AGREEMENT AND PLAN OF MERGER

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

Dated as of February 25, 2008

among

Galderma Laboratories, Inc.,

Galderma Acquisition Inc.

and

CollaGenex Pharmaceuticals, Inc.

TABLE OF CONTENTS

				Page
ARTICLE I THE OFFER					2
SECTION 1.1		The Offer			2
SECTION 1.2		Company Actions			4
SECTION 1.3		Directors of the Company			6
SECTION 1.4		Stockholders Meeting			8
SECTION 1.5		Offer Documents; Schedule 14D-9; Proxy Statement			8
ARTICLE II THE MERGER					9
SECTION 2.1		The Merger			9
SECTION 2.2		Closing			9
SECTION 2.3		Effective Time			9
SECTION 2.4		Effects of the Merger			9
SECTION 2.5		Certificate of Incorporation and Bylaws of the Surviving Corporation			9
SECTION 2.6		Directors and Officers of the Surviving Corporation			9
SECTION 2.7		Conversion of Securities			10
SECTION 2.8		Exchange of Certificates			10
SECTION 2.9		Appraisal Rights			13
SECTION 2.10		Company Options			13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY					14
SECTION 3.1		Organization, Standing and Corporate Power			14
SECTION 3.2		Capitalization			16
SECTION 3.3		Authority; Noncontravention; Voting Requirements			17
SECTION 3.4		Governmental Approvals			19
SECTION 3.5		Company SEC Documents; Financial Statements; Undisclosed Liabilities			19
SECTION 3.6		Absence of Certain Changes			21
SECTION 3.7		Legal Proceedings			21
SECTION 3.8		Compliance With Laws; Permits; Regulatory Compliance			21
SECTION 3.9		Information Supplied			24
SECTION 3.10		Tax Matters			24
SECTION 3.11		Employee Benefits and Labor Matters			26
SECTION 3.12		Contracts			29
SECTION 3.13		Environmental Matters			30
SECTION 3.14		Intellectual Property			31
SECTION 3.15		Products and Operations; Manufacturing			34
SECTION 3.16		Insurance			34
SECTION 3.17		Real Property			34
SECTION 3.18		Opinion of Financial Advisor			35

				Page
SECTION 3.19		Brokers and Other Advisors			35
SECTION 3.20		No Other Representations or Warranties			35
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER					36
SECTION 4.1		Organization and Standing			36
SECTION 4.2		Authority; Noncontravention			36
SECTION 4.3		Governmental Approvals			37
SECTION 4.4		Information Supplied			37
SECTION 4.5		Ownership and Operations of Purchaser			37
SECTION 4.6		Capital Resources			37
SECTION 4.7		Legal Proceedings			38
SECTION 4.8		Brokers and Other Advisors			38
SECTION 4.9		Ownership of Company Common Stock			38
SECTION 4.10		No Reliance			38
ARTICLE V ADDITIONAL COVENANTS AND AGREEMENTS					38
SECTION 5.1		Conduct of Business			38
SECTION 5.2		No Solicitations			42
SECTION 5.3		Efforts to Consummate			45
SECTION 5.4		Public Announcements			47
SECTION 5.5		Access to Information; Confidentiality			47
SECTION 5.6		Notification of Certain Matters			48
SECTION 5.7		Indemnification and Insurance			48
SECTION 5.8		Fees and Expenses			49
SECTION 5.9		Rule 16b-3			50
SECTION 5.10		Employee Matters			50
SECTION 5.11		Delisting			51
SECTION 5.12		Takeover Laws			51
SECTION 5.13		Stockholder Litigation			51
SECTION 5.14		Purchase of Shares of Series D-1 Preferred Stock			51
ARTICLE VI CONDITIONS TO THE MERGER					52
SECTION 6.1		Conditions to Each Party’s Obligation to Effect the Merger			52
ARTICLE VII TERMINATION					52
SECTION 7.1		Termination			52
SECTION 7.2		Effect of Termination			54
SECTION 7.3		Termination Fees			54
ARTICLE VIII MISCELLANEOUS					55
SECTION 8.1		Survival of Representations, Warranties and Agreements			55
SECTION 8.2		Amendment or Supplement			55

				Page
SECTION 8.3		Extension of Time, Waiver, Etc			55
SECTION 8.4		Assignment			56
SECTION 8.5		Counterparts			56
SECTION 8.6		Entire Agreement; No Third-Party Beneficiaries			56
SECTION 8.7		Governing Law; Jurisdiction; Waiver of Jury Trial			56
SECTION 8.8		Specific Enforcement; Remedies			57
SECTION 8.9		Notices			57
SECTION 8.10		Severability			58
SECTION 8.11		Definitions			58
SECTION 8.12		Interpretation			63

Annex A      Conditions of the Offer
Annex B     Preferred Stockholder Agreement

AGREEMENT AND PLAN OF MERGER

          This AGREEMENT AND PLAN OF MERGER, dated as of February 25, 2008 (this “ Agreement ”), is among Galderma Laboratories, Inc., a Delaware corporation (“ Parent ”), Galderma Acquisition Inc., a Delaware corporation and a wholly owned Subsidiary of Parent (“ Purchaser ”), and CollaGenex Pharmaceuticals, Inc., a Delaware corporation (the “ Company ”). Certain terms used in this Agreement without definition shall have their meanings as defined in Section 8.11 .

          WHEREAS, the respective Boards of Directors of Parent, Purchaser and the Company each deems it advisable that Parent acquire the Company on the terms and subject to the conditions provided for in this Agreement;

          WHEREAS, in furtherance thereof it is proposed that such acquisition be accomplished by (a) Purchaser commencing a tender offer to purchase all of the shares of common stock, $0.01 par value, of the Company (“ Company Common Stock ”) issued and outstanding (each, a “ Share ” and, collectively, the “ Shares ”), for $16.60 per Share (such amount or any greater amount per Share paid pursuant to the Offer being hereinafter referred to as the “ Offer Price ”), subject to any required withholding of Taxes, net to the sellers in cash, on the terms and subject to the conditions provided for in this Agreement (such cash tender offer, as it may be amended from time to time as permitted by this Agreement, the “ Offer ”), and (b) following the consummation of the Offer, the merger of Purchaser with and into the Company, with the Company being the surviving corporation, in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), pursuant to which (i) the Shares (other than certain Shares as provided in Section 2.7(b) and Dissenting Shares) will be converted into the right to receive the Offer Price and (ii) the outstanding shares (each, a “ Series D-1 Share ” and, collectively, the “ Series D-1 Shares ”) of the Series D-1 Cumulative Convertible Preferred Stock, $0.01 par value, of the Company (the “ Series D-1 Preferred Stock ”) (other than certain Series D-1 Shares as provided in Section 2.7(b) and Dissenting Shares) will be converted into the right to receive an amount of cash equal to the product of the number of shares of Company Common Stock into which such Series D-1 Shares are convertible pursuant to and in accordance with Section A.5 of the Certificate of Designation, Preferences and Rights of the Series D-1 Cumulative Convertible Preferred Stock, dated as of December 19, 2005 (the “ Series D-1 Preferred Stock Certificate of Designation ”) multiplied by the Offer Price, subject to any required withholding of Taxes, on the terms and subject to the conditions provided for in this Agreement (the “ Merger ”);

          WHEREAS, the respective Boards of Directors of the Company, Parent (on its own behalf and as the sole direct or indirect stockholder of Purchaser), and Purchaser have approved this Agreement and resolved that the transactions contemplated by this Agreement are advisable and in the best interests of their respective stockholders, including the consummation of the Offer and the Merger, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the relevant provisions of the DGCL;

          WHEREAS, the Company Board has resolved to recommend that the holders of Company Common Stock (the “ Company Stockholders ”) accept the Offer, tender their shares of Company Common Stock in the Offer, and, to the extent required by applicable Law, approve

the Merger and adopt this Agreement and the transactions contemplated by this Agreement (including the Offer and the Merger), in each case, upon the terms and subject to the conditions set forth in this Agreement; and

          WHEREAS, concurrently with the execution of this Agreement, Parent, Purchaser and holders (collectively, the “ Company Preferred Stockholders ”) of 90% or more of the Series D-1 Shares have entered into a preferred stock purchase and voting agreement, dated as of the date of this Agreement (the “ Preferred Stockholder Agreement ”), pursuant to which each Company Preferred Stockholder has agreed to, among other things, sell, convey, transfer, assign and deliver to Purchaser all of such Company Preferred Stockholder’s Series D-1 Shares immediately following the time Purchaser purchases Shares in the Offer, a copy of which Preferred Stockholder Agreement is attached as Annex B hereto;

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

ARTICLE I

     SECTION 1.1 The Offer .

