferred Stock, 833,333 shares have been
designated Series B Preferred Stock, 558,374 shares have been designated Series C Preferred
Stock,

10

 

819,673 shares have been designated Series D Preferred Stock, 2,550,980 shares have been
designated Series E Preferred Stock, 1,000,000 shares have been designated Series F Preferred
Stock, 2,100,000 shares have been designated Series G-1 Preferred Stock and 600,000 shares have
been designated Series G-2 Preferred Stock. The respective rights, restrictions, privileges
and preferences of the Company Preferred Stock are as stated in the form of the Restated
Articles.

               (ii) Common Stock. 20,000,000 shares of Common Stock and 130,000 shares of
Non-Voting Common Stock.

          (b) The number of shares of each series of Company Preferred Stock and of Company Common Stock
issued and outstanding is set forth on Section 4.2(b) of the Company Disclosure Schedule.

          (c) Except as set forth in Section 4.2(c) of the Company Disclosure Schedule or as expressly
contemplated by this Agreement and the Related Agreements, there are not outstanding any options,
warrants, instruments, rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements, or other agreements or instruments of any kind,
including convertible debt instruments, for the purchase or acquisition from the Company of any of
its Securities. The Company is not a party or subject to any agreement or understanding and, to
the Company’s knowledge, there is no agreement or understanding between any other persons, that
affects or relates to the voting or giving of written consents with respect to any security or by a
director of the Company. The Company Stockholders collectively currently own, beneficially and of
record, a sufficient number of shares of each class of the Securities outstanding on the date
hereof required to approve the transactions contemplated by this Agreement and the Related
Agreements, including the Merger.

          (d) All of the issued and outstanding shares of the Company Common Stock and Company Preferred
Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable, and
(ii) were issued in compliance with all applicable state and federal laws concerning the issuance
of securities.

          (e) Each series of Company Preferred Stock is presently convertible into Company Common Stock
on a one-for-one basis and the consummation of the transactions contemplated hereunder (including
the issuance of the Purchased Shares and the Conversion Shares) will not result in any
anti-dilution adjustment or other similar adjustment to the outstanding shares of Company Preferred
Stock. The Purchased Shares and the Conversion Shares have been duly and validly reserved for
issuance. When issued in compliance with the provisions of this Agreement and the Restated
Articles, the Purchased Shares and the Conversion Shares will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances.

          (f) Section 4.2(f) of the Company Disclosure Schedule sets forth the name and address of each
Securityholder and the Securities owned beneficially and of record by each Securityholder, and, in
the case of options, warrants, instruments and other rights to acquire capital stock of the
Company, (i) the per-share exercise price payable therefor, (ii) the number of shares of the
Company’s capital stock each option, warrant, instrument or other right is then vested or
exercisable for, (iii) whether the holder of such option, warrant, instrument or other right is an
employee of the Company, (iv) whether the vesting of such option, warrant, instrument or other
right shall be accelerated by a change of control of the Company, including as a result of the
Merger, and (v) whether or not any such options, warrants, instruments or other rights are intended
to be “incentive stock options” as such term is defined in the Code.

     4.3 Subsidiaries. The Company does not presently own or control, directly or
indirectly, any interest in any other corporation, association, partnership, limited liability
company or other business entity. The Company is not a participant in any joint venture or similar
arrangement.

11

 

     4.4 Authorization; Binding Obligations; Governmental Consents.

          (a) All corporate action on the part of the Company, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement and the Related
Agreements to which it is a party, the performance of all obligations of the Company hereunder and
thereunder, including the authorization, issuance (or reservation for issuance) and delivery of the
Purchased Shares and the Conversion Shares pursuant thereto in accordance with the terms thereof,
have been taken prior to the Agreement Date, except for the Initial Stockholder Approval (as
defined in the Merger Agreement). This Agreement is, and the Related Agreements to which it is a
party (other than the Merger Agreement) will be, the valid and legally binding obligation of the
Company, enforceable against the Company in accordance with their respective terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable remedies. The Merger
Agreement, upon receipt of the Initial Stockholder Approval, will be the valid and legally binding
obligation of the Company, enforceable against the Company in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors’ rights, and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or other equitable
remedies. The issuances of the Purchased Shares and the Conversion Shares are not and will not be
subject to any preemptive rights or rights of first refusal that have not been properly waived or
complied with.

          (b) No consent, approval, permit, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local governmental authority or any
other person on the part of the Company is required in connection with the execution and delivery
of this Agreement or the Related Agreements to which it is party and the consummation of the
transactions contemplated hereby or thereby, except (i) the filing of merger documents with the
California Secretary of State; and (ii) such filings as may be required under the HSR Act or any
applicable state or foreign anti-takeover and similar laws.

     4.5 Financial Statements.

          (a) The Company has made available to Buyer, and included in the Company Disclosure Schedule
are, the Financial Statements. The Financial Statements are complete and correct in all material
respects and have been prepared in accordance with GAAP applied on a basis consistent with prior
periods, except that the unaudited financial statements do not contain footnotes. The Financial
Statements fairly present the financial condition of the Company on a consolidated basis as of the
dates and during the periods indicated therein, subject, in the case of the unaudited financial
statements, to normal year-end audit adjustments which are neither individually nor in the
aggregate material in amount. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with GAAP applied on a basis
consistent with prior periods.

          (b) Except for Indebtedness reflected in the Financial Statements or Indebtedness (other than
Indebtedness for borrowed money) incurred in the ordinary course of business and not individually
or in the aggregate in excess of $250,000, the Company Disclosure Schedule, the Company has no
Indebtedness outstanding. The Company is not in default with respect to any outstanding
Indebtedness or any instrument relating thereto, nor, to the Company’s knowledge, is there any
event which, with the passage of time or giving of notice, or both, would result in a default, and
no such Indebtedness or any instrument or agreement relating thereto purports to limit the issuance
of any Securities by the Company or the operation of the business of the Company. Complete and
correct copies of all instruments (including all amendments, supplements, waivers and consents)
relating to any Indebtedness of the Company have been furnished to Buyer or counsel to Buyer.

12

 

     4.6 Liabilities. The Company and its Subsidiaries have no material liabilities and
the Company knows of no material contingent liabilities required to be disclosed in the Financial
Statements that are not so disclosed, except current liabilities incurred in the ordinary course of
business consistent with past practice subsequent to the date of the Financial Statements.

     4.7 Offering Valid. Subject in part to the truth and accuracy of Buyer’s
representations in this Agreement, the offer, sale and issuance of the Purchased Shares and the
Conversion Shares, as contemplated by this Agreement, will be exempt from the registration
requirements of the Securities Act and will have been registered or qualified (or exempt from
registration and qualification) under the registration, permit or qualification requirements of all
applicable state securities laws, and neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such exemption.

     4.8 Litigation. There is no action, suit, proceeding or investigation pending or, to
the knowledge of the Company, currently threatened against the Company and its Subsidiaries or any
of its officers or directors. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company, threatened involving the
prior employment of any of the Company’s employees, their use in connection with the Company’s
business of any information or techniques allegedly proprietary to any of their former employers,
or their obligations under any agreements with prior employers. The Company and its Subsidiaries
are not a party or subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company or any of its Subsidiaries currently pending or that the Company or
any of its Subsidiaries intends to initiate.

     4.9 Intellectual Property.

          (a) Section 4.9(a) of the Company Disclosure Schedule sets forth a complete and accurate list
of (i) all Intellectual Property owned, licensed or used by the Company or any of its Subsidiaries,
all applications therefor, and all licenses, assignments and other agreements relating thereto to
which the Company is a party, and (ii) all written agreements relating to technology, know-how and
processes which the Company or any of its Subsidiaries has licensed or authorized for use by
others.

          (b) The operation of the business of the Company and its Subsidiaries as currently conducted
or as currently contemplated by the Company and its Subsidiaries to be conducted does not interfere
with, conflict with, infringe upon, misappropriate or otherwise violate the Intellectual Property
rights of any third party, and no action or claim is pending or, to the knowledge of the Company,
threatened alleging that the operation of such business interferes with, conflicts with, infringes
upon, misappropriates or otherwise violates the Intellectual Property rights of any third party.

          (c) The Company has the full right, title and interest in and to, or has a valid license or
other legal right under, the Company Owned Intellectual Property and the Company Licensed
Intellectual Property used in or necessary to the operation of its business as presently conducted
or as currently contemplated by the Company to be conducted, subject to the terms of the license
agreements governing the Company Licensed Intellectual Property.

          (d) Except as set forth in Section 4.9(d) of the Company Disclosure Schedule, there are no
outstanding options, licenses, or agreements of any kind relating to the Company Owned Intellectual
Property, nor is the Company or any of its Subsidiaries bound by or a party to any options,
licenses or agreements of any kind with respect to the Intellectual Property of any other person
(other than generally available off the shelf software and other standard products).

          (e) The Company has no present knowledge from which it should reasonably conclude that the
Company Owned Intellectual Property and any Intellectual Property licensed to the Company under the
Company Licensed Intellectual Property, are invalid or unenforceable, and the same have not been
adjudged invalid or unenforceable in whole or in part. The Company Owned Intellectual

13

 

Property and the Company Licensed Intellectual Property constitute all of the Intellectual
Property necessary for the operation of the business of the Company and its Subsidiaries as
currently conducted or as currently contemplated by the Company to be conducted. The Company has
complied with all of its obligations of confidentiality in respect of the claimed trade secrets or
proprietary information of others and knows of no violation of such obligations of confidentiality
as are owed to it.

          (f) No claims or actions have been asserted, are pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries (i) based upon or challenging or seeking
to deny or restrict the ownership by or license rights of the Company or any of its Subsidiaries of
any of the Company Owned Intellectual Property or Company Licensed Intellectual Property, (ii)
alleging that any services provided by, processes used by, or products manufactured or sold by the
Company or any of its Subsidiaries infringe or misappropriate any Intellectual Property right of
any third party, or (iii) alleging that the Company Licensed Intellectual Property is being
licensed or sublicensed in conflict with the terms of any license or other agreement, and, to the
knowledge of the Company, there is no basis for such a claim.

          (g) To the knowledge of the Company and without conducting any specific investigation, no
person is engaging in any activity that infringes or misappropriates the Company Owned Intellectual
Property or Company Licensed Intellectual Property. Except as set forth in Section 4.9(g) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has granted any
license or other right to any third party with respect to the Company Owned Intellectual Property
or Company Licensed Intellectual Property. The execution, delivery and performance of this
Agreement and the Related Agreements to which the Company is a party and the consummation of the
transactions contemplated hereby and thereby by the Company will not breach, violate or conflict
with any instrument or agreement concerning the Company Owned Intellectual Property, will not cause
the forfeiture or termination or give rise to a right of forfeiture or termination of any of the
Company Owned Intellectual Property or materially impair the right of Surviving Corporation (as
defined in the Merger Agreement) to license or dispose of, or to bring any action for the
infringement of, any material Company Owned Intellectual Property.

          (h) The Company has delivered or made available to Buyer or counsel to Buyer correct and
complete copies of all the licenses of the Company Licensed Intellectual Property, other than
licenses of commercial off-the-shelf computer software or other generally available standard
products. With respect to each such license:

               (i) such license is valid and binding and in full force and effect and represents the
entire agreement between the respective licensor and licensee with respect to the subject
matter of such license;

               (ii) such license will not cease to be valid and binding and in full force and effect on
terms identical in all material respects to those currently in effect as a result of the
consummation of the transactions contemplated by this Agreement, nor will the consummation of
the transactions contemplated by this Agreement constitute a material breach or default under
such license or otherwise so as to give the licensor or any other person a right to terminate
such license;

               (iii) neither the Company nor any of its Subsidiaries has (A) received any notice of
termination or cancellation under such license, (B) received any notice of breach or default
under such license, which breach has not been cured, or (C) granted to any other third party
any rights, adverse or otherwise, under such license that would constitute a material breach of
such license; and

               (iv) neither the Company nor, to the knowledge of the Company, any other party to such
license (including any Subsidiaries of the Company) is in material breach or default thereof,
and, to the knowledge of the Company, no event has occurred that, with notice or

14

 

lapse of time, would constitute such a material breach or default or permit termination,
modification or acceleration under such license.

