AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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Power Medical Interventions, Inc | UNITED STATES SURGICAL CORPORATION

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware Date: 7/30/2009
Industry: Medical Equipment and Supplies Law Firm: Dechert;Ropes Gray Sector: Healthcare

AGREEMENT AND PLAN OF MERGER, Parties: power medical interventions inc , united states surgical corporation

Exhibit 2.1

Execution Version

AGREEMENT AND PLAN OF MERGER

AMONG

UNITED STATES SURGICAL CORPORATION

COVIDIEN DELAWARE CORP. AND

POWER MEDICAL INTERVENTIONS, INC.

Dated as of July 28, 2009

TABLE OF CONTENTS

		Page
SECTION 1 - THE OFFER AND THE MERGER		5
1.1.	The Offer	5
1.2.	Company Actions	6
1.3.	The Merger	7
1.4.	Effective Time	8
1.5.	Closing	8
1.6.	Directors and Officers of the Surviving Corporation	8
1.7.	Subsequent Actions	9
1.8.	Stockholders’ Meeting	9
1.9.	Merger Without Meeting of Stockholders	10
1.10.	Top-Up Option	10
SECTION 2 - CONVERSION OF SECURITIES		11
2.1.	Conversion of Capital Stock	11
2.2.	Exchange of Certificates	11
2.3.	Dissenting Shares	13
2.4.	Company Stock Plans	14
2.5.	Company Warrants	14
2.6.	Convertible Notes	14
2.7.	Section 16	15
2.8.	Withholding	15
2.9.	Transfer Taxes	15
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF COMPANY		15
3.1.	Organization and Qualification	15
3.2.	Authority to Execute and Perform Agreement	17
3.3.	Capitalization	17
3.4.	Company Subsidiaries	18
3.5.	SEC Reports	20
3.6.	Financial Statements	20
3.7.	Absence of Undisclosed Liabilities	21
3.8.	Absence of Adverse Changes	22

Table of Contents, continued

3.9.	Compliance with Laws	22
3.10.	Actions and Proceedings	25
3.11.	Contracts and Other Agreements	25
3.12.	Property	26
3.13.	Insurance	29
3.14.	[Intentionally Omitted.]	29
3.15.	Tax Matters	29
3.16.	Employee Benefit Plans	32
3.17.	Employee Relations	34
3.18.	Environmental Matters	35
3.19.	No Breach	37
3.20.	Board Approvals; Anti-Takeover; Vote Required	37
3.21.	Financial Advisor	38
3.22.	Information in the Offer Documents and the Schedule 14D-9	38
3.23.	Information in the Proxy Statement	39
SECTION 4 - REPRESENTATIONS AND WARRANTIES OF PARENT		39
4.1.	Organization	39
4.2.	Authority to Execute and Perform Agreement	40
4.3.	Information in the Offer Documents	41
4.4.	Information in the Proxy Statement	41
4.5.	Sub	41
4.6.	Financing	41
4.7.	Ownership of Shares	41
4.8.	Litigation	42
4.9.	Financial Advisor	42
4.10.	No Additional Representations	42
SECTION 5 - COVENANTS AND AGREEMENTS		42
5.1.	Conduct of Business	42
5.2.	No Solicitation	45
SECTION 6 - ADDITIONAL AGREEMENTS		50
6.1.	Proxy Statement	50
6.2.	Meeting of Stockholders of the Company	50
6.3.	Access to Information	50