          (a) Provided that this Agreement shall not have been terminated in accordance with Article VII and none of the events or circumstances set forth in clause (iii) of Annex A hereto shall have occurred and be existing (and shall not have been waived by Purchaser), Purchaser shall (and Parent shall cause Purchaser to) commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”)) the Offer to purchase all of the Shares at the Offer Price as promptly as reasonably practicable, but in no event later than ten (10) Business Days, after the date of this Agreement; provided , however , that such ten (10) Business Day deadline to commence the Offer will be extended to such date as the Company is ready to file the Schedule 14D-9 on the same date as the commencement of the Offer. The obligation of Purchaser to accept for payment and pay for Shares tendered pursuant to the Offer shall be subject only to (x) the satisfaction of the condition that at the expiration of the Offer there be validly tendered in accordance with the terms of the Offer and not withdrawn that number of Shares which, when taken together with Shares (if any) then owned by Parent or any of its Subsidiaries, represents more than 50% of the Shares then outstanding determined on a fully-diluted basis (on a “fully-diluted basis” meaning the number of Shares then issued and outstanding plus all shares of Company Common Stock which the Company may be required to issue as of such date pursuant to options, warrants, convertible securities (other than the shares of Series D-1 Preferred Stock owned, beneficially or of record, as of the date hereof, by the Company Preferred Stockholders) or similar obligations regardless of the conversion or exercise price, the vesting schedule or other terms and conditions thereof) (the “ Minimum Condition ”), and (y) the satisfaction (or waiver by Purchaser) of the other conditions set forth in Annex A hereto. Purchaser expressly reserves the right to waive any of such conditions (other than the Minimum Condition), to increase the price per Share payable in the Offer and to make any other

changes in the terms of the Offer; provided , however , that no change may be made without the prior written consent of the Company which decreases the price per Share payable in the Offer, changes the form of consideration payable in the Offer, reduces the maximum number of Shares sought to be purchased in the Offer, imposes conditions to the Offer in addition to, or modifies or amends, the conditions set forth in Annex A hereto, waives the Minimum Condition or makes any other changes in the terms of the Offer that are in any manner adverse to the holders of Shares or, except as provided below, extends the expiration date of the Offer. Notwithstanding the foregoing, subject to the right of the parties to terminate this Agreement in accordance with Section 7.1 , Purchaser may, and at the request of the Company shall, extend the Offer (i) beyond the initial scheduled expiration date, which shall be twenty (20) business days (as defined in Rule 14d-1 under the Exchange Act) following the date of commencement of the Offer, or any subsequent scheduled expiration date, if, at the scheduled expiration of the Offer, any of the conditions to Purchaser’s obligation to accept for payment and to pay for Shares tendered shall not be satisfied or, to the extent permitted by this Agreement, waived and (ii) for any period required by any rule, regulation or interpretation of the U.S. Securities and Exchange Commission (the “ SEC ”) or the staff thereof applicable to the Offer; provided that Purchaser shall not be required to extend the Offer to a date later than the Outside Date. Each extension of the Offer pursuant to clause (i) of the preceding sentence shall not exceed ten (10) Business Days (or such longer period as the Company and Purchaser may agree in writing in any particular instance) or such fewer number of days that Purchaser reasonably believes are necessary to cause the conditions of the Offer set forth in Annex A hereto to be satisfied. Subject to the terms of this Agreement and the satisfaction or earlier waiver of all the conditions of the Offer set forth in Annex A hereto as of any expiration date of the Offer, Purchaser shall (and Parent shall cause Purchaser to) accept for payment and pay for all Shares validly tendered and not withdrawn pursuant to the Offer promptly after it is permitted to do so under applicable Laws (but in no event later than two (2) Business Days after such expiration date of the Offer). In addition, if, at the expiration date of the Offer, all of the conditions to the Offer have been satisfied (or, to the extent permitted by this Agreement, waived by Purchaser) but the number of Shares validly tendered and not withdrawn pursuant to the Offer, when taken together with Shares, if any, then owned by Parent and its Subsidiaries, constitutes less than 90% of the Shares then outstanding, determined on a fully-diluted basis (as defined in Section 1.1(a) ), Purchaser may, or at the Company’s request (subject to applicable Laws) shall, provide for one or more “subsequent offering periods” (as contemplated by Rule 14d-11 under the Exchange Act) for at least three (3) but not more than twenty (20) Business Days following the Purchase Date, in which event Purchaser shall (and Parent shall cause Purchaser to) (A) give the required notice of such subsequent offering period and (B) immediately accept and promptly pay for all Shares tendered during the “initial offering period” and immediately accept and promptly pay for all Shares tendered during any “subsequent offering period,” in each case in accordance with Rule 14d-11 under the Exchange Act. On or prior to the date that Purchaser becomes obligated to pay for Shares pursuant to the Offer, Parent shall provide or cause to be provided to Purchaser the funds necessary to pay for all Shares that Purchaser becomes so obligated to pay for pursuant to the Offer. The Offer Price shall, subject to any required withholding of Taxes, be net to the sellers in cash, upon the terms and subject to the conditions of the Offer. The Company agrees that no shares of Company Common Stock held by the Company or any of its Subsidiaries will be tendered in the Offer.

          (b) As promptly as practicable on the date of commencement of the Offer, Parent and Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO (together with all amendments, supplements and exhibits thereto, the “ Schedule TO ”) with respect to the Offer. The Schedule TO shall contain or incorporate by reference an offer to purchase and forms of the related letter of transmittal and all other ancillary Offer documents (collectively, together with all amendments, supplements and exhibits thereto, the “ Offer Documents ”). Parent and Purchaser shall cause the Offer Documents to be disseminated to the holders of the Shares as and to the extent required by applicable federal securities Laws and rules and regulations promulgated thereunder. Parent and Purchaser, on the one hand, and the Company, on the other hand, shall promptly correct any information provided by them for use in the Offer Documents if and to the extent that it shall be or shall have become false or misleading in any material respect, and Parent and Purchaser shall cause the Offer Documents as so corrected to be filed with the SEC and disseminated to holders of the Shares, in each case, as and to the extent required by applicable federal securities Laws and rules and regulations promulgated thereunder. The Company and its counsel shall be given a reasonable opportunity to review and comment upon the Offer Documents before they are filed with the SEC and disseminated to holders of Shares. In addition, Parent and Purchaser shall provide the Company and its counsel with any comments that Parent or Purchaser or their counsel may receive from time to time from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments, consult with the Company and its counsel prior to responding to any such comments and provide the Company with copies of all such responses.

          (c) Purchaser shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Offer (or in connection with any subsequent offering period) any such amounts as are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), or under any provision of state, local or foreign Tax Law.

     SECTION 1.2 Company Actions .

          (a) As promptly as practicable on the date of commencement of the Offer, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) which, subject to Section 5.2 , shall contain the Company Recommendation. The Company shall cause the Schedule 14D-9 to be disseminated to holders of the Shares as and to the extent required by applicable federal securities Laws and rules and regulations promulgated thereunder. The Company, on the one hand, and each of Parent and Purchaser, on the other hand, shall promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall be or shall have become false or misleading in any material respect, and the Company shall cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to holders of the Shares, in each case, as and to the extent required by applicable federal securities Laws and rules and regulations promulgated thereunder. Parent and its counsel shall be given a reasonable opportunity to review and comment upon the Schedule 14D-9 before it is filed with the SEC and disseminated to holders of Shares. In addition, the Company shall provide Parent and its counsel with any comments that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments,

consult with Parent and its counsel prior to responding to any such comments and provide Parent with copies of all such responses.

          (b) The Company shall promptly furnish Purchaser with mailing labels containing the names and addresses of all record holders of Shares and with security position listings of Shares held in stock depositories, each as of a recent date, together with all other available listings and computer files containing names, addresses and security position listings of record holders and beneficial owners of Shares. The Company shall furnish Purchaser with such additional information, including updated listings and computer files of stockholders, mailing labels and security position listings, and such other assistance as Parent, Purchaser or their agents may reasonably require in communicating the Offer to the record and beneficial holders of Shares. Subject to the requirements of applicable Laws, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer or the Merger, Parent and Purchaser shall hold in confidence the information contained in such labels, listings and files, shall use such information solely in connection with the Offer and the Merger, and, if this Agreement is terminated in accordance with Section 7.1 or if the Offer is otherwise terminated, shall promptly deliver or cause to be delivered to the Company all copies of such information, labels, listings and files then in their possession or in the possession of their agents or representatives.

          (c) The Company grants to Parent and Purchaser an irrevocable option (the “ Merger Option ”) to purchase up to that number of newly issued shares of Company Common Stock (the “ Merger Option Shares ”) equal to the number of shares of Company Common Stock that, when added to the number of shares of Company Common Stock owned by Parent and Purchaser immediately following consummation of the Offer, shall constitute one share more than 90% of the shares of Company Common Stock then outstanding on a fully-diluted basis (after giving effect to the issuance of the Merger Option Shares) for consideration per Merger Option Share equal to the Offer Price; provided , however , that the obligation of the Company to deliver Merger Option Shares upon the exercise of the Merger Option is subject to the condition that no judgment, injunction, order or decree shall prohibit the exercise of the Merger Option or the delivery of the Merger Option Shares in respect of such exercise.

          (d) The Merger Option shall be exercisable only after the purchase of and payment for shares of Company Common Stock pursuant to the Offer by Parent or Purchaser as a result of which Parent and Purchaser own beneficially at least 80% of the outstanding shares of Company Common Stock on a fully-diluted basis. The Merger Option shall not be exercisable to the extent that the number of shares of Company Common Stock subject thereto exceeds (x) the number of authorized shares of Company Common Stock available for issuance or (y) the number of shares of Company Common Stock that may be issued to Parent and Purchaser without obtaining stockholder approval under the rules of NASDAQ.