          (i) Except as set forth in Section 4.9(i) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is aware that any of its respective employees, officers,
directors, agents or consultants (i) has breached or violated confidentiality restrictions in favor
of any third person the breach or violation of which could subject the Company or any of its
Subsidiaries to any material liability, or (ii) is obligated, to the Company’s knowledge, under any
contract (including licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or any of its Subsidiaries, as applicable, or that would
conflict with the Company’s or any of its Subsidiaries’ business as presently conducted. Each
employee and officer of and consultant to the Company and any of Subsidiaries of the Company has
executed a proprietary information and inventions agreement, a confidentiality agreement, or a
mutual confidentiality agreement in the form of Exhibits D-1, D-2, or
D-3 attached to the Merger Agreement. No current or former employee or officer of or
consultant to the Company or any of its Subsidiaries has excluded works or inventions made prior to
his or her employment or relationship with the Company or any of its Subsidiaries from his or her
assignment of inventions pursuant to such employee’s, officer’s or consultant’s proprietary
information and inventions agreement.

          (j) Each of the Company and each of its Subsidiaries has taken reasonable steps in accordance
with normal industry practice to maintain the confidentiality of its trade secrets and other
confidential Company Owned Intellectual Property. To the knowledge of the Company, (i) there has
been no misappropriation of any material trade secrets or other material confidential Company Owned
Intellectual Property by any person; (ii) no employee, independent contractor or agent of the
Company or any of its Subsidiaries has misappropriated any trade secrets of any other person in the
course of such performance as an employee, independent contractor or agent; and (iii) no employee,
independent contractor or agent of the Company or any of its Subsidiaries is in material default or
breach of any term of any employment agreement, non-disclosure agreement, assignment of invention
agreement or similar agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Company Owned Intellectual Property.

          (k) Neither the execution nor delivery of this Agreement or any of the Related Agreements, nor
the carrying on of the Company’s or any of its Subsidiaries’ business by the employees of and
consultants to the Company or any of its Subsidiaries, as the case may be, nor the conduct of the
Company’s or any of its Subsidiaries’ business as presently conducted or as currently proposed by
the Company to be conducted, will, to the knowledge of the Company, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. Except to the extent
already assigned to the Company or any of its Subsidiaries, neither the Company nor any of its
Subsidiaries believes that it is or will be necessary to utilize any inventions or proprietary
information of any of its respective employees (or people it currently intends to hire) made prior
to their employment by the Company or any of its Subsidiaries, as the case may be.

     4.10 Compliance with Other Instruments. Neither the Company nor any of its
Subsidiaries are in violation or default of any provision of its Articles of Incorporation or
bylaws, or of any material mortgage, indenture, contract, agreement, instrument, judgment, order,
writ or decree to which it is a party or by which it is bound or, to the Company’s knowledge, of
any provision of any federal or state statute, rule or regulation applicable to the Company or any
of its Subsidiaries. The execution, delivery and performance of this Agreement and the Related
Agreements to which the Company is a party, and the issuance of the Purchased Shares and the
Conversion Shares, will not result in any such violation or be in conflict with or constitute, with
or without the passage of time or giving of notice, a default under any such provision, instrument,
judgment, order, writ or decree, or result in the creation of any material

15

 

mortgage, pledge, lien, charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any material permit, license, authorization or approval applicable to the business,
operations or any of the assets or properties of the Company or any of its Subsidiaries.

     4.11 Agreements; Actions.

          (a) Except as set forth in Section 4.11(a) of the Company Disclosure Schedule, there are no
agreements, understandings or proposed transactions between the Company and any of its officers,
directors, Affiliates, or any Affiliate thereof, or between any Subsidiary of the Company and any
of its officers, directors or Affiliates.

          (b) Section 4.11(b) of the Company Disclosure Schedule sets forth all agreements,
understandings, instruments, contracts, judgments, orders, writs or decrees to which the Company or
any of its Subsidiaries is a party or by which it is bound that involve (i) obligations (contingent
or otherwise) of, or payments to, the Company or any of its Subsidiaries in excess of $100,000,
(ii) the license, assignment or transfer of any patent, copyright, trade secret or other
proprietary right to or from the Company or any of its Subsidiaries (other than licenses to the
Company arising from the purchase of generally available “off the shelf” or other standard
products), (iii) the manufacture, marketing, sale or distribution of any products of the Company or
any of its Subsidiaries in any jurisdiction, or any restrictions on the Company’s or any of its
Subsidiaries’ exclusive rights to develop, manufacture, assemble, distribute, market and sell its
products, (iv) indemnification by the Company or any of its Subsidiaries with respect to
infringements of proprietary rights (other than indemnification obligations arising from purchase,
sale or license agreements entered into in the ordinary course of business), or (v) any supply
agreements.

          (c) The Company has delivered or has caused to be delivered to Buyer or counsel to Buyer
correct and complete copies of each contract, agreement or other arrangement listed in Section 4.11
of the Company Disclosure Schedule, as such contracts, agreements and arrangements are amended to
date. Each such contract, agreement or other arrangement is a valid, binding and enforceable
obligation of the Company or any of its Subsidiaries, as applicable, and, to the knowledge of the
Company, of the other party or parties thereto, and is in full force and effect. Except as set
forth in Section 4.11(c) of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, the other party or parties thereto, is in breach
or non-compliance, or, to the knowledge of the Company, is considered to be in breach or
non-compliance by the other party thereto, of any term of any such contract, agreement or other
arrangement. Except as set forth in Section 4.11(c) of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries has received notice of any default or threat thereof with
respect to any such contract, agreement or other arrangement. Subject to obtaining any necessary
consents by the other party or parties to any such contract, agreement or other arrangement (as
further set forth in Section 4.11(c) of the Company Disclosure Schedule), no contract, agreement or
other arrangement listed in Section 4.11 of the Company Disclosure Schedule includes or
incorporates any provision the effect of which would be to enlarge or accelerate any obligations of
the Company or any of its Subsidiaries or give additional rights to any other party thereto or will
in any other way be adversely affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement or the Related Agreements.

          (d) Neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series of its capital
stock, (ii) incurred any Indebtedness for money borrowed or any other liabilities individually in
excess of $100,000 or, in the case of Indebtedness or liabilities individually less than $100,000,
in excess of $250,000 in the aggregate, (iii) made any loans or advances to any person, other than
ordinary advances for travel expenses or loans not in excess of $100,000 in the aggregate made and
repaid in full prior to January 1, 2003, or (iv) sold, exchanged or otherwise disposed of any of
its assets or rights, other than the

16

 

sale of its inventory in the ordinary course of business other than such sales that in the
aggregate have a value of less than $100,000.

          (e) For the purposes of Section 4.11(b), all liabilities, agreements, understandings,
instruments, contracts and proposed transactions involving the same person (including persons the
Company or any of its Subsidiaries has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

     4.12 Related-Party Transactions. No employee, officer, or director of or consultant
to the Company or any of its Subsidiaries, as the case may be, or member of his or her immediate
family is indebted to the Company or any of its Subsidiaries, nor is the Company or any of its
Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them
other than (a) for payment of salary or fees (in the case of consultants) for services rendered,
(b) reimbursement for reasonable expenses incurred on behalf of the Company or any of its
Subsidiaries, and (c) for other standard employee benefits made generally available to all
employees (including stock option agreements outstanding under any stock option plan approved by
the Company Board or the board of directors of any of the Company’s Subsidiaries, as the case may
be). To the knowledge of the Company, none of such persons has any direct or indirect ownership
interest in any firm or corporation with which the Company or any of its Subsidiaries is affiliated
or with which the Company or any of its Subsidiaries has a business relationship, or any firm or
corporation that competes with the Company or any of its Subsidiaries, except that employees,
officers or directors of the Company or any of its Subsidiaries and members of their immediate
families may own stock in publicly-traded companies that may compete with the Company or any of its
Subsidiaries. To the knowledge of the Company, no member of the immediate family of any officer or
director of the Company is directly or indirectly interested in any material contract with the
Company. To the knowledge of the Company, no member of the immediate family of any officer or
director of any Subsidiary of the Company is directly or indirectly interested in any material
contract with such Subsidiary. Except as may be disclosed in the Financial Statements, neither the
Company nor any of its Subsidiaries is a guarantor or indemnitor of any Indebtedness of any other
person.

     4.13 Changes. Except as reflected in the Financial Statements provided to Buyer,
since the end of the latest completed fiscal year of the Company, there has not been:

          (a) Any change in the assets, liabilities, financial condition or operating results of the
Company or any of its Subsidiaries from that reflected in the Financial Statements, other than
changes in the ordinary course of business consistent with past practice, none of which
individually or in the aggregate has had or could reasonably be expected to have a Material Adverse
Effect;

          (b) Any resignation or termination of any key officers or employees of the Company or any of
its Subsidiaries;

          (c) Any material change, except in the ordinary course of business consistent with past
practice, in the contingent obligations of the Company or any of its Subsidiaries by way of
guaranty, endorsement, indemnity, warranty or otherwise;

          (d) Any damage, destruction or loss, whether or not covered by insurance, which has had or
could reasonably be expected to have a Material Adverse Effect;

          (e) Any waiver by the Company or any of its Subsidiaries of a material right or of a material
debt owed to it;

          (f) Any direct or indirect loans made by the Company to any stockholder, employee, officer or
director of the Company, or a Subsidiary of the Company to any stockholder, employee, officer or
director of such Subsidiary, other than advances made in the ordinary course of business consistent
with past practice;

17

 

          (g) Any material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder of the Company or any of its Subsidiaries, other than in the
ordinary course of business consistent with past practices;

          (h) Any declaration or payment of any dividend or other distribution of the assets of the
Company or any of its Subsidiaries;

          (i) Any labor organization activity;

          (j) Any Indebtedness, obligation or liability incurred, assumed or guaranteed by the Company
or any of its Subsidiaries, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business consistent with past practice;

          (k) Any sale, assignment, transfer or license of any patents, trademarks, copyrights, trade
secrets or other intangible assets of the Company or any of its Subsidiaries, except for (i)
licenses to use such Intellectual Property granted in connection with the commercial use of the
Company’s products by end-users (but which do not grant rights to manufacture, sell or distribute
products using such Intellectual Property to such persons), (ii) rights to manufacture products
using such Intellectual Property granted to contract manufacturing partners pursuant to agreements
that are terminable upon no more than ninety (90) days’ notice without penalty and do not grant the
other party the right to market, distribute or sell products including such Intellectual Property
and (iii) non-commercial site licenses granted to clinical investigators who are evaluating the
Company products in clinical trials, which licenses terminate at the conclusion of such trials;

          (l) Any change in any material agreement to which the Company or any of its Subsidiaries is a
party or by which it is bound which has had or should reasonably be expected to have a Material
Adverse Effect; or

          (m) Any other event or condition of any character that, either individually or cumulatively,
has had or could reasonably be expected to have a Material Adverse Effect.

     4.14 Compliance with Laws; Permits. Neither the Company nor any of its Subsidiaries
is in violation of any applicable statute, rule, regulation, order, judgment, decree, writ or
restriction of any domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties which has had or could
reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries
has all franchises, permits, licenses and any similar authority (the “Permits”) necessary
for the conduct of its business as now being conducted by it. No suspension or cancellation of any
of the Permits is pending or, to the knowledge of the Company, threatened.

     4.15 Environmental, Zoning and Safety Laws. Except as set forth in Section 4.15 of
the Company Disclosure Schedule, (a) neither the activities carried on by the Company or any of its
Subsidiaries at the facilities, offices or properties leased by the Company or any of its
Subsidiaries, as the case may be, nor, to the knowledge of the Company, such facilities, offices or
properties, are in material violation of any Environmental Laws, or any other zoning, health or
safety law or regulation; (b) neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any operator of its past or present properties, is or has been in violation, or
alleged violation, of, or has any liability or threatened liability under, any Environmental Laws;
(c) to the knowledge of the Company, none of the properties currently or formerly owned, leased or
operated by the Company or any of its Subsidiaries (including, without limitation, soils and
surface and ground waters) are contaminated with any Hazardous Substance (as defined in the Merger
Agreement); (d) neither the Company nor any of its Subsidiaries is actually, potentially or
allegedly liable for any off-site contamination by Hazardous Substances; (e) to the knowledge of
the Company, neither the Company nor any of its Subsidiaries is actually, potentially or allegedly
liable under any Environmental Law (including, without limitation, pending or threatened liens);
(f) the Company and each of its Subsidiaries has all Environmental Permits necessary for the

18

 

conduct of its business as now being conducted by it; (g) the Company and each of its
Subsidiaries has always been and is in compliance with its Environmental Permits; and (h) neither
the execution of this Agreement nor the consummation of the transactions contemplated hereby will
require any investigation, remediation or other action with respect to Hazardous Substances, or any
notice to or consent of Governmental Authorities or third parties, pursuant to any applicable
Environmental Law or Environmental Permit.

     4.16 Manufacturing and Marketing Rights. Neither the Company nor any of its
Subsidiaries has granted rights to manufacture, produce, assemble, license, market, or sell its
products to any other person and is not bound by any agreement that affects the Company’s, or any
of its Subsidiaries’, exclusive right to develop, manufacture, assemble, distribute, market or sell
its products.