Table of Contents, continued

6.4.	Public Disclosure	51
6.5.	Regulatory Filings; Reasonable Efforts	51
6.6.	Notification of Certain Matters; Litigation	53
6.7.	Indemnification	53
6.8.	Directors	54
6.9.	Employee Benefit Matters	55
6.10.	Convertible Notes	57
6.11.	Lien Discharges	57
6.12.	12(b) Deregistration	57
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATION OF PARTIES TO CONSUMMATE THE MERGER		57
7.1.	Conditions to Obligations of Each Party to Effect the Merger	57
SECTION 8 - TERMINATION, AMENDMENT AND WAIVER		58
8.1.	Termination	58
8.2.	Effect of Termination	60
8.3.	Fees and Expenses	60
8.4.	Amendment	60
8.5.	Waiver	61
SECTION 9 - MISCELLANEOUS		61
9.1.	No Survival	61
9.2.	Notices	61
9.3.	Entire Agreement	62
9.4.	Governing Law	62
9.5.	Binding Effect; No Assignment; No Third-Party Beneficiaries	62
9.6.	Counterparts and Signature	63
9.7.	Severability	63
9.8.	Submission to Jurisdiction; Waiver	63
9.9.	Enforcement	63
9.10.	Rules of Construction; Certain Definitions	64
9.11.	No Waiver; Remedies Cumulative	65
9.12.	Waiver of Jury Trial	65

iii

ANNEXES

Annex I – Form of Certificate of Incorporation of the Surviving Corporation

Annex II – Form of Tender and Voting Agreement

Annex III – Conditions to the Offer

Index of Defined Terms

	Section

Acceptance Time	5.2(b)
Acquisition Proposal	5.2(a)
Adverse Recommendation Change	5.2(c)
Affiliate	1.10(c)
Agreement	Preamble
Alternative Acquisition Agreement	5.2(c)
Assignee	9.5(a)
CERCLA	3.18(b)
Certificate of Merger	1.4
Certificates	2.2(b)
Closing	1.5
Closing Date	1.5
Code	2.8
Company	Preamble
Company Balance Sheet	3.6(a)
Company Board of Directors	Recitals
Company Disclosure Schedule	SECTION 3
Company Joint Venture	3.4(c)
Company’s knowledge	9.10(b)
Company Material Adverse Effect	3.1(a)
Company Option	2.4
Company Preferred Stock	3.3(a)
Company SEC Reports	3.5
Company Stockholder Approval	6.1
Company Stock Plans	2.4(a)
Company Subsidiary	3.4(a)
Company Warrants	2.5
Confidentiality Agreement	1.2(c)
Continuing Employees	6.9(b)
Current D&O Insurance	6.7(b)
DGCL	Recitals
Dissenting Shares	2.3(a)
Effective Time	1.4
Environmental Laws	3.18(e)(i)
ERISA	3.16(a)
ERISA Affiliate	3.16(b)
Exchange Act	1.1(a)
Exchange Fund	2.2(a)
Expiration Date	1.1(a)
FCPA	3.9(c)
FDA	3.9(e)
Good Clinical Practices	3.9(h)

Table of Contents, continued

Good Laboratory Practices	3.9(h)
Good Manufacturing Practices	3.9(i)
Governmental Entity	9.10(b)
Hazardous Materials	3.18(e)(ii)
HSR Act	3.19
Indemnified Parties	6.7(a)
Independent Directors	6.8(a)
IRS	3.16(c)
Jefferies	3.21(a)
Laws	3.9(b)
Material Contract	6.7(b)
Maximum Premium	6.7(b)
Merger	1.3(a)
Merger Agreement	Annex II
Merger Consideration	2.1(c)
Minimum Condition	Annex III
Notice Period	5.2(d)
OECD Convention	3.9(c)
Offer	Recitals
Offer Documents	1.1(b)
Offer Price	Recitals
Offer to Purchase	1.1(a)
on a fully diluted basis	9.10(b)
Outside Date	8.1(b)
Parent	Preamble
Parent Balance Sheet	6.7(b)
Parent Material Adverse Effect	6.7(b)
Parent SEC Reports	1.1(a)
Paying Agent	2.2(a)
Permits	3.9(a)
Permitted Investment	5.2(g)
person	9.10(b)
Plans	3.16(a)
Principal Stockholders	Recitals
Programs	3.9(k)
Prohibited Payment	3.9(c)
Proprietary Rights	3.12(a)
Proxy Statement	1.8(a)(ii)
Real Property	3.12(b)
Regulation M-A	1.1(b)
Release	3.18(e)(iii)
Reporting Tail Endorsement	6.7(b)
Restraints	8.1(b)
Restricted Shares	3.3(b)
Rights Agent	Recitals
Sarbanes-Oxley Act	3.3(b)