          (e) In the event that Parent or Purchaser wish to exercise the Merger Option, Purchaser shall give the Company one (1) Business Day’s prior written notice specifying the number of shares of Company Common Stock that are owned by Parent and Purchaser immediately following consummation of the Offer and specifying a place and a time for the closing of the purchase. The Company shall, as soon as practicable following receipt of such notice, deliver written notice to Purchaser specifying the number of Merger Option Shares. At

the closing of the purchase of the Merger Option Shares, Parent or Purchaser shall pay to the Company an amount equal to the product of (i) the number of shares of Company Common Stock purchased pursuant to the Merger Option, multiplied by (ii) the Offer Price, which amount shall be paid in cash (by wire transfer or cashier’s check) or, at the election of Parent or Purchaser, by delivery of a promissory note having full recourse to Parent.

          (f) Parent and Purchaser acknowledge that the Merger Option Shares which Parent and Purchaser may acquire upon exercise of the Merger Option will not be registered under the Securities Act and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Parent and Purchaser represent and warrant to the Company that Purchaser is, or will be upon the purchase of the Merger Option Shares, an “accredited investor”, as defined in Rule 501 of Regulation D under the Securities Act. Parent and Purchaser agree that the Merger Option and the Merger Option Shares to be acquired upon exercise of the Merger Option are being and will be acquired by Purchaser for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof (within the meaning of the Securities Act).

     SECTION 1.3 Directors of the Company .

          (a) Upon the purchase of Shares pursuant to the Offer and for so long thereafter as Parent and its Subsidiaries own in the aggregate more than 50% of the outstanding Shares (the “ Board Representation Period ”), determined on a fully-diluted basis (as defined in Section 1.1(a) ), Parent shall be entitled to designate for appointment or election to the Company Board, upon written notice to the Company, such number of directors, rounded up to the next whole number, as is equal to the product obtained by multiplying the total number of directors on the Company Board (after giving effect to the directors designated by Parent pursuant to this sentence) by the percentage that the number of Shares so owned by Parent and its Subsidiaries bears to the total number of Shares then outstanding. In furtherance thereof, the Company shall, upon request of Parent, use its reasonable best efforts, subject to compliance with applicable securities Laws and applicable rules of the NASDAQ Global Market (“ NASDAQ ”), to promptly cause Parent’s designees (and any replacement designees in the event that any designee shall no longer be on the Company Board) to be so appointed or elected to the Company Board and, in furtherance thereof, to the extent necessary, use its reasonable best efforts to increase the size of the Company Board or obtain the resignation of such number of its directors as is necessary to give effect to the foregoing provision. During the Board Representation Period, subject to Section 1.3(c) , the Company will cause individuals designated by Parent to constitute such number of members of each committee of the Company Board, rounded up to the next whole number, that represents the same percentage as such individuals represent on the Company Board, other than any committee established to take action under this Agreement which committee shall be composed only of Independent Directors. Notwithstanding the foregoing, until the Effective Time, the Company Board shall have at least two (2) directors who are directors of the Company on the date of this Agreement and who are not officers of the Company or any of its Subsidiaries (“ Independent Directors ”); provided for the avoidance of doubt, the director elected by the holders of the Series D-1 Preferred Stock, pursuant to Section A.8 of the Series D-1 Preferred Stock Certificate of Designation may constitute an Independent Director for purposes of this Section 1.3(a) ; and provided , further , that if the number of Independent Directors shall be reduced below two (2) for any reason whatsoever (or if immediately following

consummation of the Offer there are not at least two (2) then-existing directors of the Company who are (A) Qualified Persons and (B) willing to serve as Independent Directors), then the number of Independent Directors required hereunder shall be one (1), unless the remaining Independent Director is able to identify a person who is not then an officer or Affiliate of the Company, Parent or any of their respective Subsidiaries (any such person being referred to herein as a “ Qualified Person ”; it being understood that, for purposes of this definition, a person that would otherwise not be considered an Affiliate of the Company shall not be deemed an Affiliate of the Company solely because he or she is a director of the Company), willing to serve as an Independent Director, in which case such remaining Independent Director shall be entitled to designate any such Qualified Person to fill such vacancy, and such designated Qualified Person shall be deemed to be an Independent Director for purposes of this Agreement, or if no Independent Directors then remain, the other directors shall be required to designate two (2) Qualified Persons to fill such vacancies, and such persons shall be deemed to be Independent Directors for purposes of this Agreement.

          (b) The Company shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in order to fulfill its obligations under Section 1.3(a) , including mailing to the Company’s stockholders the information required by such Section 14(f) and Rule 14f-1 (which the Company shall mail together with the Schedule 14D-9 if it receives from Parent and Purchaser the information below on a basis timely to permit such mailing) as is necessary to fulfill the Company’s obligations under Section 1.3(a) . The Company’s obligation to appoint Parent’s designees to the Company Board pursuant to Section 1.3(a) shall be subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder and to Parent’s compliance with its obligations under the following sentence. Parent and Purchaser shall supply the Company such information with respect to Parent and Purchaser and their nominees, officers, directors and Affiliates required by such Section 14(f) and Rule 14f-1 as is necessary in connection with the appointment of any of Parent’s designees under Section 1.3(a) , and Parent and Purchaser shall be solely responsible for the accuracy and completeness of such information.

          (c) Following the election or appointment of Parent’s designees pursuant to Section 1.3(a) and prior to the Effective Time, the approval by affirmative vote or written consent of a majority of the Independent Directors then in office (or, if there shall be only one (1) Independent Director then in office, the Independent Director) (the “ Independent Director Approval ”) shall be required to authorize (and such authorization shall constitute the authorization of the Company Board and no other action on the part of the Company, including any action by any other committee thereof or any other director of the Company, shall, unless otherwise required by applicable Law, be required or permitted to authorize) (i) any amendment or termination of this Agreement by the Company, (ii) any extension by the Company of time for performance of any obligation or action under this Agreement by Parent or Purchaser, (iii) any waiver, exercise or enforcement of any of the Company’s rights under this Agreement, (iv) any other action by the Company which could adversely affect the interests of the stockholders of the Company (other than Parent or any of its Affiliates) or (v) any amendment of the Company Charter Documents. The Independent Directors shall have the authority to retain such counsel and other advisors at the expense of the Company as are reasonably appropriate to the exercise of their duties in connection with this Agreement, subject to approval by the Company of the terms of such retention, which approval shall not be unreasonably withheld, conditioned or delayed. In

addition, the Independent Directors shall have the authority to institute any action, on behalf of the Company, to enforce performance of this Agreement.

     SECTION 1.4 Stockholders Meeting .

          (a) As promptly as practicable following the acceptance for payment of Shares by Parent or Purchaser or any of their Affiliates pursuant to and in accordance with the terms of the Offer on the Purchase Date (the “ Acceptance Time ”) (or, if later, following the termination of the subsequent offering period, if any), if required by applicable Law in order to consummate the Merger, the Company, acting through the Company Board, shall, in accordance with applicable Law and the Company Charter Documents:

               (i) duly call, give notice of, convene and hold an annual or special meeting of the Company Stockholders and the holders of Series D-1 Preferred Stock (the “ Series D-1 Holders ”) for the purposes of considering and taking action upon the adoption of this Agreement (the “ Company Stockholders Meeting ”); and

               (ii) in consultation with Parent, prepare and file with the SEC a preliminary proxy or information statement relating to the Merger and this Agreement and obtain and furnish the information required by the SEC to be included therein and, after consultation with Parent, respond promptly to any comments made by the SEC with respect to the preliminary proxy or information statement and cause a definitive proxy or information statement (together with all amendments, supplements and exhibits thereto, the “ Proxy Statement ”) to be mailed to the Company Stockholders and the Series D-1 Holders at the earliest practicable date; provided that no amendments or supplements to the Proxy Statement shall be made by the Company without consultation with Parent. Parent shall provide the Company with such information with respect to Parent and its Affiliates as shall be required to be included in the Proxy Statement.

          (b) Notwithstanding the provisions of Section 1.4(a) , in the event that Parent, Purchaser and any of Parent’s other Subsidiaries shall acquire in the aggregate at least 90% of the outstanding shares of each class of capital stock of the Company pursuant to the Offer or otherwise, the parties hereto shall, subject to Article VI , take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL.

          (c) Parent shall vote, or cause to be voted, all of the shares of capital stock of the Company acquired in the Offer or pursuant to the Preferred Stockholder Agreement or otherwise then owned by it, Purchaser or any of Parent’s other Subsidiaries in favor of the adoption of this Agreement at the Company Stockholders Meeting or in order to take the actions required by Section 1.4(b) .

     SECTION 1.5 Offer Documents; Schedule 14D-9; Proxy Statement . Without limiting any other provision of this Agreement, whenever any party hereto becomes aware of any event or change which is required to be set forth in an amendment or supplement to the Offer Documents, the Schedule 14D-9 and/or the Proxy Statement, such party shall promptly inform the other parties thereof and each of the parties shall cooperate in the preparation, filing with the SEC and (as and to the extent required by applicable federal securities Laws and rules and

regulations promulgated thereunder) dissemination to the Company’s stockholders of such amendment or supplement.