     4.17 Disclosure. The Company has provided Buyer or counsel to Buyer with all the
information that Buyer has requested for deciding whether to purchase the Purchased Shares and to
execute this Agreement and the Related Agreements. Neither this Agreement (including all the
exhibits and schedules hereto), the Related Agreements, nor any other statements or certificates
made or delivered in connection herewith or therewith, contains any untrue statement of a material
fact or omits to state a material fact relating to the Company necessary to make the statements
herein or therein not misleading in light of the circumstances under which they were made. Except
as set forth in this Agreement, to the knowledge of the Company, there is no material fact relating
to the Company that the Company or any of its Subsidiaries, as the case may be, has not disclosed
to Buyer or counsel to Buyer and of which any of its officers, directors or executive employees is
aware that could reasonably be expected to result in a Material Adverse Effect on the Company.

     4.18 Registration or First Offer Rights. Except as set forth in Section 4.18 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has granted or agreed
to grant any registration rights, including piggyback rights, or any right of first offer to any
person.

     4.19 Insurance. The Company and each of its Subsidiaries has in full force and effect
fire and casualty insurance policies, with coverages, and in the good faith belief of the Company,
sufficient in amount (subject to reasonable deductibles) to allow the Company or such Subsidiary to
replace in full any of its properties that might be damaged or destroyed. The Company and each of
its Subsidiaries has in full force and effect products liability and errors and omissions insurance
in amounts customary for companies similarly situated. Neither the Company nor any of the
Company’s Subsidiaries is in default with respect to its obligations under any insurance policy
maintained by it, and neither the Company nor any of the Company’s Subsidiaries has been denied
insurance coverage.

     4.20 Employee Benefit Plans.

          (a) Identification of Plans. Except as disclosed in Section 4.20(a) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries currently maintains or
contributes to, or has any outstanding liability to or in respect of or obligation under, any
pension, profit-sharing, deferred compensation, bonus, stock option, employment, share appreciation
right, severance, group or individual health, dental, medical, life insurance, survivor benefit, or
similar plan, policy, arrangement or agreement, whether formal or informal, written or oral, for
the benefit of any current or former director, officer or employee of or consultant to the Company
or any of its Subsidiaries, as applicable. Each of the arrangements set forth in Section 4.20(a)
of the Company Disclosure Schedule is herein referred to as an “Employee Benefit Plan”,
except that any such arrangement which is a multi-employer plan shall be treated as an Employee
Benefit Plan only for purposes of Sections 4.20(d)(ii) and (vi) and 4.20(g) below.

          (b) Delivery of Documents. The Company has heretofore delivered to Buyer or counsel
to Buyer true, correct and complete copies of each Employee Benefit Plan and, with respect to each
such Employee Benefit Plan, true, correct and complete copies of (i) any associated trust,
custodial, insurance or service agreements, (ii) any annual report, actuarial report, or disclosure
materials (including

19

 

specifically any summary plan descriptions) submitted to any governmental agency or
distributed to participants or beneficiaries thereunder in the current or any of the three (3)
preceding calendar years, and (iii) the most recently received IRS determination letters, if any,
and any governmental advisory opinions, rulings, compliance statements, closing agreements or
similar materials specific to such Employee Benefit Plan.

          (c) Compliance with Terms and Law. Each Employee Benefit Plan is and has heretofore
been maintained and operated in material compliance with the terms of such Employee Benefit Plan
and in material compliance with the requirements prescribed (whether as a matter of substantive law
or as necessary to secure favorable tax treatment) by any and all applicable statutes, governmental
or court orders, or governmental rules or regulations in effect from time to time, including ERISA
and the Code, and applicable to such Employee Benefit Plan. Each Employee Benefit Plan which is
intended to qualify under Section 401(a) of the Code and each trust or other entity intended to
qualify as a “voluntary employee benefit association” within the meaning of Section 501(c)(9) of
the Code and associated with any Employee Benefit Plan is expressly identified as such in Section
4.20(c) of the Company Disclosure Schedule and has been determined to be so qualified by the IRS,
may rely on an opinion letter issued by the IRS with respect to a standardized prototype plan
adopted in accordance with the requirements for such reliance, or has time remaining for
application to the IRS for a determination of the qualified status of such Employee Benefit Plan
and, to the knowledge of the Company, nothing has occurred as to each which has resulted or is
likely to result in the revocation or denial of such determination or which, to the knowledge of
the Company, would not reasonably be expected to be resolved without such revocation or denial
under the compliance resolution programs of the IRS to preserve such qualification.

          (d) Absence of Certain Events and Arrangements. Except as set forth in Section
4.20(d) of the Company Disclosure Schedule:

               (i) there is no pending or, to the knowledge of the Company, threatened legal action, proceeding or investigation, other than routine claims for benefits, concerning any Employee Benefit Plan or, to the knowledge of the Company, any fiduciary or service provider thereof;

               (ii) no liability (contingent or otherwise) to the PBGC or any multi-employer plan has been incurred by the Company or any of its Affiliates or Subsidiaries (other than insurance premiums satisfied in due course);

               (iii) no reportable event, or event or condition which presents a material risk of termination by the PBGC, has occurred with respect to any Employee Benefit Plan, or any retirement plan of an Affiliate or Subsidiary of the Company, which is subject to Title IV of ERISA;

               (iv) no Employee Benefit Plan nor any party in interest with respect thereof has, to the knowledge of the Company, engaged in a prohibited transaction which could subject the Company or any of its Subsidiaries directly or indirectly to material liability under Section 409 or 502(i) of ERISA or Section 4975 of the Code;

               (v) no Employee Benefit Plan provides welfare benefits subsequent to termination of employment to employees or their beneficiaries except to the extent required by applicable state laws and Title I, Part 6 of ERISA;

               (vi) neither the Company nor any of its Subsidiaries has announced its intention to modify or terminate any Employee Benefit Plan or adopt any arrangement or program which, once established, would come within the definition of an Employee Benefit Plan, except for amendments required by law; and

               (vii) neither the Company nor any of its Subsidiaries has undertaken to maintain any Employee Benefit Plan for any stated period of time and each such Employee Benefit

20

 

Plan is terminable at the sole discretion of the sponsor thereof, subject only to such
constraints as may be imposed by applicable law.

          (e) Funding of Certain Plans. With respect to each Employee 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 the Company or any of its Subsidiaries, as the case may be, under the
terms of each such Employee Benefit Plan or applicable law, as applied through the Closing Date,
the consummation of the Merger or a short-form merger, and no accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any such Employee Benefit Plan. The current value of the assets of each such Employee
Benefit Plan, as of the end of the most recently ended plan year of that Employee Benefit Plan
subject to Article IV of ERISA, equals or exceeds the current value of all benefits liabilities
under that Employee Benefit Plan.

          (f) Effect of Transactions. The execution of this Agreement and the consummation of
the transactions contemplated by this Agreement and the Related Agreements, including upon delivery
of the Merger Election Notice, the Merger, will not, by themselves or in combination in any other
event (regardless of whether that other event has or will occur), result in any payment (whether of
severance pay or otherwise) becoming due from or under any Employee Benefit Plan (including any
employment agreement) to any current or former director, officer or employee of or consultant to
the Company or any of its Subsidiaries or result in the vesting, acceleration of payment or
increases in the amount of any benefit payable to or in respect of any such current or former
director, officer or employee of or consultant to the Company.

          (g) Multi-employer Plans. No Employee Benefit Plan is a multi-employer plan.

          (h) Definitions. For purposes of this Section, “multi-employer plan”, “party in
interest”, “current value”, “reportable event” and “benefit liability” have the same meaning
assigned such terms under Sections 3, 4043(b) or 4001(a) of ERISA, and “affiliate” means any entity
which under Section 414 of the Code is treated as a single employer with the Company, determined,
however, without regard to this Agreement or the Merger Agreement.

     4.21 FDA and Regulatory Matters.

          (a) With respect to the Contingent Payment Products (as defined in the Merger Agreement) and,
to the extent applicable, any other products currently under development by the Company
(collectively, the “Products”), (i) (A) the Company and each of its Subsidiaries has
obtained all necessary and applicable approvals, clearances, authorizations, licenses and
registrations required by United States or foreign governments or government agencies, to permit
the design, development, pre-clinical and clinical testing, manufacture, labeling, sale,
distribution and promotion of its Products in jurisdictions where it currently conducts such
activities (the “Activities to Date”) with respect to each Product (collectively, the
“Company Licenses”); (B) the Company and each of its Subsidiaries, as the case may be, is
in compliance in all material respects with all terms and conditions of each Company License and
with all applicable laws pertaining to the Activities to Date with respect to each Product which is
not required to be the subject of a Company License; (C) the Company and each of its Subsidiaries,
as the case may be, is in compliance with all applicable laws regarding registration, license
and/or certification for each site at which a Product is manufactured or labeled, or from which a
Product is sold or distributed by the Company or its Subsidiaries; and (D) to the extent that any
Product has been exported from the United States, the Company or, as applicable, a Subsidiary of
the Company exporting such Product, has exported such Product in compliance in all material
respects with applicable law; (ii) all manufacturing operations performed by or on behalf of the
Company or its Subsidiaries have been and are being conducted in all material respects in
compliance with the Quality Systems Regulations of the FDA and, to the extent applicable to the
Company or any of its Subsidiaries, in all material respects with counterpart regulations in the
European Union and all other countries where compliance is required; (iii) all non-clinical
laboratory studies of Products under development, sponsored by the Company or any

21

 

of its Subsidiaries and intended to be used to support regulatory clearance or approval, have
been and are being conducted in compliance in all material respects with the FDA’s Good Laboratory
Practice for Non-Clinical Studies regulations (21 CFR Part 58) in the United States and, to the
extent applicable to the Company or any of its Subsidiaries, counterpart regulations in the
European Union and all other countries; and (iv) the Company and each of its Subsidiaries is in
compliance with all applicable reporting requirements for all Company Licenses or plant
registrations described in clause (i) above, including, but not limited to, applicable adverse
event reporting requirements in the United States and outside of the United States under applicable
law.

          (b) The Company and each of its Subsidiaries is in compliance with all FDA and non-United
States equivalent agencies and similar state and local laws applicable to the maintenance,
compilation and filing of reports, including medical device reports, with regard to the Products.
Section 4.21(b) of the Company Disclosure Schedule sets forth a list of all adverse event reports
related to the Products, including any Medical Device Reports (as defined in 21 CFR 803). Set
forth on Section 4.21(b) of the Company Disclosure Schedule are complaint review and analysis
reports of the Company and each of its Subsidiaries through the date hereof, including information
regarding complaints by product and root cause analysis of closed complaints, which reports are
correct in all material respects.

          (c) Neither the Company nor any of its Subsidiaries has received any written notice or other
written communication from the FDA or any other Governmental Authority (i) contesting the
pre-market clearance or approval of, the uses of or the labeling and promotion of any of the
Products, or (ii) otherwise alleging any material violation of any laws by the Company or any of
its Subsidiaries.

          (d) There have been no recalls, field notifications or seizures ordered or adverse regulatory
actions taken (or, to the knowledge of the Company, threatened) by the FDA or any other
Governmental Authority with respect to any of the Products, including any facilities where any such
Products are produced, processed, packaged or stored and neither the Company nor any of its
Subsidiaries has within the last three (3) years, either voluntarily or at the request of any
Governmental Authority, initiated or participated in a recall of any Product or provided post-sale
warnings regarding any Product.

          (e) The Company and each of its Subsidiaries have conducted all of their clinical trials with
reasonable care and in accordance with all applicable laws and the stated protocols for such
clinical trials.

          (f) All filings with and submissions to the FDA and any corollary entity in any other
jurisdiction made by the Company or any of its Subsidiaries with regard to the Products, whether
oral, written or electronically delivered, were true, accurate and complete as of the date made,
and, to the extent required to be updated, as so updated remain true, accurate and complete in all
material respects as of the date hereof, and do not materially misstate any of the statements or
information included therein, or omit to state a material fact necessary to make the statements
therein not misleading.

     4.22 Brokers; Expenses. No finder, broker, agent or other similar intermediary has
acted for or on behalf of the Company or its stockholders in connection with the negotiation of
this Agreement or the Related Agreements or the consummation of the transactions contemplated
hereby or thereby.