Table of Contents, continued

Schedule 14D-9	3.6(b)
Schedule TO	1.1(b)
SEC	1.1(a)
Section 409A	3.16(h)
Securities Act	3.11(c)
Shares	Preamble
Special Meeting	1.8(a)(i)
Sub	Preamble
Sub Common Stock	2.1
Superior Proposal	5.2(c)
Surviving Corporation	1.3(a)
Tax	3.15(a)
Taxable	3.15(a)
Tax Return	3.15(a)
Tender Completion Time	6.2
Tender and Voting Agreements	Recitals
Termination Fee	8.2(b)
Top-Up Option	1.10(a)
Top-Up Shares	1.10(a)

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) dated as of July 28, 2009 is among United States Surgical Corporation (“ Parent ”), a Delaware corporation and wholly-owned, indirect subsidiary of Covidien plc, an Irish company, Covidien Delaware Corp. (“ Sub ”), a newly-formed Delaware corporation and a direct or indirect wholly-owned subsidiary of Parent, and Power Medical Interventions, Inc. (the “ Company ”), a Delaware corporation.

R E C I T A L S

WHEREAS, Parent and the Board of Directors of each of Sub and the Company has approved the acquisition of the Company by Parent on the terms and conditions set forth in this Agreement;

WHEREAS, in furtherance thereof, it is proposed that Sub commence a cash tender offer (as it may be amended from time to time as permitted by this Agreement, the “ Offer ”) to acquire all shares of the issued and outstanding common stock, par value $0.001 per share, of the Company (the “ Shares ”), for $2.08 for each Share, net to each seller in cash, without interest, or any such higher consideration per Share as may be paid in the Offer (the “ Offer Price ”);

WHEREAS, the Board of Directors of each of Sub and the Company has approved this Agreement and the transactions contemplated hereby, including the Merger (as defined in Section 1.3(a)) following the Offer in accordance with the Delaware General Corporation Law (“ DGCL ”) and upon the terms and subject to the conditions set forth herein;

WHEREAS, the Board of Directors of the Company (the “ Company Board of Directors ”) has determined that the consideration to be paid for each Share in the Offer and the Merger is fair to the holders of such Shares and has resolved to recommend that the holders of Shares accept the Offer and adopt this Agreement and approve the Merger upon the terms and subject to the conditions set forth herein;

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent entering into this Agreement, certain Company stockholders (the “ Principal Stockholders ”) have entered into tender and voting agreements, dated as of the date hereof, in substantially the form attached hereto as Annex II , pursuant to which, among other things, each of the Principal Stockholders has agreed to tender his, her or its Shares to Sub in the Offer (the “ Tender and Voting Agreements ”); and

WHEREAS, the Company, Parent and Sub desire to make certain representations, warranties, covenants and agreements in connection with the Offer, the Merger and the other transactions contemplated hereby.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties agree as follows:

SECTION 1 - THE OFFER AND THE MERGER

1.1. The Offer .

(a) Provided that this Agreement shall not have been terminated in accordance with Section 8.1 and none of the events described in any of paragraphs (a) or (b) of Annex III hereto have occurred and be continuing (unless waived by Parent or Sub), Sub shall, and Parent shall cause Sub to, commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “ Exchange Act ”)) the Offer within ten (10) business days following the date hereof. The obligations of Sub to accept for payment and to pay for any Shares validly tendered and not withdrawn prior to the expiration of the Offer (as it may be extended in accordance with requirements of this Section 1.1(a)) shall be subject only to the conditions set forth in Annex III hereto. Subject to the prior satisfaction or waiver by Parent or Sub of conditions set forth in Annex III hereto, Sub shall, and Parent shall cause Sub to, consummate the Offer in accordance with its terms and accept for payment and pay for all Shares tendered and not withdrawn promptly following the acceptance of Shares for payment pursuant to the Offer. The Offer shall be made by means of an offer to purchase (the “ Offer to Purchase ”) that contains the terms set forth in this Agreement and the conditions set forth in Annex III hereto. Parent expressly reserves the right to waive any of such conditions, to increase the Offer Price and to make any other changes in the terms of the Offer; provided , however , that Sub shall not, and Parent shall cause Sub not to, decrease the Offer Price or change the form of consideration in which any component of the Offer Price is payable, decrease the number of Shares sought in the Offer, waive or change the Minimum Condition (as defined in Annex III hereto), modify or amend any of the conditions set forth in Annex III hereto or otherwise modify or amend any other term or condition of the Offer, in each case in any manner adverse to the holders of the Company Common Stock, impose any conditions to the Offer that are not set forth on Annex III hereto, or extend the Offer beyond a date that is twenty-one (21) business days after commencement of the Offer or the last extension (as permitted in accordance with this Section 1.1), if any, of the Offer, whichever is later (the “ Expiration Date ”) except as set forth below, in each case without the prior written consent of the Company (such consent to be authorized by the Company Board of Directors or a duly authorized committee thereof). Notwithstanding the foregoing, but subject to the parties’ respective rights to terminate this Agreement in accordance with Section 8.1, Sub shall, upon the written request of the Company at least one business day before the then-scheduled expiration date, and may, without the consent of the Company, (i) extend the Offer beyond the initial expiration date if, at any scheduled (or extended) expiration of the Offer, any of the conditions set forth in Annex III hereto (other than the Minimum Condition) shall not be satisfied or waived for up to two periods of not more than ten (10) business days per extension, (ii) from time to time, extend the Offer if at the scheduled or extended Expiration Date the Minimum Condition is not satisfied, for up to two periods of ten (10) business days per extension or (iii) extend the Offer for any period required by any rule, regulation or interpretation of the United States Securities and Exchange Commission (“ SEC ”), or the staff thereof, applicable to the Offer. In addition to the foregoing and excluded from any such limitations, Sub also may provide a “subsequent offering period” in accordance with Rule 14d-11 under the Exchange Act.

(b) On the date of commencement of the Offer, Parent and Sub shall file with the SEC, pursuant to Regulation M-A under the Exchange Act (“ Regulation M-A ”), a Tender

Offer Statement on Schedule TO with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule TO ”). The Schedule TO shall include, as exhibits, the Offer to Purchase and a form of letter of transmittal and summary advertisement (collectively, together with any amendments and supplements thereto, the “ Offer Documents ”). Subject to Section 5.2, the Company hereby consents to the inclusion in the Offer Documents of the recommendation and the approval of the Company Board of Directors referred to in Section 3.20(a). The Offer Documents will comply in all material respects with all applicable provisions of the Exchange Act. Parent and Sub agree to take all commercially reasonable steps necessary to cause the Offer Documents to be filed with the SEC and, subject to the Company’s compliance with Section 1.2(c), disseminated to holders of Shares, in each case as and to the extent required by applicable Law. Parent and Sub, on the one hand, and the Company, on the other hand, agree to promptly correct any information provided by it for use in the Offer Documents if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by Law. Parent and Sub further agree to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable Law. The Company shall be given a reasonable opportunity to review and comment on the Schedule TO and any amendment thereto before it is filed with the SEC, and Parent and Sub shall give due consideration to all reasonable additions, deletions or modifications thereto suggested by the Company and its legal counsel. In addition, Parent and Sub agree to provide the Company with any comments, whether written or oral, that Parent, Sub or their counsel may receive from time to time prior to the expiration or termination of the Offer, from the SEC or its staff with respect to the Offer Documents, promptly upon receipt of such comments, and any written or oral responses thereto, and the Company shall have the right to consult with Parent, Sub and their counsel prior to responding to any such comments, either in written or oral form. The Company and its legal counsel shall be given a reasonable opportunity to review any responses to such comments or communications, and Parent and Sub shall give due consideration to all reasonable views and comments of the Company and its legal counsel with respect thereto.