ARTICLE II

     SECTION 2.1 The Merger . Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time Purchaser shall be merged with and into the Company, and the separate corporate existence of Purchaser shall thereupon cease, and the Company shall be the surviving corporation in the Merger (the “ Surviving Corporation ”).

     SECTION 2.2 Closing . The closing of the Merger (the “ Closing ”) shall take place at 10:00 a.m. (New York time) on a date to be specified by the parties (the “ Closing Date ”), which date shall be no later than the second (2 ^nd ) Business Day after satisfaction or waiver of the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time), at the offices of Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York 10022, unless another time, date or place is agreed to in writing by the parties hereto.

     SECTION 2.3 Effective Time . Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file with the Secretary of State of the State of Delaware a certificate of merger (or, if applicable, a certificate of ownership and merger) executed in accordance with the relevant provisions of the DGCL (the “ Certificate of Merger ”). The Merger shall become effective upon the filing of the Certificate of Merger or at such later time as is agreed to by the parties hereto and specified in the Certificate of Merger (the time at which the Merger becomes effective is herein referred to as the “ Effective Time ”).

     SECTION 2.4 Effects of the Merger . The Merger shall have the effects set forth in the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Purchaser shall become the debts, liabilities and duties of the Surviving Corporation.

     SECTION 2.5 Certificate of Incorporation and Bylaws of the Surviving Corporation . The certificate of incorporation and bylaws of Purchaser, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation and bylaws of the Surviving Corporation until thereafter amended as provided therein or by applicable Law (but subject to Section 5.7 ).

     SECTION 2.6 Directors and Officers of the Surviving Corporation .

          (a) The directors of Purchaser immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately following the Effective Time, until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

          (b) The officers of Purchaser immediately prior to the Effective Time shall be the officers of the Surviving Corporation until their respective successors are duly appointed and qualified or their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

     SECTION 2.7 Conversion of Securities . At the Effective Time, by virtue of the Merger and without any action on the part of the holders of any securities of Purchaser or the Company:

          (a) Each issued and outstanding share of capital stock of Purchaser shall be converted into and become one (1) validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

          (b) Any shares of Company Common Stock that are owned by the Company as treasury stock and any Shares or Series D-1 Shares owned by Parent, Purchaser, any other Subsidiary of Parent or a Subsidiary of the Company shall be automatically canceled and shall cease to exist and no consideration shall be delivered in exchange therefor.

          (c) Each (i) Share (other than (x) Shares to be canceled in accordance with Section 2.7(b) and (y) any Dissenting Shares), shall be converted into the right to receive an amount of cash equal to the Offer Price payable upon surrender, in the manner provided in this Agreement, to the holder of the certificate formerly representing such Share, without interest and (ii) Series D-1 Share (other than (x) Series D-1 Shares to be canceled in accordance with Section 2.7(b) and (y) any Dissenting Shares) shall be converted into the right to receive an amount of cash equal to the product of the number of shares of Company Common Stock into which such Series D-1 Shares are convertible pursuant to and in accordance with Section A.5 of the Series D-1 Preferred Stock Certificate of Designation multiplied by the Offer Price payable upon surrender, in the manner provided in this Agreement, to the holder of the certificate formerly representing such Series D-1 Share, without interest (collectively, the “ Merger Consideration ”). All such Shares and Series D-1 Shares, when so converted, shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate which immediately prior to the Effective Time represented any such Shares or such Series D-1 Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such certificate in accordance with this Agreement, without interest.

          (d) The Merger Consideration shall be adjusted to reflect fully the effect of any reclassification, stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Shares), reorganization, recapitalization or other like change with respect to Shares, occurring (or for which a record date is established) after the date of this Agreement and prior to the Effective Time.

     SECTION 2.8 Exchange of Certificates .

          (a) Paying Agent . Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company to act as agent for the holders of Shares and the holders of Series D-1 Shares in connection with the Merger (the “ Paying Agent ”) to

receive, on terms reasonably acceptable to the Company, for the benefit of holders of Shares and the holders of Series D-1 Shares, the aggregate Merger Consideration to which holders of Shares and holders of Series D-1 Shares shall become entitled pursuant to Section 2.7(c) . Parent shall deposit such aggregate Merger Consideration with the Paying Agent at or prior to the Effective Time. Such aggregate Merger Consideration deposited with the Paying Agent shall, pending its disbursement to such holders, be invested by the Paying Agent in (i) direct obligations of the United States of America, (ii) obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, (iii) commercial paper rated the highest quality by either Moody’s Investors Service, Inc. or Standard and Poor’s Ratings Services or (iv) money market funds investing solely in a combination of the foregoing. Any interest and other income resulting from such investments shall be the property of, and shall be paid to, Parent. Parent shall promptly replace any funds deposited with the Paying Agent lost through any investment made pursuant to this paragraph.

          (b) Exchange Procedures . Promptly after the Effective Time (but in no event more than three (3) Business Days thereafter), the Surviving Corporation shall cause the Paying Agent to mail to each holder of record of a certificate or certificates (or evidence of shares in book-entry form), which immediately prior to the Effective Time represented outstanding Shares (the “ Certificates ”), whose shares were converted pursuant to Section 2.7(c) into the right to receive the Merger Consideration and to each holder of record of a certificate or certificates (or evidence of shares in book-entry form), which immediately prior to the Effective Time represented outstanding Series D-1 Shares (the “ Series D-1 Certificates ”), whose shares were converted pursuant to Section 2.7(c) into the right to receive the Merger Consideration, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates and the Series D-1 Certificates shall pass, only upon delivery of the Certificates and the Series D-1 Certificates to the Paying Agent, and which shall be in such form and shall have such other customary provisions (including customary provisions with respect to delivery of an “agent’s message” with respect to shares held in book-entry form) as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates and the Series D-1 Certificates in exchange for payment of the Merger Consideration with respect thereto. Upon surrender of a Certificate or a Series D-1 Certificate for cancellation to the Paying Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions (and such other customary documents as may reasonably be required by the Paying Agent), the holder of such Certificate or such Series D-1 Certificate, as applicable, shall be entitled to receive in exchange therefor the Merger Consideration (less any applicable excise and withholding Taxes in accordance with Section 2.8(g) ), without interest, for each Share formerly represented by such Certificate or each Series D-1 Share formerly represented by such Series D-1 Certificate, as applicable, and the Certificate or Series D-1 Certificate so surrendered shall forthwith be canceled. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate or Series D-1 Certificate is registered, it shall be a condition of payment that (x) the Certificate or Series D-1 Certificate so surrendered shall be properly endorsed or shall otherwise be in proper form for transfer and (y) the Person requesting such payment shall have paid any transfer and other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of such Certificate or Series D-1 Certificate surrendered or shall have established to the reasonable satisfaction of the Surviving Corporation that such Tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 2.8 , each

Certificate and Series D-1 Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration with respect thereto as contemplated by this Article II , without interest.

          (c) Transfer Books; No Further Ownership Rights in Company Stock . The Merger Consideration paid in respect of Shares or Series D-1 Shares upon the surrender for exchange of Certificates or Series D-1 Certificates, as applicable, in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares previously represented by such Certificates or the Series D-1 Shares previously represented by such Series D-1 Certificate, as applicable, and at the close of business on the day on which the Effective Time occurs, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Shares or the Series D-1 Shares that were outstanding immediately prior to the Effective Time. From and after the Effective Time, the holders of Certificates that evidenced ownership of Shares outstanding immediately prior to the Effective Time and holders of Series D-1 Certificates that evidenced ownership of Series D-1 Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares, except as otherwise provided for herein or by applicable Law. Subject to the last sentence of Section 2.8(e) , if, at any time after the Effective Time, Certificates or Series D-1 Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II .

          (d) Lost, Stolen or Destroyed Certificates . If any Certificate or Series D-1 Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate or such Series D-1 Certificate, as applicable, to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond, in such reasonable amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate or such Series D-1 Certificate, the Paying Agent will pay, in exchange for such lost, stolen or destroyed Certificate or Series D-1 Certificate, the applicable Merger Consideration to be paid in respect of the shares formerly represented thereby, as contemplated by this Article II .

          (e) Termination of Fund . At any time following six (6) months after the Closing Date, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) that had been made available to the Paying Agent and which have not been disbursed to holders of Certificates or holders of Series D-1 Certificates, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or other similar Laws) as general creditors thereof with respect to the payment of any Merger Consideration that may be payable upon surrender of any Certificates or Series D-1 Certificates held by such holders, as determined pursuant to this Agreement, without any interest thereon. Any amounts remaining unclaimed by such holders at such time at which such amounts would otherwise escheat to or become property of any Governmental Authority shall become, to the extent permitted by applicable Law, the property of Parent free and clear of all claims or interests of any Person previously entitled thereto.