     4.23 Taxes.

          (a) Filing of Tax Returns and Payment of Taxes. The Company has timely filed all Tax
Returns required to be filed by it, each such Tax Return has been prepared in compliance with all
applicable laws and regulations, and all such Tax Returns are true, accurate and complete in all
respects. All Taxes that have become due and payable by the Company have been timely paid, and the
Company is not and will not be liable for any additional Taxes in respect of any Taxable period or
any portion thereof ending on or before the date of the unaudited consolidated financial statements
forming part of the Financial Statements included in the Company Disclosure Schedule in an amount
that exceeds the corresponding reserve therefor separately identified in Section 4.23(a) of the
Company Disclosure

22

 

Schedule, if any, as reflected in such Financial Statements, and any Taxes of the Company
arising after such date and at or before the Effective Time have been or will be incurred in the
ordinary course of the Company’s business. The Company has delivered to Buyer or counsel to Buyer
true, correct and complete copies of all Tax Returns with respect to income Taxes filed by or with
respect to it with respect to Taxable periods ended on or after December 31, 2000 (the “Delivered
Tax Returns”), and has delivered or made available to Buyer or counsel to Buyer all relevant
documents and information with respect thereto, including without limitation work papers, records,
examination reports, and statements of deficiencies proposed, assessed against or agreed to by the
Company.

          (b) Deficiencies. No deficiency or adjustment in respect of Taxes has been proposed,
asserted or assessed by any Taxation Authority against the Company. There are no outstanding
refund claims with respect to any Tax or Tax Return of the Company.

          (c) Liens. There are no liens for Taxes (other than current Taxes not yet due and
payable) on any of the assets of the Company.

          (d) Extensions to Statute of Limitations for Assessment of Taxes. The Company has not
consented to extend the time in which any Tax may be assessed or collected by any Taxation
Authority.

          (e) Extensions of the Time for Filing Tax Returns. The Company has not requested or
been granted an extension of the time for filing any Tax Return that has not yet been filed.

          (f) Pending Proceedings. There is no action, suit, Taxation Authority proceeding, or
audit with respect to any Tax now in progress, pending or, to the knowledge of the Company,
threatened against or with respect to the Company.

          (g) No Failures to File Tax Returns. No claim has ever been made by a Taxation
Authority in a jurisdiction where the Company does not pay Tax or file Tax Returns that the Company
is or may be subject to Taxes assessed by such jurisdiction.

          (h) Tax Attributes, Etc. Set forth in Section 4.23(h) of the Company Disclosure
Schedule are the net operating loss, net capital loss, credit, minimum Tax, charitable
contribution, and other Tax carryforwards (by type of carryforward and expiration date, if any) of
the Company. Except as set forth in Section 4.23(h) of the Company Disclosure Schedule or the
Updated Company Disclosure Schedule none of those carryforwards are presently subject to limitation
under Sections 382, 383, or 384 of the Code, or the federal consolidated return regulations, or any
analogous provision of foreign, state, or local Tax law.

          (i) Elections. All elections with respect to Taxes affecting the Company that were
not made in the Delivered Tax Returns are described in Section 4.23(i) of the Company Disclosure
Schedule.

          (j) Membership in Affiliated Groups, Liability for Taxes of Other Persons, Etc. The
Company has never been a member of any affiliated group of corporations (as defined in Section
1504(a) of the Code) or filed or been included in a combined, consolidated or unitary Tax Return.
The Company is neither a party to nor bound by any Tax sharing or allocation agreement. The
Company is not presently liable, nor does the Company have any potential liability, for the Taxes
of another person (i) under Treasury Regulations Section 1.1502-6 (or comparable provision of
state, local or foreign law), (ii) as transferee or successor, or (iii) by contract or indemnity or
otherwise.

          (k) Adjustments under Section 481. The Company will not be required, as a result of a
change in method of accounting for any period ending on or before or including the Effective Time,
to include any adjustment under Section 481(c) of the Code (or any similar or corresponding
provision or requirement under any other Tax law) in Taxable income for any period ending on or
after the Effective Time. The Company will not be required to include any item of income in
Taxable income for any

23

 

Taxable period (or portion thereof) ending after the Effective Time as a result of any prepaid
amount received on or prior to the Effective Time.

          (l) Withholding Taxes. The Company has timely withheld and timely paid all Taxes
which are required to have been withheld and paid by it in connection with amounts paid or owing to
any employee, independent contractor, creditor or other person.

          (m) Permanent Establishments and Branches Outside the United States. The Company does
not have a permanent establishment in any country with which the United States of America has a
relevant Tax treaty, as defined in such relevant Tax treaty, and does not otherwise operate or
conduct business through any branch in any country other than the United States.

          (n) U.S. Real Property Holding Corporation. The Company is not and has not been a
United States real property holding corporation within the meaning of Code Section 897(c)(2),
during the applicable period specified in Code Section 897(c)(1)(A)(ii).

          (o) Safe Harbor Lease Property. None of the property owned or used by the Company is
subject to a Tax benefit transfer lease executed in accordance with Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended by the Economic Recovery Tax Act of 1981.

          (p) Tax-Exempt Use Property. None of the property owned by the Company is “tax-exempt
use property” within the meaning of Section 168(h) of the Code.

          (q) Security for Tax-Exempt Obligations. None of the assets of the Company directly
or indirectly secures any Indebtedness, the interest on which is tax-exempt under Section 103(a) of
the Code, and the Company is not directly or indirectly an obligor or a guarantor with respect to
any such Indebtedness.

          (r) Section 341(f) Consent. The Company has not filed any consent agreement under
Section 341(f) of the Code (as in effect prior to its repeal by the Jobs and Growth Tax Relief
Reconciliation Act of 2003) or agreed to have Section 341(f)(2) of the Code (as in effect prior to
such repeal) apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code, prior to such repeal) owned by the Company.

          (s) Parachute Payments, Etc. The Company has not made any payments, is not obligated
to make any payments, and is not a party to any agreement that under certain circumstances could
obligate it to make any payments, that will not be deductible under Code Sections 162(m) or 280G.

          (t) Rulings. There are no outstanding rulings of, or requests for rulings by, any
Taxation Authority addressed to the Company that are, or if issued would be, binding on the
Company.

          (u) Divisive Transactions. The Company has never been either a “distributing
corporation” or a “controlled corporation” in connection with a distribution of stock qualifying
for tax-free treatment, in whole or in part, pursuant to Section 355 of the Code.

          (v) Section 83(b) Elections. To the Company’s knowledge, all persons who have
purchased shares of the Company’s stock that at the time of such purchase were 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 state and local Tax laws.

     For purposes of this Section 4.23, references to the Company shall be deemed to include the
Company and all of its Subsidiaries.

     4.24 Minute Book. The minute book of the Company made available to Buyer or counsel
to Buyer contains minutes of all meetings of directors and stockholders since the time of
incorporation and reflects all transactions referred to in such minutes accurately in all material
respects.

24

 

     4.25 Employees. The Company has no collective bargaining agreements with any of its
employees. There is no labor union organizing activity pending or, to the Company’s knowledge,
threatened with respect to the Company or any of its Subsidiaries. To the Company’s knowledge, no
employee of the Company, nor any consultant with whom the Company has contracted, is in violation
of any material term of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business to be conducted by the Company; and to the Company’s
knowledge, the continued employment by the Company of its present employees, and the performance of
the Company’s contracts with its independent contractors, will not result in any such violation.
The Company has not received any notice alleging that any such violation has occurred. No employee
of the Company has been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company is not aware that
any officer or key employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of key employees.

     4.26 Obligations of Management. Each officer of the Company and its Subsidiaries is
currently devoting one hundred percent (100%) of his or her business time to the conduct of the
business of the Company. The Company is not aware of any officer or key employee of the Company
planning to work less than full time at the Company in the future.

     4.27 Title to Properties and Assets; Liens, Etc. The Company has good and marketable
title to all of its properties and assets, including the properties and assets reflected in the
most recent balance sheet included in the Financial Statements, and good title to its leasehold
estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other
than (a) those resulting from Taxes which have not yet become delinquent, (b) minor liens and
encumbrances which do not materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and (c) those that have otherwise arisen in the
ordinary course of business. All facilities, machinery, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used. The Company is in
compliance with all material terms of each lease to which it is a party or is otherwise bound.

     4.28 Information Supplied. None of the information supplied or to be supplied by the
Company in writing to Buyer or counsel to Buyer with the intention that such information be
included or incorporated by reference in any registration statement, permit application or proxy
statement in connection with the issuance of Buyer Common Stock pursuant to Section 1.8 of the
Merger Agreement at the time such registration statement or permit application is filed or at the
time such proxy statement is mailed to the stockholders of the Company, will contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances under which they
were made not misleading. Notwithstanding the foregoing, the Company makes no representation,
warranty or covenant with respect to any information supplied or required to be supplied by Buyer
or which is contained in or omitted from any of the foregoing documents.

5. REPRESENTATIONS AND WARRANTIES OF BUYER. As of the Agreement Date, the Closing Date and each
Loan Date, Buyer represents and warrants to the Company as follows:

     5.1 Organization, Good Standing and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware. Buyer
has all requisite corporate power and authority to own and operate its properties and assets, to
execute and deliver this Agreement and the Related Agreements, to carry out the provisions of this
Agreement and those of the Related Agreements, and to perform its obligations under, and carry out
the provisions of, this Agreement

25

 

and such Related Agreements, and to carry on its business as presently conducted and as
presently proposed to be conducted. Buyer is duly qualified to transact business and is in good
standing in each jurisdiction where such qualification is required and in which failure to so
qualify would have a Material Adverse Effect on Buyer.

     5.2 Authorization; Binding Obligations; Governmental Consents.

          (a) All corporate actions on the part of Buyer and its officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement and the Related
Agreements and the performance of all obligations of Buyer hereunder and thereunder have been taken
prior to the Agreement Date; provided, that as of the Agreement Date, the board of directors of
Buyer has not authorized the delivery of a Merger Election Notice or the performance of any of its
obligations that arise after delivery of the Merger Election Notice. This Agreement and the
Related Agreements are the valid and legally binding obligations of Buyer, enforceable against it
in accordance with their respective terms, except as such enforcement may be limited by (i) the
effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement,
moratorium or other laws affecting or relating to the rights of creditors generally, or (ii) the
rules governing the availability of specific performance, injunctive relief or other equitable
remedies and general principles of equity, regardless of whether considered in a proceeding in law
or equity.

          (b) No consent, approval, permit, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local governmental authority on the
part of Buyer is required in connection with the consummation by Buyer of the Transactions, except
for (i) the filing of merger documents with the California Secretary of State; (ii) such filings as
may be required under the HSR Act or any applicable state or foreign anti-takeover and similar laws
in connection with the Merger; and (iii) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not have a Material Adverse Effect on Buyer
and would not prevent, or materially alter or delay any of the transactions contemplated by this
Agreement.

     5.3 Compliance with Other Instruments. The execution, delivery and performance of
this Agreement and the Related Agreements to which it is party, and the performance by Buyer of
each such agreement in accordance with their respective terms will not (a) violate the Certificate
of Incorporation or bylaws of Buyer, (b) breach or result in a violation of any law, rule or
regulation applicable to Buyer or the transactions contemplated by this Agreement and the Related
Agreements, (c) constitute a material breach of the terms, conditions, provisions of, or constitute
a default under, any judgment, order, or decree of any court or arbitrator to which Buyer is a
party or any material mortgage, indenture, agreement, contract or instrument to which Buyer is a
party or by which it is bound, or (d) result in the suspension, revocation, impairment, forfeiture,
or nonrenewal of any permit, license, authorization or approval applicable to the business,
operations or any of the assets or properties of Buyer.

     5.4 Brokers’ and Finders’ Fees. Buyer has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment
bankers’ fees or any similar charges in connection with this Agreement or the consummation of the
Transactions.

     5.5 Purchase Entirely For Own Account. The Purchased Shares, the Notes and the
Conversion Shares will be acquired for investment for Buyer’s own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof, and Buyer has no
present intention of selling, granting any participation in, or otherwise distributing the same.

     5.6 Accredited Investor. Buyer is an Accredited Investor as defined in Regulation D
under the Securities Act. Buyer acknowledges that an investment in the Purchased Shares and the
Notes involves a high degree of risk, and that Buyer is experienced in evaluating and investing in
securities of companies in a similar stage of development as the Company. Buyer acknowledges that
it is able to fend for itself, can bear the economic risk of the investment in the Purchased Shares
and the Notes, and has

26

 

such knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Purchased Shares and the Notes and can
afford a complete loss of such investment.