          (f) No Liability . Notwithstanding any provision of this Agreement to the contrary, none of the parties hereto, the Surviving Corporation or the Paying Agent shall be liable to any Person for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

          (g) Withholding Taxes . Parent, Purchaser, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable to a holder of Shares, Company Options or Series D-1 Shares pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax Law. To the extent amounts are so withheld and paid over to the appropriate taxing authority, the withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares, Company Options or Series D-1 Shares in respect of which such deduction and withholding was made.

     SECTION 2.9 Appraisal Rights . Notwithstanding anything in this Agreement to the contrary, Shares and Series D-1 Shares that are issued and outstanding immediately prior to the Effective Time and which are held by a stockholder who did not vote in favor of the Merger (or consent thereto in writing) and who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, the provisions of Section 262 of the DGCL (each, a “ Dissenting Stockholder ”), shall not be converted into or be exchangeable for the right to receive the Merger Consideration therefor (the “ Dissenting Shares ”), but instead such Dissenting Stockholder shall be entitled to payment of the fair value of such Dissenting Shares in accordance with the provisions of Section 262 of the DGCL (and at the Effective Time, such Dissenting Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and such Dissenting Stockholder shall cease to have any rights with respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with the provisions of Section 262 of the DGCL), unless and until such Dissenting Stockholder shall have failed to perfect or shall have effectively withdrawn or lost rights to appraisal under the DGCL. If any Dissenting Stockholder shall have failed to perfect or shall have effectively withdrawn or lost such right, such Dissenting Stockholder’s Shares shall thereupon be treated as if they had been converted into and become exchangeable for the right to receive, as of the Effective Time, the Merger Consideration for each such Share or Series D-1 Share, in accordance with Section 2.7(c) , without any interest thereon. The Company shall give Parent (i) prompt notice of any written demands for appraisal of any Shares or Series D-1 Shares, attempted withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company relating to stockholders’ rights of appraisal, and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands for appraisal under the DGCL. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent or as otherwise required by an order, decree, ruling or injunction of a court of competent jurisdiction, make any payment with respect to, or settle or compromise or offer to settle or compromise, any such demand, or agree to do any of the foregoing.

     SECTION 2.10 Company Options . Prior to the Purchase Date, the Company shall take all actions necessary to provide that each Company Option outstanding immediately prior to the Effective Time (whether or not then vested or exercisable) shall be terminated and converted at the Effective Time into the right to receive, in full satisfaction of such Company Option, a cash

amount equal to the Option Consideration (if any) for each share of Company Common Stock then subject to the Company Option. The Option Consideration shall be paid within five (5) Business Days following the Effective Time. Notwithstanding the foregoing, Parent and the Company shall be entitled to deduct and withhold from the Option Consideration otherwise payable such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax Law. For purposes of this Agreement, “ Option Consideration ” means, with respect to any share of Company Common Stock issuable under a particular Company Option, an amount equal to the excess, if any, of (i) the Offer Price over (ii) the exercise price payable in respect of such share of Company Common Stock issuable under such Company Option rounded down to the nearest cent. As of the Effective Time, any Option with an exercise price equal to or greater than the Offer Price shall be canceled without consideration and be of no further force or effect. The Company Board (or, if appropriate, any committee thereof administering the Company Stock Plans) shall adopt such resolutions or take such other actions as may be required to effect the foregoing. Any Company Options held by any director of the Company that do not vest and are thereby cancelled as a result of such director’s resignation pursuant to the provisions of Section 1.3(a) shall nevertheless be deemed to be outstanding for purposes of the payments to be made in respect of Company Options outstanding immediately prior to the Effective Time (whether or not then vested or exercisable) pursuant to this Section 2.10 .

ARTICLE III

Representations and Warranties of the Company

          The Company represents and warrants to Parent and Purchaser that except as set forth in the letter delivered by the Company to Parent simultaneously with the execution of this Agreement (the “ Company Disclosure Letter ”) or the Company SEC Documents filed prior to the date of this Agreement (the “ Filed Company SEC Documents ”) (excluding all exhibits, annexes and schedules thereto and documents incorporated by reference therein or any risk factors or forward-looking statements and any other disclosures therein to the extent they are predictive or forward-looking in nature) (it being understood that any matter set forth in the Company Disclosure Letter or in such Filed Company SEC Documents shall be deemed disclosed for all sections and subsections of this Agreement only to the extent that the applicability of such disclosure to such section or subsection is readily apparent):

     SECTION 3.1 Organization, Standing and Corporate Power .

          (a) The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate power and authority necessary to own or lease all of its properties and assets and to carry on its business as it is now being conducted. The Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased or held under license by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. For purposes of this Agreement, “ Company Material Adverse Effect ” shall mean any change, event, occurrence, state of facts or

development which has a material adverse effect on (1) the business, results of operations or financial condition of the Company and its Subsidiaries taken as a whole or (2) the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement by the Outside Date; provided that with respect to clause (1) above, Company Material Adverse Effect shall not include any changes, events, occurrences, state of facts or developments, to the extent arising out of or resulting from (i) changes after the date of this Agreement in conditions generally in the United States or global economy or in the capital or financial markets, including changes in interest or exchange rates, (ii) changes after the date of this Agreement in general legal, regulatory, political, economic or business conditions or changes in generally accepted accounting principles that, in either case, generally affect the industry in which the Company and its Subsidiaries conduct business, (iii) the negotiation, execution, announcement or performance of this Agreement or the consummation of the Transactions, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners, collaborators or employees, (iv) acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of this Agreement, (v) storms, earthquakes or other natural disasters, (vi) the initiation of any litigation by any stockholder of the Company relating to this Agreement, the Offer or the Merger, (vii) any decline in the market price, or change in trading volume, of the Company Common Stock or any failure of the Company to meet publicly announced revenue or earnings projections; provided that the underlying changes, events, occurrences, state of facts or developments that caused or contributed to any such decline, change or failure may otherwise be taken into consideration in determining whether a Company Material Adverse Effect has occurred, (viii) any delay after the date of this Agreement in any of the Company’s ongoing research programs resulting from any adverse changes, developments, circumstances, events or occurrences, or (ix) any action taken by the Company or any of its Subsidiaries which is expressly required by this Agreement or that has been expressly consented to by Parent under the terms of this Agreement, except in each of cases (i), (ii), (iii), (iv), (v), (vi) and (vii), to the extent that such changes affect the Company and its Subsidiaries in a disproportionate manner relative to other participants in the businesses and industries in which the Company and its Subsidiaries operate.

          (b) Each of the Company’s Subsidiaries is a corporation or other organization duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization. Each of the Company’s Subsidiaries is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased or held under license by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Section 3.1(b) of the Company Disclosure Letter sets forth a true and complete list of each Subsidiary of the Company (including its name and form of organization, its jurisdiction of incorporation or organization and the number and type of outstanding equity securities and a list of the holders of such securities). All the outstanding shares of capital stock, voting securities or other equity interests of each Subsidiary of the Company (except for directors’ qualifying shares or the like) are duly authorized, have been validly issued, are fully paid, nonassessable and free of preemptive rights, and are owned by the Company or another wholly-owned Subsidiary of the Company free and clear of all liens, pledges, security interests and transfer restrictions, except for such transfer restrictions of general

applicability as may be provided under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “ Securities Act ”), and other applicable securities Laws and rules and regulations promulgated thereunder. There are no (i) outstanding options or other rights of any kind which obligate the Company or any of its Subsidiaries to issue or deliver any shares of capital stock, voting securities or other equity interests of any such Subsidiary or any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other equity interest of a Subsidiary of the Company, (ii) outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other equity interests of a Subsidiary of the Company; or (iii) other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of any Subsidiary to which the Company or any of its Subsidiaries is a party.

          (c) The Company has made available to Parent complete and correct copies of the certificate of incorporation and bylaws (or other comparable organizational documents) of the Company and each of its Subsidiaries, in each case as amended through the date of this Agreement (the “ Company Charter Documents ”).

          (d) The Company does not control directly or indirectly or own, directly or indirectly, any capital stock of, or other voting securities or equity or similar interests in, or investment in or have any obligation to invest in, any corporation, partnership, limited liability company, joint venture, trust or other business association or entity or Person which is not a Subsidiary of the Company listed on Section 3.1(b) of the Company Disclosure Letter .

     SECTION 3.2 Capitalization .