     5.7 Receipt of Information. Subject to the accuracy and completeness of the
representations and warranties of the Company in Section 4 of this Agreement, Buyer believes it has
received all the information it considers necessary or appropriate for deciding whether to enter
into this Agreement. Buyer further represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the business, properties, prospects and financial
condition of the Company and to obtain additional information (to the extent the Company possessed
such information or could acquire it without unreasonable effort or expense) necessary to verify
the accuracy of any information furnished to it or to which it had access. The foregoing, however,
does not limit or modify the representations and warranties of the Company in Section 4 of this
Agreement or in Article 3 of the Merger Agreement or the right of Buyer to rely thereon. Buyer
confirms that at no time was Buyer presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form of general advertising in
connection and concurrently with the communicated offer to enter into this Agreement.

     5.8 Restricted Securities. Buyer understands that the Purchased Shares have not been,
the Notes will not be, and any Conversion Shares acquired on conversion thereof at the time of
issuance will not be, registered under the Securities Act. Without limiting the representations
and warranties of the Company made herein, Buyer further understands and agrees that such
securities are a risky investment and may not be sold, transferred or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering such securities or an available exemption from
registration under the Securities Act, such securities must be held indefinitely. In particular,
Buyer is aware that the Purchased Shares, the Notes and the Conversion Shares may not be sold
pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of Rule 144
are met. Among the conditions for use of Rule 144 is the availability of current information to
the public about the Company. Such information is not now available and the Company has no present
plans to make such information available. The Buyer understands that the Purchased Shares, Notes
and Conversion Shares will contain appropriate state and federal legends.

6. CERTAIN COVENANTS.

     6.1 Conduct of Business of the Company. The Company covenants and agrees that, during
the period beginning on the Agreement Date and ending on the termination or expiration of the
Option Period, unless Buyer shall otherwise agree in writing, the business of the Company shall be
conducted only in, and the Company shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall use commercially
reasonable efforts to preserve intact its business organization, to keep available the services of
the current officers and employees of and consultants to the Company, and to preserve the current
relationships of the Company with customers, suppliers and other persons with which the Company has
significant business relations. Without limiting the foregoing, the Company shall not do, or
propose to do, any of the following prior to the expiration or termination of the Option Period
without providing notice of such to a designated representative of Buyer (the “Buyer
Representative”) and obtaining the prior written consent of Buyer. The Buyer Representative
shall use commercially reasonable efforts to respond to such request for written consent within
fifteen (15) business days of Buyer’s receipt of the Company’s notice. The Buyer Representative
shall initially be Doug Godshall, who shall serve until Buyer designates another individual upon
written notice to the Company in accordance with Section 10.1 hereof. Each of the clauses below
shall constitute an independent obligation of the Company, not qualified by any other such clause,
and shall be deemed to be cumulative:

          (a) Charter Documents. Cause or permit any amendments to its Restated Articles or
bylaws to the extent it could reasonably be expected to cause a Buyer Impairment, provided,
that, for

27

 

purposes of this Agreement, the amendment of the Restated Articles to provide that any series
or class of capital stock of the Company does not automatically convert into shares of Company
Common Stock immediately prior to the closing of the Merger shall be deemed to be a Buyer
Impairment;

          (b) Dividends; Repurchases; Changes in Capital Stock. Except as otherwise
specifically contemplated in this Agreement, (i) 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, (ii)
issue or authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock (other than pursuant to repurchase rights of the
Company that permit the Company to repurchase securities from the holders thereof at the original
purchase price therefor in connection with the termination of services of such holder as an
employee of or consultant to the Company);

          (c) Stock Option Plans, Warrants, Etc. Accelerate, except with respect to grants
already outstanding pursuant to the existing terms thereof, amend or change the period of
exercisability or vesting of options or other rights granted under the Company Option Plan,
establish any new or additional stock option plan, amend the Company Option Plan, or grant any
options, warrants or other rights to acquire shares of Company Common Stock or Company Preferred
Stock, other than options granted under the Company Option Plan;

          (d) Material Contracts. Enter into any material contract or commitment, or violate,
amend or otherwise modify or waive (other than in the ordinary course of business) any of the terms
of any agreements, understandings, instruments or contracts which are material to the business of
the Company as currently conducted and as proposed to be conducted other than (i) contracts that
are entered into in the ordinary course of business or (ii) contracts which are terminable by the
Company upon notice of ninety (90) days or less without penalty or surviving obligations. For
purposes of this Section 6.1(d), the parties hereto acknowledge that any such actions with respect
to any contract or commitment, or series of related contracts or commitments, having a value in
excess of $250,000 shall not be deemed to be in the ordinary course of business. Without limiting
the foregoing, in no event shall the Company extend, terminate or otherwise amend or modify any of
the terms of the Rutgers Agreements (as defined in the Merger Agreement) during the Option Period
without the consent of Buyer. Any material contact or commitment entered into, or extended, by the
Company during the Option Period shall explicitly provide that the consummation of the transactions
contemplated by this Agreement shall not result in a breach or violation of such contract or
otherwise require the payment of any fees or expenses in connection therewith, or give the other
party the right to accelerate any obligations of the Company thereunder or to cause the termination
of such contract.

          (e) Issuance of Securities. Issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or securities or other instruments
(including notes or other evidences of Indebtedness) convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any character obligating it
to issue any such shares or other convertible instruments or securities, other than (A) the
Purchased Shares, (B) the Conversion Shares, (C) shares of Company Common Stock issuable upon
exercise of Reva Options that are either outstanding as of the Agreement Date or that are
subsequently issued under the Company Option Plan, (D) shares of Company Common Stock issuable upon
exercise of Company Warrants (as defined in the Merger Agreement) that are outstanding as of the
Agreement Date, (E) Reva Options, or (F) other shares, convertible instruments or securities that
will automatically, by their express terms, terminate or convert into shares of Company Common
Stock immediately prior to the consummation of the Merger and the issuance of which will not
otherwise have a Buyer Impairment.

          (f) Intellectual Property.

               (i) Sell, license, assign or transfer any Intellectual Property of the Company to any
other person other than Buyer, or encumber any Intellectual Property of the

28

 

Company, other than (A) licenses to use such Intellectual Property granted in connection
with the commercial use of the Company’s products by end-users (but which do not grant rights
to manufacture, sell or distribute products using such Intellectual Property to such persons),
(B) rights to manufacture products using such Intellectual Property granted to contract
manufacturing partners pursuant to agreements that are terminable upon no more than ninety (90)
days’ notice without penalty and do not grant the other party the right to market, distribute
or sell products including such Intellectual Property and (C) non-commercial site licenses
granted to clinical investigators who are evaluating the Company products in clinical trials,
which licenses terminate at the conclusion of such trials; or

               (ii) License, or otherwise acquire, any Intellectual Property not owned by the Company or
Buyer from any third party on terms requiring any royalty payments following, or imposing other
obligations on the Company that may survive, the Option Period;

          (g) Marketing or Other Rights. Except with the consent of Buyer, such consent not to
be unreasonably withheld, enter into or amend, in any material respect, any agreement pursuant to
which any other party is granted manufacturing, marketing or other development or distribution
rights of any type or scope with respect to any of the Company’s products or technology other than
agreements that (i) are terminable no longer than ninety (90) days from delivery of a Merger
Election Notice without requiring any payment by the Company in excess of $250,000 in the aggregate
for all such agreements and (ii) would not require any payment upon delivery of a Merger Election
Notice or the consummation of the Merger in excess of $250,000 in the aggregate for all such
agreements, or enter into any agreement that would limit the ability of any of the Surviving
Corporation, Buyer or any Affiliate of Buyer to operate in a specific area of business or specific
geographic area after the closing of the Merger;

          (h) Dispositions; Upstream Obligations. Except for the sale of the Company’s
inventory in the ordinary course of business, sell, lease, license or otherwise dispose of or
encumber any of its properties or assets which are material, individually or in the aggregate,
taken as a whole, or otherwise incur obligations that would become obligations of Buyer upon
Buyer’s delivery of the Merger Election Notice (which, for purposes of clarity, shall not be deemed
to include obligations that would become obligations of Surviving Corporation);

          (i) Indebtedness. Incur any Indebtedness (other than to Buyer) for borrowed money or
guarantee any such Indebtedness or issue or sell any debt securities or guarantee any debt
securities of others;

          (j) Repayment of Indebtedness. Repay in cash or repurchase for cash any Indebtedness
to any Affiliate of the Company, or any Securities representing Indebtedness convertible into
Company Common Stock or Company Preferred Stock other than repayment of Indebtedness owing to Buyer
in accordance with the terms thereof;

          (k) Leases. Enter into any operating lease with an annual commitment in excess of
$100,000 or with a duration of more than four (4) years;

          (l) Insurance. Materially reduce the amount of any material insurance coverage
provided by existing insurance policies;

          (m) Termination or Waiver. Terminate or waive any right that has material value to
the Company, other than in the ordinary course of business;

          (n) Employee Benefit Plans; New Hires; Pay Increases. Adopt or amend any employee
benefit plan or arrangement, pay any special bonuses or special remuneration to any employee or
director (other than pre-existing obligations) which in the aggregate exceed 20% of the Company’s
then-current annual aggregate salary obligation, or, except in the ordinary course of business
consistent with past practices, increase the salaries, bonuses or wage rates of its employees;

29

 

          (o) Severance Arrangements. Except as specifically described in Section 4.20 of the
Company Disclosure Schedule attached to this Agreement, adopt or approve any severance, bonus or
benefit acceleration arrangements (whether individually or more broadly) that could be triggered
after the consummation of the Merger;

          (p) Lawsuits. Commence a lawsuit other than (i) for the routine collection of bills,
(ii) in such cases where it in good faith determines that failure to commence suit would result in
the material impairment of a valuable aspect of its business, provided, that it consults
with Buyer prior to the filing of such a suit, or (iii) with respect to this Agreement or the
Related Agreements;

          (q) Acquisitions. Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division thereof which are
material, individually or in the aggregate, to the Company’s business, taken as a whole;

          (r) Taxes. Make or change any election in respect of Taxes, adopt or request
permission of any Taxation Authority to change any accounting method in respect of Taxes, enter
into any closing agreement in respect of Taxes, settle any claim or assessment in respect of Taxes,
surrender or allow to expire any right to claim a refund of Taxes, consent to any extension or
waiver of the limitation period applicable to any claim or assessment in respect of Taxes, or take
(or permit any Subsidiary to take) any such actions with respect to any Subsidiary;

          (s) Notices. Fail to give any notices and other information required to be given to
the employees of the Company, any collective bargaining unit representing any group of employees of
the Company, or any applicable government authority under the Worker Adjustment and Retraining Act
(the WARN Act), the National Labor Relations Act, the Code, the Consolidated Omnibus Reconciliation
Act (COBRA), or other applicable law in connection with the transactions provided for in this
Agreement or the Related Agreements;

          (t) Other Transactions. Merge or consolidate with any entity other than Buyer, Merger
Sub or an Affiliate of Buyer, or liquidate, dissolve or effect a recapitalization or reorganization
in any form of transaction;

          (u) Confidentiality Agreements. Hire or retain, or continue to retain or employ, any
employee or consultant having access to confidential or proprietary information of the Company
unless such employee or consultant enters into, or has entered into, a proprietary information and
inventions agreement, a confidentiality agreement, or a mutual confidentiality agreement with the
Company in the form of Exhibits D-1, D-2, or D-3 attached to the
Merger Agreement, or amend or otherwise modify, or grant a waiver under, any such confidentiality
or proprietary information agreement with any such person;

          (v) Related Party Transactions. Enter into any transaction with any director,
officer, employee, significant stockholder or family member of or consultant to any such person,
corporation or other entity of which any such person beneficially owns 10% or more of the equity
interests or has 10% or more of the voting power, or Subsidiary or Affiliate of the Company, except
as approved by a majority of the disinterested directors of the Company Board on terms and
conditions which are fair and reasonable to the Company and no less favorable to the Company as
could be obtained from a third party on an arms-length basis;

          (w) Principal Business. Engage in any business other than the Principal Business;

          (x) Other Activities. Knowingly engage in any other activity which could reasonably
be expected to materially impair the ability of Buyer, the Merger Sub or the Company to consummate
the Merger; or

          (y) Subsidiaries. Permit any Subsidiary of the Company to take any action from which
the Company would be prohibited pursuant to this Section.

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     6.2 Clinical Trials. From time to time and at the reasonable request of Buyer, the
Company shall provide Buyer with updates concerning the progress of and developments in and results
of the Company’s clinical trials. In addition, the Company shall (a) invite Buyer to participate
in all meetings with clinical investigators, (b) make available to Buyer copies of all written
communication provided to and from such investigators, and (c) make available to Buyer copies of
any interim data and data analysis generated with respect to its clinical trials. At least thirty
(30) days prior to finalizing such protocols or delivering drafts or copies thereof to
institutional review boards or regulatory authorities, selecting such clinical investigators and
engaging in such clinical trials, the Company shall furnish to Buyer for its review and comment and
shall consult with Buyer regarding, (i) clinical trial protocols, (ii) lists of clinical
investigators, (iii) copies of all forms of clinical investigator contracts, and (iv) patient data
forms for any of its proposed clinical trials. All information obtained by Buyer pursuant to this
Section 6.2 shall be kept confidential in accordance with Section 6.15 to the extent it constitutes
“Confidential Information” thereunder.