          (a) The authorized capital stock of the Company consists of: (i) 75,000,000 shares of Company Common Stock and (ii) 5,000,000 shares of preferred stock, par value $0.01 per share (“ Company Preferred Stock ”) of which, (x) 200,000 shares are designated as Series D-1 Preferred Stock and (y) 150,000 shares are designated as Series A Participating Preferred Stock and were reserved for issuance in accordance with the Company Rights Agreement, pursuant to which the Company had issued rights (“ Company Rights ”) to purchase shares of such Series A Participating Preferred Stock and which Company Rights expired pursuant to the terms of the Company Rights Agreement on September 26, 2007. At the close of business on February 22, 2008, (i) 21,576,533 shares of Company Common Stock were issued and outstanding, (ii) 200,000 shares of Series D-1 Preferred Stock were issued and outstanding, (iii)  3,568,658 shares of Company Common Stock were subject to outstanding Company Options, (iv) 2,352,941 shares of Company Common Stock were reserved for issuance upon conversion of the Series D-1 Preferred Stock, (v) no shares of Company Common Stock were held by the Company in its treasury, (vi) no shares of Company Preferred Stock were held by the Company in its treasury and (vii) no shares or Series A Participating Preferred Stock were outstanding. All outstanding shares of Company Common Stock, and all shares of Company Common Stock reserved for issuance upon exercise of the Company Options or upon conversion of the Series D-1 Preferred Stock, have been duly authorized and all outstanding shares of Company Common Stock are, and all shares of Company Common Stock reserved for issuance upon exercise of the Company Options or upon conversion of the Series D-1 Preferred Stock, both in accordance with their

respective terms, will upon issuance be, validly issued, fully paid, nonassessable and free of preemptive rights. All shares of Company Preferred Stock have been duly authorized and all outstanding shares of Series D-1 Preferred Stock are validly issued, fully paid, nonassesable and free of preemptive rights. Section 3.2(a) of the Company Disclosure Letter sets forth a correct and complete list, as of February 25, 2008, of the outstanding Company Options, the number of shares of Company Common Stock underlying such Company Options, the holders, exercise prices, dates of grant, vesting schedules and expiration dates thereof and the Company Stock Plan (if any) under which such Company Option was granted. Since February 22, 2008, the Company has not issued, or reserved for issuance, any shares of its capital stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock, other than or pursuant to the Company Options referred to above that are outstanding as of the date of this Agreement.

          (b) Except as set forth in Section 3.2(a) , as of the date of this Agreement, (A) there are no outstanding options, stock appreciation rights or other rights of any kind which obligate the Company or any of its Subsidiaries to issue or deliver any shares of capital stock, voting securities or other equity interests of the Company or any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other equity interests of the Company (collectively, (“ Company Securities ”); (B) there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities; and (C) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company to which the Company or any of its Subsidiaries is a party. No Subsidiary of the Company owns any shares of Company Common Stock.

          (c) Except as disclosed in Section 3.2(c) of the Company Disclosure Letter , the Company and its Subsidiaries have no outstanding indebtedness for borrowed money and there are no outstanding guarantees by the Company or any of its Subsidiaries of indebtedness for borrowed money of any other Person. There are no bonds, debentures, notes or other indebtedness of the Company or any of its Subsidiaries having the right to vote (or convertible into or exchangeable for securities having the right to vote) on any matters on which stockholders of the Company or any such Subsidiary may vote.

     SECTION 3.3 Authority; Noncontravention; Voting Requirements .

          (a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and, subject to obtaining the Company Stockholder Approval as contemplated by Section 1.4 , to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Transactions, have been duly authorized and approved by all necessary corporate action on the part of the Company (including by the Company Board), and except for obtaining the Company Stockholder Approval (to the extent required by the DGCL), no other corporate action or proceedings on the part of the Company or any of its stockholders are necessary to authorize the execution, delivery and performance by the Company of this Agreement and the consummation by it of the Transactions. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery

hereof by the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at Law or in equity (the “ Bankruptcy and Equity Exception ”).

          (b) The Company approves of and consents to the Offer, and represents and warrants that the Company Board, at a meeting duly called and held, has, subject to the terms and conditions set forth in this Agreement, unanimously (i) approved this Agreement, and deemed this Agreement and the Transactions advisable, fair to and in the best interests of the Company Stockholders; (ii) approved this Agreement and the Transactions, including the Offer and the Merger, in all respects, and such approval constitutes approval of this Agreement and the Transactions and the Tender Agreement for purposes of Section 203 of the DGCL (assuming the accuracy of Parent’s representation and warranty contained in Section 4.9 ) and for purposes of any other state takeover Law or state Law that purports to limit or restrict business combinations or the ability to acquire or vote shares; and (iii) resolved to recommend that the Company Stockholders accept the Offer, tender their shares of Company Common Stock in the Offer, and, to the extent required by applicable Law, approve the Merger and adopt this Agreement (the “ Company Recommendation ”). The Company hereby consents to the inclusion of such approval and the Company Recommendation in the Offer Documents, subject to Section 5.2(b) .

          (c) Neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the Transactions, nor compliance by the Company with any of the terms or provisions hereof, will (i) conflict with or result in any violation or breach of (with or without notice or lapse of time, or both) any provision of the Company Charter Documents or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.4 and the Company Stockholder Approval (to the extent required by the DGCL) are obtained and the filings referred to in Section 3.4 are made, (x) violate any Law, judgment, writ or injunction of any Governmental Authority applicable to the Company or any of its Subsidiaries or (y) conflict with or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under or give rise to a right of, or result in, termination, modification, cancellation, recapture or acceleration of any obligation or to the loss of a benefit, or result in the creation of any lien in or upon or with respect to, any of the properties (including Intellectual Property) or other assets of the Company or any of its Subsidiaries, under any of the terms, conditions or provisions of any loan or credit agreement, debenture, note, bond, mortgage, indenture, deed of trust, lease, contract or other agreement (each, a “ Contract ”) to which the Company or any of its Subsidiaries is a party, except, in the case of this clause (ii), for such violations or defaults as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

          (d) Except as set forth in Section 3.3(d) of the Company Disclosure Letter , the affirmative vote (in person or by proxy) by the holders of at least a majority in voting power of the outstanding shares of Company Common Stock and Series D-1 Preferred Stock (voting on an as-converted basis) voting together as a single class, at the Company Stockholders Meeting, or any adjournment or postponement of the Company Stockholders Meeting, in favor of the

adoption of this Agreement are the only votes or approvals of the holders of any class or series of the Company’s capital stock or any of its Subsidiaries’ capital stock or other securities which are necessary to adopt this Agreement and approve the Transactions (to the extent required by applicable Law to approve the Merger) (the “ Company Stockholder Approval ”).

     SECTION 3.4 Governmental Approvals . Except for (i) the filing with the SEC of the Schedule 14D-9 and, if necessary, of the Proxy Statement in definitive form, and other filings required under, and compliance with other applicable requirements of, the Exchange Act, state securities or “blue sky” laws and the rules and regulations of NASDAQ, (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL and (iii) filings required under, and compliance with other applicable requirements of, the HSR Act, no consents or approvals of, or filings, declarations or registrations with, any Governmental Authority are necessary for the execution and delivery of this Agreement by the Company and the consummation by the Company of the Transactions, other than such consents, approvals, filings, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or to impair in any material respect the ability of the Company to perform its obligations hereunder or prevent or materially delay consummation of the Transactions.

     SECTION 3.5 Company SEC Documents; Financial Statements; Undisclosed Liabilities .

          (a) The Company has filed all required statements, prospectuses, forms, reports, schedules and other documents with the SEC, together with all certifications required pursuant to the Sarbanes-Oxley Act of 2002 (including its rules and regulations, “ SOX ”), from and after January 1, 2005 (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the “ Company SEC Documents ”). As of their respective effective dates (in the case of Company SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing dates (in the case of all other documents), the Company SEC Documents and all documents filed from and after December 31, 2004 by the Company with the SEC on a voluntary basis on Current Reports on Form 8-K (the “ Company Current Reports ”) complied in all material respects with applicable Law, including the Exchange Act, the Securities Act and SOX, as the case may be, and none of the Company SEC Documents or the Company Current Reports as of such respective dates contained any untrue statement of a material fact or omitted to state a 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. No Subsidiary of the Company is, or has at any time since December 31, 2004 been, subject to the reporting requirements of Section 13(a) or Section 15(d) of the Exchange Act.

          (b) The consolidated financial statements of the Company included in the Company SEC Documents (the “ Company Financial Statements ”) have been prepared in accordance with GAAP (except, in the case of unaudited interim statements, as indicated in the notes thereto) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the

case of unaudited interim statements, to normal year-end audit adjustments which were not and would not, individually or in the aggregate, reasonably be expected to be material). The books and records of the Company and each of its Subsidiaries have been, and are being, maintained in all material respects in accordance with applicable legal and accounting requirements, and the Company Financial Statements are consistent in all material respects with such books and records.

          (c) Except as disclosed in Section 3.5(c) of the Company Disclosure Letter , neither the Company nor any of its Subsidiaries has any liabilities of any nature, whether accrued, contingent or otherwise (“ Liabilities ”), except Liabilities (i) reflected in or reserved against on the most recent financial statements of the Company and included in the Company SEC Documents filed with the SEC prior to the date of this Agreement, (ii) incurred in the ordinary course of business, (iii) that have been discharged or paid in full in the ordinary course of business, (iv) that are expressly contemplated by this Agreement or (v) as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

          (d) The Company and its Subsidiaries have designed and maintain a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company (i) has designed and maintains “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Section 302 and 906 of SOX, and (ii) has disclosed, based on its most recent evaluation of such disclosure controls and procedures prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Company Board (A) any “significant deficiencies” and “material weaknesses” in the design or operation of “internal controls over financial reporting” that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. For purposes of this Agreement, the terms “significant deficiency” and “material weakness” shall have the meanings assigned to them by the Public Company Accounting Oversight Board in Auditing Standard No. 2, as in effect on the date of this Agreement, and the term “internal controls over financial reporting” shall have the meaning assigned to it by Rule 13a-15(f).