     6.3 Notice of Developments. Buyer, on the one hand, and the Company, on the other
hand, shall use reasonable efforts to give prompt written notice to the other party of any material
development causing a breach of any of its own representations and warranties in this Agreement or
the Merger Agreement.

     6.4 Payment of Taxes, Etc. The Company shall, and shall cause each of its Subsidiaries
to, 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, and the Company
shall, and shall cause each of its Subsidiaries to, timely pay and discharge as they become due and
payable all Taxes (other than Taxes contested in good faith by the Company or its Subsidiaries in
appropriate proceedings), assessments and other governmental charges or levies imposed upon it or
its income or any of its property as well as all claims of any kind (including claims for labor,
materials and supplies) that, if unpaid, may by law become a lien or charge upon its properties.

     6.5 Board Observation Rights. At all times until the expiration of the Option Period,
the Company shall permit two (2) representatives of Buyer to attend all meetings of the Company
Board in a nonvoting observer capacity and, in this respect, shall give such representatives copies
of all notices, minutes, consents and other materials that the Company provides to its directors,
provided, however, that the Company shall be entitled to exclude such representatives from
access to any materials or meeting or portion thereof to the extent that the Company reasonably
believes (a) that such exclusion is necessary to maintain the attorney-client privilege with
respect to any material fact or advice, or (b) that such material or meeting or portion thereof
presents a clear conflict between the Company and Buyer relating to the relationship represented by
this Agreement and the Related Agreements, or otherwise. All information obtained by Buyer or such
representatives pursuant to this Section 6.5 shall be kept confidential in accordance with the
terms of Section 6.15 hereof to the extent it constitutes “Confidential Information” thereunder.

     6.6 Full Access. At all times until the expiration of the Option Period, the Company
will afford to Buyer and its authorized representatives, upon reasonable notice, full access during
normal business hours to all properties, books, records, contracts, and documents of the Company as
Buyer and such authorized representatives may reasonably request and a complete opportunity to make
such investigations as Buyer and such authorized representatives may reasonably request, and the
Company will furnish or cause to be furnished to Buyer and its authorized representatives all such
information with respect to the affairs and businesses of the Company (including, but not limited
to, the Company’s development programs and clinical trials) as they may reasonably request,
provided, however, that if the Company shall determine in good faith that
furnishing such materials to Buyer at a location other than the Company’s premises would be unduly
burdensome, or that such materials are so highly sensitive that the consequences of inadvertent,
unauthorized disclosure of such materials could reasonably be expected to result in a Material
Adverse Effect on the Company, then such review shall be made on the Company’s

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premises. All information obtained by Buyer pursuant to this Section 6.6 shall be kept
confidential in accordance with the terms of Section 6.15 hereof to the extent it constitutes
“Confidential Information” thereunder. No investigation pursuant to this Section 6.6 shall affect
any representation or warranty in this Agreement or the Related Agreements of any party hereto or
thereto or any condition to the obligations of the parties hereto or thereto.

     6.7 Exclusivity; Superior Proposal.

          (a) From and after the date of this Agreement until the expiration or termination of the
Option Period, the Company will not, nor will it authorize or permit any of its officers,
directors, Affiliates or employees, or any investment banker, attorney or other advisor or
representative retained by it to directly or indirectly, (i) solicit, initiate or induce the
making, submission or announcement of any Acquisition Proposal, (ii) participate in any discussions
or negotiations regarding, or furnish to any person any non-public information with respect to, or
take any other action to facilitate any inquiries or the making of any proposal that constitutes or
may reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in discussions with
any person with respect to any Acquisition Proposal, except as to disclose the existence of these
provisions, (iv) endorse or recommend any Acquisition Proposal, or (v) enter into any letter of
intent or similar document or any contract, agreement or commitment contemplating or otherwise
relating to any Superior Proposal; provided, however, that, during the period prior to the
adoption of the Merger Agreement by the required Company Stockholder vote, this Section 6.7(a)
shall not prohibit the Company from furnishing nonpublic information regarding the Company and its
Subsidiaries to, entering into a confidentiality agreement with or entering into discussions with,
any person or group in response to a Superior Proposal or any offer or proposal that the Company
Board reasonably determines in good faith is reasonably likely to lead to a Superior Proposal
submitted by such person or group (and not withdrawn), or the Company Board from recommending that
the Company Stockholders approve a Superior Proposal if (A) neither the Company nor any
representative of the Company or any of its Subsidiaries shall have violated any of the
restrictions set forth in this Section 6.7, including, but not limited to, obligations under
clause (i) above, (B) the Company Board concludes in good faith, after consultation with its
outside legal counsel, that such action is required in order for the Company Board to comply with
its fiduciary obligations to the Company Stockholders under California Law, (C) prior to furnishing
any such nonpublic information to, or entering into discussions with, such person or group, the
Company gives Buyer written notice of the identity of such person or group and of the Company’s
intention to furnish nonpublic information to, or enter into discussions with, such person or group
and the Company receives from such person or group an executed confidentiality agreement containing
customary limitations on the use and disclosure of all nonpublic written and oral information
furnished to such person or group by or on behalf of the Company, and (D) contemporaneously with
furnishing any such nonpublic information to such person or group, the Company furnishes such
nonpublic information to Buyer (to the extent such nonpublic information has not been previously
furnished by the Company to Buyer); provided, further, however, that the
Company shall not be permitted to consummate any transaction(s) contemplated by any Superior
Proposal unless and until the Company has first terminated this Agreement pursuant to Section
9.1(b). The Company and its Subsidiaries will, and will cause their respective officers,
directors, Affiliates, employees, investment bankers, attorneys and other advisors and
representatives to, immediately cease any and all existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any Acquisition Proposal. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth in the preceding
two sentences by any officer, director or employee of the Company or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of the Company or any of its
subsidiaries shall be deemed to be a breach of this Section 6.7 by the Company.

          (b) In addition to the obligations of the Company set forth in subsection (a) of this Section
6.7, the Company as promptly as practicable shall advise Buyer in writing of any Acquisition
Proposal or of any request for nonpublic information or other inquiry which the Company reasonably

32

 

believes could lead to an Acquisition Proposal, the material terms and conditions of such
Acquisition Proposal (to the extent known), and the identity of the person or group making any such
request, inquiry or Acquisition Proposal. The Company agrees to keep Buyer informed on a current
basis of the status and details (including any material amendments or proposed amendments) of any
such request, inquiry or Acquisition Proposal. Notwithstanding anything to the contrary herein,
nothing contained in this Section 6.7 shall be deemed to prevent the Company from marketing
(including responding to due diligence requests), negotiating or consummating an equity financing
otherwise permitted under Section 6.1.

     6.8 Further Assurances of the Company. Subject to the terms and conditions set forth
in this Agreement, from time to time after the date hereof during the Option Period, the Company
will use commercially reasonable 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, proper or
advisable to consummate and make effective the transactions contemplated by this Agreement,
including, but not limited to, the Merger, or the transactions contemplated by the Stockholder
Option Agreement, in the event that Buyer exercises the Company Option or the Stockholder Options,
as the case may be.

     6.9 Further Assurances of Buyer. Subject to the terms and conditions set forth in
this Agreement, from time to time during the Option Period, Buyer will use commercially reasonable
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, proper or advisable to consummate and make
effective the Transactions, provided, that nothing in this Section 6.9 shall be deemed to
require Buyer to exercise the Company Option or the Stockholder Options, or to make a Loan if the
applicable conditions precedent to such Loan have not been satisfied.

     6.10 Public Announcements. Prior to the closing of the Merger, or the consummation of
the transactions contemplated by the Stockholder Option Agreement, as the case may be, Buyer shall
not, without having previously informed the Company about the form, content and timing of any such
announcement, issue any press release or otherwise make any public statements with respect to this
Agreement or the transactions contemplated hereby, except as may be required by (a) law, (b) the
Securities Exchange Commission, (c) the Securities Act or the Exchange Act, or (d) any listing
agreement with the New York Stock Exchange, the National Association of Securities Dealers, Inc. or
any national securities exchange to which Buyer is subject. Nothing herein express or implied
shall require Buyer to consult with the Company following the closing of the Merger. The Company
shall not, without the prior written consent of Buyer, issue any press release or otherwise make
any public statements with respect to this Agreement or the transactions contemplated hereby at any
time.

     6.11 Restrictions on Negative Pledges and Upstream Limitations. The Company will not,
and will not permit any of its Subsidiaries to enter into any agreement, contract or arrangement
(excluding this Agreement and the Notes) restricting the ability of any Subsidiary of the Company
to pay or make dividends or distributions in cash or kind to the Company, to make loans, advances
or other payments of whatsoever nature to the Company, or to make transfers or distributions of all
or any part of its assets to the Company.

     6.12 Liens; Dispositions; Obligations. The Company will not, and will not permit any
of its Subsidiaries to, (a) create or incur or suffer to be created or incurred or to exist any
Lien upon any of its property or assets of any character whether now owned or hereafter acquired,
or upon the income or profits therefrom; transfer any of such property or assets or the income or
profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to payment of its general creditors; acquire, or
have an option to acquire, any property or assets upon conditional sale or other title retention or
purchase money security agreement, device or arrangement; or suffer to exist for a period of more
than thirty (30) days after the same shall have been incurred any Indebtedness or claim or demand
against it that if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over its general creditors; or (b) except for

33

 

the sale of the Company’s inventory in the ordinary course of business, sell, lease, license,
or otherwise dispose of or encumber or grant, or permit to arise any security interest in, any of
its properties or assets, or become a party to any agreement effecting any of the foregoing, or
otherwise incur obligations that would become obligations of Buyer upon Buyer’s delivery of the
Merger Election Notice.

     6.13 Material Contracts. Any material contract or commitment entered into, or
extended, by the Company during the Option Period shall explicitly provide that the consummation of
the transactions contemplated by the Merger Agreement or the Stockholder Option Agreement shall not
result in a breach or violation of such contracts or otherwise require the payment of any fees or
expenses in connection therewith, or give the other party the right to accelerate any obligations
of the Company thereunder or to cause the termination of such contract.

     6.14 Patents. From and after the Agreement Date until the expiration of the Option
Period, the Company shall (a) use commercially reasonable efforts to maintain at least one (1)
pending United States patent application in each independent patent family of the Company, (b) take
any and all such actions as may be reasonably necessary to cause each patent of the Company to be
valid and subsisting, including paying all necessary registration, maintenance and renewal fees in
connection with such patents and filing all necessary documents and certificates in connection with
such patents with the relevant authorities in the United States or foreign jurisdictions, as the
case may be, for the purposes of maintaining such patents in full force and effect, and (c) use
commercially reasonable efforts to continue to acquire and develop additional Intellectual Property
useful to the Principal Business.

     6.15 Confidentiality. The Company and Buyer acknowledge that to facilitate a business
arrangement created by this Agreement and the Related Agreements, it will be necessary for the
parties to exchange certain Confidential Information on a confidential basis. In consideration of
the mutual benefits to be derived from the exchange of Confidential Information, Buyer and the
Company agree as follows:

          (a) Confidential Information of a disclosing party shall be treated and safeguarded hereunder
by the receiving party for a period of five (5) years from the date of disclosure and with the same
degree of care with which it treats its own Confidential Information of like character and will not
use Confidential Information for any purposes other than in connection with the relationship
established by this Agreement and the Related Agreements. The receiving party warrants that it
applies reasonable safeguards against the unauthorized disclosure and use of Confidential
Information; provided, however, that the foregoing restrictions concerning
confidentiality, use and disclosure shall not apply to any such Confidential Information that:

               (i) prior to or subsequent to the time of such disclosure is independently known to the
receiving party;

               (ii) prior to or subsequent to the time of such disclosure has legitimately entered the
public domain;

               (iii) subsequent to the time of such disclosure becomes or is made available to the
receiving party by a third party having the lawful right to do so;

               (iv) is independently developed by the receiving party or its agents or employees by
persons who did not receive the Confidential Information;

               (v) is disclosed to others by the disclosing party without restriction concerning
disclosure and/or commercial use; or

               (vi) is publicly disclosed or otherwise made publicly available by a Governmental
Authority or other third party after being disclosed by Buyer or the Company pursuant to any
law, regulation or judicial or administrative directive.