          (e) Each of the principal executive officer of the Company and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with respect to the Company SEC Documents, and the statements contained in such certifications were complete and correct on the date such certifications were made. For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the

meanings given to such terms in SOX. Neither the Company nor any of its Subsidiaries has outstanding (nor has arranged or modified since the enactment of SOX) any “extensions of credit” (within the meaning of Section 402 of SOX ) to directors or executive officers (as defined in Rule 3b-7 under the Exchange Act) of the Company or any of its Subsidiaries.

          (f) Except as set forth in Section 3.5(f) of the Company Disclosure Letter , since December 31, 2004 through the date of this Agreement, (i) neither the Company nor any of its Subsidiaries, nor any director or executive officer of the Company or any of its Subsidiaries has, and, to the Knowledge of the Company, no other officer, employee or accountant of the Company or any of its Subsidiaries has, received any material complaint, allegation, assertion or claim, in writing (or, to the Knowledge of the Company, orally) regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Company Board or any committee thereof or to any director or officer of the Company.

     SECTION 3.6 Absence of Certain Changes . Except as disclosed in Section 3.6 of the Company Disclosure Letter or in the Company SEC Documents, from December 31, 2006 until the date of this Agreement (a) each of the Company and its Subsidiaries has carried on and operated its businesses in all material respects in the ordinary course of business, (b) there have not been any events, changes or occurrences that have had, or would, individually or in the aggregate, reasonably be expected to have, a Company Material Adverse Effect, (c) there has not been any material damage, destruction or loss, whether or not covered by insurance, and (d) no action, event, occurrence or transaction has taken place, and neither the Company nor any of its Subsidiaries has taken any action, that would have been prohibited by Section 5.1(a) without the consent of Parent if this Agreement had been in effect at the time thereof.

     SECTION 3.7 Legal Proceedings . As of the date of this Agreement, there is no pending or, to the Knowledge of the Company, threatened Action or Proceeding against or relating to the Company or any of its Subsidiaries or any of the executive officers or directors of the Company in their capacity as such, nor is the Company, any of its Subsidiaries, or any of their respective properties or assets subject to any injunction, order, judgment, settlement, award, ruling or decree imposed upon the Company or any of its Subsidiaries, in each case, by or before any Governmental Authority, except, in each case, for those that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Since December 31, 2006, there has not been made or, to the Knowledge of the Company, threatened, any material product liability or other material product-related claims by any third party arising from the sale, distribution or manufacturing of products by the Company or any of its Subsidiaries.

     SECTION 3.8 Compliance With Laws; Permits; Regulatory Compliance .

          (a) The Company and its Subsidiaries are, and have been since January 1, 2006, in compliance with all laws, statutes, ordinances, codes, rules, regulations, decrees and

orders of Governmental Authorities (collectively, “ Laws ”) applicable to the Company or any of its Subsidiaries, except for such non-compliance as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company and each of its Subsidiaries hold all licenses, franchises, permits, certificates, approvals, consents, clearances and authorizations from Governmental Authorities necessary for the lawful conduct of their respective businesses (collectively, “ Permits ”), and there is no Action or Proceeding pending, or to the Knowledge of the Company threatened, regarding any of the Permits, except where the failure to hold the same or such Actions or Proceedings regarding the same would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company and its Subsidiaries are in compliance with the terms of all Permits, except for such non-compliance as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

          (b) To the Knowledge of the Company (including for this purpose the members of the Audit Committee of the Company Board), there are no formal or informal Governmental Authority inquiries or investigations or internal investigations or whistle-blower complaints pending or threatened, in each case regarding accounting or disclosure practices of the Company or any of its Subsidiaries, compliance by the Company or any of its Subsidiaries with any Law or any malfeasance by any officer of the Company or any of its Subsidiaries, other than ordinary course inquiries, investigations or complaints not material to the Company and its Subsidiaries, taken as a whole.

          (c) Since January 1, 2006, neither the Company nor any of its Subsidiaries has received a written notice that the Food and Drug Administration (“ FDA ”) or any other Governmental Authority which has jurisdiction over the operations of the Company and any of its Subsidiaries has commenced, or threatened to commence, any regulatory Action or Proceeding relating to any alleged violation of Law with respect to any of the Company’s or its Subsidiaries’ products, except where such action would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

          (d) To the Knowledge of the Company, each of the products of the Company and its Subsidiaries that is subject to the jurisdiction of the Food, Drug and Cosmetic Act of 1938, as amended (the “ FDCA ”), the Public Health Service Act, as amended (the “ PHSA ”), the Controlled Substances Act, as amended (the “ CSA ”), and the regulations promulgated thereunder or similar Laws in any foreign jurisdiction, is in compliance in all material respects with all applicable requirements under the FDCA, the PHSA, the CSA and the regulations promulgated thereunder or similar Laws in any foreign jurisdiction, including but not limited to those requirements applicable to the development, manufacture, storage, testing, labeling or packaging, marketing, promotion or distribution of such product.

          (e) All preclinical and clinical studies conducted by, or, to the Knowledge of the Company, on behalf of, the Company or its Subsidiaries since January 1, 2005 have been and are being conducted in compliance with the FDA’s Good Laboratory Practice and Good Clinical Practice requirements, including regulations under 21 C.F.R. Parts 50, 54, 56, 58, 312 and applicable guidance documents, as amended from time to time, the Animal Welfare Act, and all applicable similar requirements in other jurisdictions, all requirements related to protection of human subjects and, to the extent it would not reasonably be expected to result in a material

liability to the Company or its Subsidiaries, the provisions governing the privacy of patient medical records under the Health Insurance Portability and Accountability Act of 1996 and the implementing regulations of the United States Department of Health and Human Services. The Company and its Subsidiaries have not received any written notices, correspondence or other communication from the FDA or any other Governmental Authority, or any institutional review board, requiring the termination, suspension or material modification of any preclinical or clinical trials conducted by, or on behalf of, the Company or its Subsidiaries, or in which the Company or its Subsidiaries have participated.

          (f) Except as set forth on Section 3.8(f) of the Company Disclosure Letter , neither the Company nor its Subsidiaries have received any notice, letters or other correspondence from the FDA or any other Governmental Authority or Person (i) contesting the pre-market clearance or approval of, the clinical or non-clinical testing of, the uses of or the labeling, promotion or distribution of its products or (ii) otherwise alleging any violation of Laws by the Company. The Company and its Subsidiaries are in substantial compliance with all applicable FDA requirements, including, but not limited to, registration and listing requirements set forth in 21 U.S.C. § 360 and 21 C.F.R. Part 207 and all other similar Laws, except where such noncompliance would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. To the Knowledge of the Company, no communication, filing or submission to any Governmental Authority with regard to the Company’s or any of its Subsidiaries’ products that is or is intended to be the basis for any approval contains any material omission or any materially false information. The Company and its Subsidiaries are in substantial compliance with all Laws applicable to the maintenance, compilation and filing of reports, including, but not limited to, periodic or annual, or other reports, with regards to its products. The Company and each of its Subsidiaries has filed with the applicable Governmental Authorities all applicable adverse event or product safety reports required to be filed in relation to its products.

          (g) All manufacturing operations of products by the Company and its Subsidiaries and, to the Knowledge of the Company, for the benefit of the Company and its Subsidiaries have been and are being, to the extent required by applicable Law, conducted in material compliance with the FDA regulations, Good Manufacturing Practices, including C.F.R. Parts 210 and 211 and applicable guidance documents, as amended from time to time, and all applicable similar requirements in countries where such compliance is required.

          (h) Except as set forth on Section 3.8(h) of the Company Disclosure Letter , none of the Company’s or its Subsidiaries’ products or product candidates has been recalled, withdrawn, suspended or discontinued (whether voluntarily or otherwise) at the request of the FDA or any other Governmental Authority, nor has the Company or any of its Subsidiaries received any notice from the FDA or any other Governmental Authority that it has commenced, or threatened to initiate, any action to withdraw approval, place sales or marketing restrictions on or request the recall of any of the Company’s or its Subsidiaries’ products, or that it has commenced or threatened to initiate any action to enjoin or place restrictions on the production of any of the Company’s or its Subsidiaries’ products.

          (i) Neither the Company nor its Subsidiaries, nor, to the Knowledge of the Company, any of their respective directors, officers, agents or employees (in their capacities as

such) has engaged in any conduct that has resulted in or would reasonably be expected to result in any material violation of the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), or the False Claims Act, 31 U.S.C. § 3729, or any similar Laws.

          (j) To the Knowledge of the Company, no officer, employee or agent of the Company (in their capacities as such) has made an untrue statement of a material fact or fraudulent statement to the FDA or any other Governmental Authority, failed to disclose a material fact required to be disclosed to the FDA or any other Governmental Authority, or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to provide a basis for the FDA or any other Governmental Authority to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. To the Knowledge of the Company, neither the Company nor its Subsidiaries has used in any capacity the services of any individual or entity debarred under 21 U.S.C. § 335a(a) or any similar Laws in connection with a product of the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any of their respective directors, officers, agents or employees (in their capacities as such), has engaged in any conduct that has resulted, or would reasonably be expected to result, in debarment under 21 U.S.C. § 335a(a) or any similar Laws.