          (b) The receiving party agrees to limit access to the Confidential Information to such
employees and consultants of the receiving party who reasonably require such access in connection
with

34

 

the transactions contemplated by this Agreement or the Related Agreements. However, the
receiving party’s confidentiality obligations set forth in this paragraph and in paragraph (a)
above shall not require it to take any greater care to keep such information confidential than the
receiving party regularly employs with respect to its own confidential information. To the extent
practicable, in the event that the receiving party is required to disclose any Confidential
Information pursuant to any law, regulation or judicial or administrative directive, the receiving
party shall promptly notify the disclosing party in order to allow the disclosing party a
reasonable period of time to obtain protective or confidential treatment of the Confidential
Information before it is disclosed.

          (c) Neither receipt by the receiving party of the Confidential Information nor the receiving
party’s evaluation and examination of it shall impair or limit receiving party’s right to contest
the validity of any patent that may have been or may hereafter be issued in respect of any of the
Confidential Information.

          (d) The receiving party is under no obligation by virtue of its acceptance of any Confidential
Information to reveal any information with respect to its activities in the field of technology
pertaining to such Confidential Information, the details of the receiving party’s evaluation or
testing with respect thereto.

          (e) The terms and provisions hereof shall inure to the benefit of each party and the
designees, successors and assigns of each party and shall be binding on each party and the
successors and assigns of each party.

          (f) Any Confidential Information received by either party from and after the Agreement Date
shall not be deemed to be Confidential Material or Proprietary Information or disclosed under those
certain Confidentiality Agreements, dated January 18, 2001 and March 16, 2004, between Buyer and
the Company, for any purpose.

7. DEFINITIONS. As used herein the following terms not otherwise defined have the following
respective meanings:

     “Acquisition Proposal” means any bona fide offer or proposal (other than an offer or proposal
by Buyer) relating to any Acquisition Transaction.

     “Acquisition Transaction” means (a) any transaction or series of related transactions, other
than the transactions contemplated by this Agreement and the Related Agreements, involving the
purchase of all or a majority of the capital stock (voting rights) or assets of the Company, (b)
any agreement to enter into a business combination with the Company, and (c) any agreement made,
other than in the ordinary course of business, with regard to the Intellectual Property owned or
licensed by the Company.

     “Affiliate” means, with respect to any person, any person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with, such person. Until the consummation of the Merger, the Company shall not be deemed
for any purposes of this Agreement to be an Affiliate of Buyer.

     “business day” (whether such term is capitalized or not) means any day other
than Saturday, Sunday or a legal holiday that banks located in Boston, Massachusetts are open for
business.

     “Buyer Common Stock” means duly authorized, validly issued, fully paid and non-assessable
shares of the voting common stock of Buyer.

     “Buyer Impairment” means an impairment of (a) any material rights of Buyer
under this Agreement or the Related Agreements (including, but not limited to, any action, event or
circumstance that could have the effect of (i) delaying a Merger or the transactions contemplated
by the Stockholder Option Agreement, (ii) increasing the Merger Consideration or the purchase price
for the sale of shares

35

 

set forth in the Stockholder Option Agreement, or (iii) increasing the expenses to be incurred
by the Company, Buyer or Merger Sub in connection with the consummation of the transactions
contemplated by this Agreement, the Merger Agreement or the Stockholder Option Agreement), or (b)
the value of the Company to Buyer after the Effective Time of the Merger, or the closing of the
transactions contemplated by the Stockholder Option Agreement, as the case may be.

     “California Law” means the General Corporation Law of the State of California, as amended from
time to time.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Company Common Stock” means the Common Stock of the Company, no par value per share.

     “Company Licensed Intellectual Property” shall have the meaning set forth in the Merger
Agreement.

     “Company Option” means the right of Buyer to cause a Merger to occur pursuant
to the Merger Agreement.

     “Company Option Plan” means the Company’s 2001 Stock Option/Stock Issuance Plan, as amended
prior to the Closing Date.

     “Company Owned Intellectual Property” shall have the meaning set forth in the Merger
Agreement.

     “Company Preferred Stock” means the Preferred Stock of the Company, no
par value per share.

     “Confidential Information” means information of the Company or its Affiliates that (a) derives
independent economic value, actual or potential, for not being generally known to the public or to
other persons who can obtain economic value from its disclosure or use, and (b) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy. Confidential
Information includes, but is not limited to, an invention, idea, intellectual property, formula,
pattern, compilation, program, method, technique, assay, process, biological material, data,
design, source code, research plan, business plan, business opportunity, customer or personnel
list, financial statement and other information disclosed to the Buyer in connection with this
Agreement or the Related Agreements. Confidential Information shall include information disclosed
to the Buyer by the Company regarding polymer embolic technologies for embolism treatment, and such
other information as the Buyer shall receive from the Company pursuant to the terms of Sections 6.5
and 6.6 hereof and any corresponding provisions of the Related Agreements. Notwithstanding the
foregoing, for any such information submitted to the Buyer to be deemed to be “Confidential
Information” hereunder, (i) if such information is submitted to the Buyer in writing, such
information must be clearly marked “confidential” or “proprietary”, and (ii) if such information is
submitted to the Buyer orally, the Buyer must have agreed in writing to receive such information
prior to its delivery, and such oral disclosure must subsequently be reduced to writing and marked
“confidential” and such writing must be delivered to the Buyer within thirty (30) days of the oral
disclosure; provided, however, that any information delivered to a representative
of the Buyer in connection with any meeting of the Company Board, whether in writing or oral, and
whether or not marked as “confidential” or “proprietary”, shall be presumed to be “Confidential
Information”.

     “Conversion Shares” means, collectively, the shares of Company Common Stock issuable upon
conversion of the Purchased Shares and the Note Conversion Shares.

     “Deposit” shall have the meaning set forth in the Merger Agreement.

     “DSMB” means the Data Safety Monitoring Board.

     “Effective Time” shall have the meaning set forth in the Merger Agreement.

     “Environmental Laws” shall have the meaning set forth in the Merger Agreement.

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     “Environmental Permits” shall have the meaning set forth in the Merger Agreement.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

     “FDA” means the United States Food and Drug Administration.

     “Financial Statements” means (a) the consolidated financial statements (including balance
sheet, income statement and statement of cash flows) of the Company as of the end of the most
recently completed fiscal year ending at least 45 days prior to the latest date on which the
representations set forth in Sections 4.5(a), 4.12, 4.13, 4.23, and 4.27 are deemed to be made, and
for the twelve (12)-month period ended on such date, and (b) the consolidated balance sheet and
income statement of the Company as of the end of the most recently completed fiscal quarter ending
at least 30 days prior to the latest date on which the representations set forth in Sections
4.5(a), 4.12, 4.13, 4.23, and 4.27 are deemed to be made, and for the portion of the current fiscal
year ended on the calendar month ending immediately prior to such date, which the Company has made
available to Buyer and included in the Company Disclosure Schedule.

     “fully-diluted basis” means, with respect to the number of shares of Company Common Stock
deemed to be outstanding as of a particular time, the sum of (a) the aggregate number of shares of
Company Common Stock issued and outstanding at such time, (b) the maximum number of shares of
Company Common Stock issuable at such time upon the exercise of unexercised options, warrants or
rights to acquire shares of Company Common Stock issued and outstanding at such time (whether or
not fully vested), and upon the conversion of all convertible debt instruments outstanding at such
time (excluding Company Preferred Stock), and (c) the maximum number of shares of Company Common
Stock issuable at such time upon the conversion of the outstanding Company Preferred Stock,
including any shares of Company Preferred Stock issuable upon exercise of the options, warrants and
other rights described in (b) above.

     “GAAP” means generally accepted accounting principles consistently applied.

     “Governmental Authority” (whether such term is capitalized or not) means any United States
(federal, state or local) or foreign government, or governmental, regulatory or administrative
authority, agency or commission.

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

     “Indebtedness” shall have the meaning set forth in the Merger Agreement.

     “Intellectual Property” shall have the meaning set forth in the Merger Agreement.

     “IRS” means the United States Internal Revenue Service.

     “Lien” means any mortgage, deed of trust, security interest, pledge, hypothecation,
assignment in the nature of a security interest, attachment, encumbrance, lien (statutory, judgment
or otherwise), or other security agreement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any lease in the nature of a security
interest).

     “Major Material Adverse Effect” means, with respect to the
Company, (w) an adverse determination by a court of competent jurisdiction or applicable regulatory
body that would have the result of preventing the Company from developing, marketing or selling its
proposed biodegradable vascular stents, (x) the receipt by the Company of adverse results from
clinical trials relating to the Company’s proposed biodegradable vascular stents that would make
such stents impossible to be commercialized even after making reasonable modifications, (y) the
introduction by third parties of competitive products to the Company’s biodegradable vascular
stents that would render such stents obsolete or not commercially viable, or (z) other adverse
events relating to the Company’s business,

37

 

results of operations, financial condition or prospects of similar magnitude or effect.
Notwithstanding the foregoing, a lack of liquidity or undercapitalization of the Company at any
time shall not be deemed to constitute, by itself, a “Major Material Adverse Effect”.

     “Material Adverse Effect” means, with respect to the Company or Buyer, as the case may be, any
change or effect that, when taken individually or together with all other adverse changes or
effects, is or is reasonably likely to be materially adverse to the business, results of operations
and financial condition of the Company or Buyer, as the case may be, and its respective
Subsidiaries, taken as a whole.

     “Merger Election Notice” means a written notice delivered to the
Company by Buyer informing the Company of Buyer’s election to cause the Company and Merger Sub to
close the Merger in accordance with the terms of the Merger Agreement.

     “Note Conversion Shares” means the shares of Company Preferred Stock issuable upon conversion
of the Notes.

     “Option Expiration Date” means the first anniversary of the Option Price Adjustment
Date.

     “Option Period” means the period beginning on the Agreement Date and ending, unless otherwise
terminated earlier pursuant to Section 8 of the Merger Agreement, on the earliest of (a) the Option
Expiration Date, if Buyer has delivered the Deposit pursuant to Section 1.1(d) of the Merger
Agreement and Buyer has made the Third Loan pursuant to Section 3.1(c) hereof, (b) at the election
of Buyer, upon delivery of a written termination notice to the Company, at any time prior to the
scheduled expiration or other termination of the Option Period, (c) at the election of the Company
in accordance with Section 3.10 hereof if Buyer does not deliver a Loan Election Notice within the
applicable time period after receipt of an Option Period Termination Notice thereunder, and (d) at
the election of the Company in accordance with Section 1.1(d) of the Merger Agreement if Buyer has
not delivered the Deposit pursuant to Section 1.1(d) of the Merger Agreement and made the Third
Loan pursuant to Section 3.1(c) hereof, in each case on or prior to the Option Price Adjustment
Date; provided, that in the event that Buyer exercises the option under the Merger Agreement or the
options under the Stockholder Option Agreement prior to the expiration or termination of the Option
Period, the Option Period shall extend until the earliest to occur of (i) the Effective Time or the
closing of the transactions contemplated by the Stockholder Option Agreement; (ii) the termination
of the Merger Agreement prior to the consummation of the Merger (to the extent that Buyer shall not
have exercised the options under the Stockholder Option Agreement prior to such termination) in
accordance with the terms thereof; or (iii) the termination of the Stockholder Option Agreement
prior to the consummation of the transactions contemplated thereby (to the extent Buyer shall not
have exercised the option under the Merger Agreement prior to such termination) in accordance with
the terms of the Stockholder Option Agreement; provided, further, that the Option Period shall be
extended if at such time as it would otherwise expire (x) the Company is in breach of any of its
material obligations under this Agreement or the Merger Agreement or (y) any of the Company
Stockholders is in breach of any of its obligations under the Stockholder Option Agreement until
thirty (30) days after such time as all of such breaches shall have been cured; and
provided, further, that in the event that Buyer delivers a Disclosure Schedule
Request in accordance with Section 1.2 prior to the scheduled expiration of the Option Period, the
Option Period shall not expire until the tenth (10th) day following the date on which
the Company shall have delivered an Updated Company Disclosure Schedule pursuant thereto or the
Company shall have notified Buyer that it has elected not to deliver such an Updated Disclosure
Schedule, and no termination or expiration of the Option Period shall be deemed to limit Buyer’s
right to deliver a Merger Election Notice within the periods set forth in Section 1.1(b) of the
Merger Agreement.

     “Option Period Termination Notice” means (a) a notice delivered by the Company of the
Company’s intention to terminate the Option Period in accordance with Section 3.10 and (b) a notice
delivered by the Stockholder Representative Committee of its intention to terminate the Option
Period in accordance with Section 1.1(d) of the Merger Agreement.

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     “Option Price Adjustment Date” means the 90th day following the completion
of the Third Milestone.

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “person” means an individual, corporation, partnership, limited partnership, limited liability
company, syndicate, person (including a “person” as defined in Section 13(d)(3) of the Exchange
Act), trust, association or entity or government, political subdivision, agency or instrumentality
of a government.

     “Principal Business” means the development, manufacturing, marketing and sale of the Principal
Products.

     “Principal Products” means biodegradable vascular stents, balloon expandable
nitinol stents and embolic materials.

     “Related Agreements” means the Merger Agreement, the Stockholder Option Agreement, the Notes
(if issued), and the Investors’ Rights Agreement.

     “Reva Options” means the options to purchase shares of Company Common Stock issued under the
Company Option Plan.

     “Securities” means all shares of Company Common Stock and Company Preferred Stock, all
outstanding options, warrants, convertible notes, rights of conversion and other rights to acquire
capital stock of the Company, and all shares issuable upon exercise or conversion of the Company
Preferred Stock, options, warrants, convertible notes, rights of conversion and other rights to
acquire stock of the Company, outstanding from time to time, whether or not then currently vested,
exercisable or convertible.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

     “Securityholder” means any holder of Securities.

     “Series F Preferred Stock” means the Series F Preferred Stock,
no par value per share, of the Company.

     “Series G Preferred Stock” means, collectively, the Series G-1
Preferred Stock and the Series G-2 Preferred Stock.

     “state” (whether or not capitalized) means any state or commonwealth of the United States of
America, the District of Columbia, the Commonwealth of Puerto Rico, and any other dependency,
possession or territory of the United States of America.

     “Stockholder Option Notice” shall have the meaning set forth in the Stockholder Option
Agreement.

     “Stockholder Options” means the options that may be granted to Buyer to
acquire all of the Stockholders’ Securities in accordance with the terms of the Stockholder Option
Agreement.

     “Subsidiary” or “Subsidiaries” (whether or not capitalized) of any person means (i) any
corporation of which such person (either alone or through or together with any other Subsidiary),
owns, directly or indirectly, more than 50% of the stock the holders of which are generally
entitled to vote for the election of the board of directors of such corporation, or (ii) any
partnership, limited liability company, association, trust, joint venture, or other non-corporate
entity in which such person (either alone or through or together with any other Subsidiary) holds,
directly or indirectly, an equity interest.

     “Superior Proposal” means an unsolicited, bona fide written offer made by a third
party to consummate any of the following transactions: (a) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which

39

 

the Company Stockholders immediately preceding such transaction hold less than fifty percent
(50%) of the equity interest in the surviving or resulting entity of such transaction; (b) a sale
or other disposition by the Company of all or substantially all of its assets, or (c) the
acquisition by any person or group (including by way of a tender offer or an exchange offer or
issuance by the Company), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of fifty percent (50%) of the voting power of
the then outstanding shares of capital stock of the Company, in each case on terms that the Company
Board determines, in its reasonable judgment (after consultation with a financial advisor of
nationally recognized reputation), to be more favorable to the Company Stockholders than the terms
of the Merger (after taking into account all relevant factors, including all conditions to the
offer, the timing of the transaction contemplated by the offer, the risk of nonconsummation thereof
and the need for any required governmental or other consents, filings or approvals); provided,
however, that any such offer shall not be deemed to be a “Superior Proposal” if any financing
required to consummate the transaction contemplated by such offer is not committed and is not
likely in the reasonable judgment of the Company Board to be obtained by such third party on a
timely basis.

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

     “Taxation Authority” means any Governmental Authority having any responsibility for (a) the
determination, assessment or collection or payment of any Tax, or (b) the administration,
implementation or enforcement of or compliance with any law relating to any Tax.

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

     “Third Milestone” shall have the meaning set forth for such term in the Merger
Agreement.

8. INDEMNIFICATION.

     8.1 Indemnity by the Company. The Company agrees to indemnify and hold the Buyer (and
its respective directors, officers, employees and Affiliates) harmless from and with respect to any
and all claims, liabilities, losses, damages, costs and expenses, including, without limitation,
the fees and disbursements of counsel (collectively, the “Losses”), related to or arising,
directly or indirectly, out of any failure or any breach by the Company of any representation or
warranty, covenant, obligation or undertaking made by the Company in this Agreement, any schedule
or exhibit hereto, or any other statement, certificate or other instrument delivered pursuant
hereto.

     8.2 Time Limit. All representations and warranties in this Agreement, other than
those in Section 4.23, which shall survive until sixty (60) days after the expiration of the
applicable statutes of limitations, shall expire on, and neither the Buyer nor the Company will be
liable for any damages hereunder with respect to a breach of such representations and warranties
unless a written claim for indemnification is given to such party with respect thereto prior to,
the later of (a) the eighteen (18) month anniversary of the latest Closing Date or Loan Date, and
(b) the date on which the Option Period terminates.

     8.3 Termination of Indemnity Obligation. Notwithstanding anything in this Agreement
to the contrary, and without limiting any indemnification obligations of any party under Section
9.2 of the

40

 

Merger Agreement or any stock purchase agreement entered into pursuant to the Stockholder
Option Agreement, the indemnity obligations of the Company set forth in this Section 8 shall
terminate upon the earlier of the closing of the Merger or the consummation of the transactions
contemplated by the Stockholder Option Agreement.

9. TERM AND TERMINATION.

     9.1 Term.

          (a) Subject to Section 9.4, this Agreement shall commence on the Agreement Date and shall
continue in full force and effect until the later of (a) the termination or expiration of the
Option Period hereunder in accordance with the definition thereof, and (b) the expiration of the
indemnity obligations set forth in Section 8.

          (b) Notwithstanding anything to the contrary contained herein, this Agreement may be
terminated by the Company in the event that the Company Board has received a Superior Proposal
after the date hereof and prior to the initial adoption and approval of the Merger Agreement and
the transactions contemplated thereby by the Company Stockholders, and the Company Board has
adopted a resolution determining to terminate this Agreement in accordance with this Section
9.1(b), provided, that such termination under this Section 9.1(b) shall not be effective until the
Company has made payment of the fees and expenses required by Section 8.3(b) of the Merger
Agreement.

     9.2 Termination for Cause. If either party defaults in any material respect the
performance of any material provision of this Agreement, then the nondefaulting party may give
written notice to the defaulting party that if the default is not cured within thirty (30) days
after receipt of written notice (the “Cure Period”), the Agreement may be
terminated by the nondefaulting party. If the nondefaulting party gives such notice and the
default is not cured during such Cure Period then, any time after at the end of such Cure Period,
the nondefaulting party may terminate this Agreement (which termination shall be effective
immediately upon defaulting party’s receipt of written notice of termination).

     9.3 Termination for Insolvency. This Agreement shall terminate at the election of
Buyer (a) upon the institution by or against the Company of insolvency, receivership or bankruptcy
proceedings or any other proceedings for the settlement of a party’s debts, (b) upon the Company
making an assignment for the benefit of creditors, or (c) upon the Company’s dissolution or ceasing
to do business. This Agreement shall terminate without notice (x) upon the institution by or
against the Buyer of insolvency, receivership or bankruptcy proceedings or any other proceedings
for the settlement of a party’s debts, (y) upon the Buyer making an assignment for the benefit of
creditors, or (z) upon the Buyer’s dissolution or ceasing to do business.

     9.4 Survival of Certain Terms. The representations and warranties set forth in
Sections 4.1 to 4.28 shall survive the Closing Date and any Loan Date. The provisions of
Sections 2.1(b), 2.4, 3.1(b), 3.6, 3.7, , 6.15, 9 and 10 shall survive the termination of this
Agreement for any reason. All other rights and obligations of the parties, other than those rights
that shall have then accrued, shall cease upon termination of this Agreement.

     9.5 Effect of Termination. The parties acknowledge that upon termination of this
Agreement as permitted under, and in accordance with, the terms of this Section 9, no party shall
have the right to recover any claim with respect to any losses suffered by such party in connection
with such termination, except to the extent that such losses arise out of or are related to a
breach of the agreements, representations, warranties or covenants hereunder of another party
hereto prior to or contemporaneous with such termination. The termination of this Agreement shall
not affect the obligations of the Company under the specific terms contained in the Notes.

41

 

10. GENERAL.

     10.1 Notices. All notices, claims and demands hereunder, and all other communications
which are required to be given in writing pursuant to this Agreement, shall be in writing and shall
be given (and shall be deemed to have been duly given upon receipt) by delivery in person or
facsimile (received at the facsimile machine to which it is transmitted prior to 5 p.m., local
time, on a business day for the party to which it is sent, or if received after 5 p.m., local time,
as of the next business day) or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section 10.1):

if to Buyer:

Boston Scientific Corporation

One Boston Scientific Place

Natick, Massachusetts 01760

Attention: Chief Financial Officer

Facsimile: 508-650-8956

with a copy to:

Boston Scientific Corporation

One Boston Scientific Place

Natick, Massachusetts 01760

Attention: Assistant General Counsel

Facsimile: 508-650-8956

if to the Company:

Reva Medical, Inc.

5751 Copley Drive, Suite B

San Diego, CA 92111

Attention: President

Telephone: (858) 430-0720

Facsimile: (858) 430-0729

with a copy to:

Heller Ehrman White & McAuliffe LLP

4350 La Jolla Village Drive, 7th Floor

San Diego, CA 92122

Attention: Michael S. Kagnoff, Esq.

Telephone: (858) 450-8400

Facsimile: (825) 450-8499

     10.2 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of applicable law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the matters referred to herein are not affected in any
manner materially adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the matters referred to herein are be
consummated as originally contemplated to the fullest extent possible.

42

 

     10.3 Entire Agreement; Assignment. This Agreement and the documents referred to
herein constitute the entire agreement among the parties with respect to the subject matter hereof
and thereof and supersede all prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and thereof, provided,
that subject to Section 6.15, nothing in this Agreement shall be deemed to supersede those certain
Confidentiality Agreements, dated January 18, 2001 and March 16, 2004, between Buyer and the
Company. This Agreement shall not be assigned by operation of law or otherwise, except that Buyer
may assign all or any of its rights and obligations hereunder to (a) any Affiliate of Buyer
(provided, that no such assignment to an Affiliate shall relieve the assigning party of its
obligations hereunder), and (b) a person that acquires all of the capital stock, or substantially
all of the assets, of the division or business unit of Buyer responsible for the business of the
Company (provided, that such person assumes this Agreement, in writing, and agrees to be
bound by and to comply with all of the terms and conditions hereof).

     10.4 Parties in Interest. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto and nothing in this Agreement, express or implied is intended to
or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement.

     10.5 Specific Performance. The parties hereto agree that irreparable damage would
occur in the event that any provision of this Agreement was not performed in accordance with the
terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.

     10.6 Governing Law. This Agreement shall be governed by, and construed in accordance
with the laws of the State of California applicable to contracts executed in and to be performed in
that state.

     10.7 Headings; Interpretation. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the word “include,” “includes,” or “including” appears
in this Agreement, it shall be deemed in each instance to be followed by the words “without
limitation.”

     10.8 Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in one (1) or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed and delivered shall be deemed to be an original
but all of which taken together shall constitute one (1) and the same agreement.

     10.9 Fees and Expenses. All costs and expenses incurred in connection with this
Agreement by the Company shall be paid by the Company. All costs and expenses incurred in
connection with this Agreement by Buyer shall be paid by Buyer.

     10.10 Amendment. This Agreement may be amended only in an instrument in writing, duly
authorized by the Company Board, and signed by Buyer and the Company.

     10.11 Waiver. At any time prior to the termination of this Agreement, Buyer and the
Company may agree to (a) extend the time for the performance of any obligation or other act of the
other party hereto, (b) waive any inaccuracy in the representations and warranties of the other
contained herein or in any document delivered pursuant hereto, and (c) waive compliance by the
other, as the case may be, with any agreement or condition contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be
bound thereby.

[The remainder of this page is intentionally left blank.]

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     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused
this Agreement to be duly executed and delivered as a sealed instrument as of the date and year
first above written.

	 	 	 	 	 
	 	BOSTON SCIENTIFIC CORPORATION

 	 
	 	By:  	/s/ Lawrence C. Best
 	 
	 	 	Name:  	Lawrence C. Best 	 
	 	 	Title:  	Senior Vice President - Finance &
Administration and Chief Financial Officer 	 
	 
	 	REVA MEDICAL, INC.

 	 
	 	By:  	/s/ Robert K. Schultz
 	 
	 	 	Name:  	Robert K. Schultz 	 
	 	 	Title:  	President & COO 	 
	 

Signature page to Securities Purchase Agreement

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