     SECTION 3.9 Information Supplied . Subject to the accuracy of the representations and warranties of Parent and Purchaser set forth in Section 4.4 , neither the Schedule 14D-9 nor any information supplied (or to be supplied) in writing by or on behalf of the Company specifically for inclusion or incorporation by reference in the Offer Documents will, at the respective times the Schedule 14D-9, the Offer Documents, or any amendments or supplements thereto are filed with the SEC or at the time they are first published, sent or given to the holders of Company Common Stock, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading. The Proxy Statement (if any) will not, on the date it is first mailed to the holders of Company Common Stock, 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 are made, not misleading, and will not, at the time of the Company Stockholders Meeting (if such a meeting is held), omit to state any material fact necessary to correct any statement in any earlier communication from the Company with respect to the Company Stockholders Meeting which shall have become false or misleading in any material respect. The Proxy Statement (if any) and the Schedule 14D-9 will comply as to form in all material respects with the applicable requirements of the Exchange Act. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to information supplied by or on behalf of Parent or Purchaser for inclusion or incorporation by reference in any of the foregoing documents.

     SECTION 3.10 Tax Matters .

          (a) Each of the Company and its Subsidiaries has timely filed, or has caused to be timely filed on its behalf (taking into account any extension of time within which to file), all material Tax Returns required to be filed by it, and all such filed Tax Returns are correct and

complete in all material respects. All material Taxes of the Company and its Subsidiaries (whether or not shown to be due on such Tax Returns) have been timely paid. No material deficiency with respect to Taxes has been proposed, asserted or assessed against the Company or any of its Subsidiaries which have not been fully paid or adequately reserved in the Company SEC Documents. No audit or other administrative or court proceedings are pending with any Governmental Authority with respect to Taxes of the Company or any of its Subsidiaries, and no written notice thereof has been received. There are no agreements in effect to extend the period of limitations for assessment or collection of any Tax for which the Company or any of its Subsidiaries may be liable.

          (b) Neither the Company nor any of its Subsidiaries (i) is a party to or bound by any Tax allocation or Tax sharing agreement (other than any such agreement solely between or among the Company and any of its Subsidiaries), (ii) has received notice in writing of any claim made by a Governmental Authority in a jurisdiction where it does not file a Tax Return that it is or may be subject to taxation by such jurisdiction, (iii) has participated in a “listed transaction” (as defined in Treasury Regulation Section 1.6011-4), (iv) has received or applied for a Tax ruling or entered into a closing agreement pursuant to Section 7121 of the Code (or any predecessor provision or any similar provision of state, local or foreign law, or (v) has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying or intended to qualify for tax-free treatment under Section 355 of the Code in the two (2) years prior to the date of this Agreement.

          (c) Neither the Company nor any of its Subsidiaries (i) is or has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or (ii) has any liability for the Taxes of any Person (other than the Company or any of its Subsidiaries) under United States Treasury Regulation §1.1502-6 (or any similar provision of state, local, or foreign Law), as a transferee or successor, by Contract, or otherwise.

          (d) There are no material liens for Taxes upon any property or other assets of the Company or any of its Subsidiaries, except liens for Taxes not yet due and payable and liens for Taxes that are being contested in good faith by appropriate proceedings.

          (e) All material Taxes required to be withheld, collected or deposited by or with respect to the Company and each of its Subsidiaries have been timely withheld, collected or deposited, as the case may be, and to the extent required, such Taxes have been paid to the relevant Tax authority or other Governmental Authority.

          (f) The Company had net operating loss carryforwards for U.S. federal income Tax purposes as of December 31, 2006 of approximately $105 million.

          (g) For purposes of this Agreement: (i) “ Taxes ” shall mean (x) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, (y) all interest, penalties, fines,

additions to tax or additional amounts imposed by any Governmental Authority in connection with any item described in clause (x), and (z) any transferee liability in respect of any items described in clauses (x) and/or (y) payable by reason of Contract, assumption, transferee liability, operation of Law, Treasury Regulation § 1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar provision under Law) or otherwise, and (ii) “ Tax Returns ” shall mean any return, report, claim for refund, estimate, information return or statement or other similar document relating to or required to be filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

          (h) This Section 3.10 contains the sole and exclusive representations and warranties of the Company with respect to Tax matters.

     SECTION 3.11 Employee Benefits and Labor Matters .

          (a) Section 3.11(a) of the Company Disclosure Letter lists each material Company Plan. The Company has made available to Parent correct and complete copies of (i) each Company Plan and any amendments thereto (or if the Company Plan is not a written Company Plan, a description of the Company Plan), (ii) the most recent annual reports on Form 5500 required to be filed with the Internal Revenue Service (the “ IRS ”) with respect to each Company Plan (if any such report was required), (iii) the most recent summary plan description for each Company Plan for which such summary plan description is required, (iv) any related trust, agreement, insurance contract or other funding vehicle, (v) the two most recent annual financial reports, if any, (vi) any reports or summaries required under ERISA or the Code and (vii) the most recent determination letter received from the IRS with respect to each Company Plan intended to qualify under Section 401 of the Code. Each Company Plan that is a Company Stock Plan is marked with an asterisk (*) in Section 3.11(a) of the Company Disclosure Letter . Each Company Plan maintained, contributed to or required to be contributed to by the Company or any of its Subsidiaries has been administered in accordance with its terms in all material respects. The Company, its Subsidiaries and all the Company Plans are all in material compliance with the applicable provisions of ERISA, the Code and all other applicable Laws. Each Company Plan that is intended to be Tax qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS, and, to the Knowledge of the Company, there are no existing circumstances or any events that could reasonably be expected to adversely affect the qualified status of any such plan. There has been no amendment to, announcement by the Company or any Subsidiary relating to, or change in employee participation or coverage under, any Company Plan that would increase materially the expense of maintaining such plan above the level of the expense incurred therefor for the most recent fiscal year, except as required by applicable Law or as provided in Section 3.11(a) of the Company Disclosure Letter . Neither the Company nor any of its Subsidiaries maintains or, within the past six (6) years, has contributed or has been obligated to contribute to an “employee benefit plan” subject to Title IV of ERISA, a multiemployer plan, as defined in Section 3(37) of ERISA, or an “employee benefit plan” subject to Sections 4063 or 4064 of ERISA.

          (b) Neither the Company, any Subsidiary, any Company Plan, any trust created thereunder, nor, to the Knowledge of the Company, any trustee or third-party administrator of the foregoing, has engaged in a transaction in connection with which the Company or any Subsidiary, any Company Plan, any such trust, or any trustee or administrator

of the foregoing, or any party dealing with any Company Plan or any such trust could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, other than penalties or taxes that, would not, individually or in the aggregate, reasonably be expected to be material.

          (c) Except as disclosed in Section 3.11(c) of the Company Disclosure Letter or the Company SEC Documents, no Company Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Company or any Subsidiary for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable Law, (ii) death benefits under any pension plan, or (iii) benefits the full costs of which are borne by the current or former employee (or his beneficiary).

          (d) The Company acknowledges that certain payments have been made or are to be made and certain benefits have been granted or are to be granted according to employment compensation, severance and other arrangements or agreements or pursuant to the terms of this Agreement (collectively, the “ Company Compensation Arrangements ”) to certain holders of Company Common Stock and other securities of the Company (the “ Covered Stockholders ”). Amounts payable under the Company Compensation Arrangements (i) were or are being paid or granted as compensation for past services performed, future services to be performed or future services to be refrained from performing, by the Covered Stockholders (and matters incidental thereto) and (ii) are not calculated based on the number of shares of Company Common Stock to be tendered in the Offer by the applicable Covered Stockholder. In connection therewith, the Compensation Committee of the Company Board has adopted resolutions, substantially in the form set forth in Section 3.11(d) of the Company Disclosure Letter , approving the Company Compensation Arrangements, in accordance with the “safe harbor” requirements of Rule 14d-10(d)(2) under the Exchange Act and the instructions thereto, to the extent required (collectively the “ 14d-10 Approvals ”). The Company Board has determined that each of the members of the Compensation Committee of the Company Board is “independent” as defined in the rules of NASDAQ.

          (e) The Company and each of its Subsidiaries is in material compliance with all applicable Laws respecting labor, employment, fair employment practices, terms and conditions of employment, workers’ compensation, occupational safety and health requirements, plant closings, wages and hours, withholding of taxes, employment discrimination, disability rights or benefits, equal opportunity, affirmative action, labor relations, employee leave issues and unemployment insurance and related matters. To the Knowledge of the Company, all individuals who provide services to the Company or any Subsidiary have at all times been accurately classified by the Company or such Subsidiary with respect to such services as an employee or a non-employee. Except as disclosed in Section 3.11(e) of the Company Disclosure Letter and except for instances that could not reasonably be expected to, individually or in the aggregate, result in a Company Material Adverse Effect: (i) there is no pending or, to the Knowledge of the Company, threatened labor strike, slowdown or stoppage against or affecting the Company or any Subsidiary of the Company and (ii) neither the Company nor any Subsidiary has received no