(c) Parent shall provide or cause to be provided to Sub promptly following the expiration of the Offer or any subsequent extension thereof, as applicable, all funds necessary to promptly pay in full in cash the aggregate Offer Price for those Shares that have been validly tendered and not withdrawn pursuant to the Offer and that Sub is obligated to accept for payment pursuant to the Offer and permitted to accept for payment under applicable Law.

1.2. Company Actions .

(a) Subject to Section 5.2 and to any consents or approvals of the Company’s stockholders required under applicable Law, the Company hereby approves of and consents to the Offer, the Merger and the other transactions contemplated hereby.

(b) On the date the Offer is commenced, the Company shall, in a manner that complies in all material respects with Rule 14d-9 under the Exchange Act, file with the SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) which shall, subject to the provisions of Section 5.2, contain the recommendation and the approval of the Company Board of Directors referred to in Section 3.20(a). The Company further agrees to take all

commercially reasonably steps necessary to cause the Schedule 14D-9 to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable Law. The Company, on the one hand, and Parent and Sub, on the other hand, agree to promptly correct and supplement any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by Law. The Company agrees to take all commercially reasonable steps necessary to 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 Law. Parent and Sub shall be given the opportunity to review and comment on the Schedule 14D-9 and any amendment thereto before filing with the SEC, and the Company shall give due consideration to all reasonable additions, deletions or changes thereto suggested by Parent and its legal counsel. In addition, the Company agrees to provide Parent and Sub any comments, whether written or oral, 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 receipt of such comments, and to consult with Parent, Sub and their counsel prior to responding to any such comments, either in written or oral form, and the Company shall give due consideration to the views and comments of Parent and its legal counsel with respect thereto.

(c) The Company shall promptly furnish or cause to be furnished to Parent or Sub security position listings, mailing labels and computer files containing the names and addresses of the record holders of the Shares as of a recent date, and of those persons becoming record holders subsequent to such date, and shall promptly furnish Parent or Sub with such information and assistance (including, but not limited to, lists of holders of the Shares, updated periodically, and their addresses, mailing labels and lists of security positions) as Parent or Sub or its agent(s) may reasonably request. Subject to applicable Law, such information shall be held confidential by Parent and Sub under the terms of the confidentiality agreement, dated February 2, 2009 entered into between Tyco Healthcare Group LP d/b/a Covidien and the Company (as amended, the “ Confidentiality Agreement ”). For the avoidance of doubt, the parties agree that the Confidentiality Agreement does not restrict steps to prepare, file or disseminate the Offer Documents and any other documents necessary to consummate the transactions contemplated hereby.

1.3. The Merger .

(a) Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 1.4), the Company and Sub shall consummate a merger (the “ Merger ”) in accordance with the DGCL pursuant to which (i) Sub will be merged with and into the Company and the separate corporate existence of Sub will thereupon cease; (ii) the Company will be the successor or surviving corporation in the Merger and will continue to be governed by the Laws of the State of Delaware; (iii) the corporate existence of the Company with all its properties, rights, privileges, immunities, powers and franchises will continue; and (iv) the Company will succeed to and assume all the rights and obligations of Sub. The corporation surviving the Merger is sometimes hereinafter referred to as the “ Surviving Corporation .” 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 property, rights, privileges, powers and franchises of the Company and Sub shall be vested in the Surviving Corporation, and all

debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and duties of the Surviving Corporation.

(b) At the Effective Time, the certificate of incorporation of the Company shall, by virtue of the Merger, be amended and restated in its entirety to read in the form of Annex I hereto and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.

(c) At the Effective Time, and without any further action on the part of the Company or Sub, the bylaws of the Company shall be amended and restated in their entirety to be identical to the bylaws of Sub as in effect immediately prior to the Effective Time (except that such bylaws shall be amended to reflect that the name of the Surviving Corporation shall be Power Medical Interventions, Inc.), and, as so amended, shall be the bylaws of the Surviving Corporation until thereafter changed or amended as provided by the DGCL, the certificate of incorporation of the Surviving Corporation and such bylaws.

1.4. Effective Time . Parent, Sub and the Company shall cause an appropriate certificate of merger complying with Section 251 of the DGCL or an appropriate certificate of ownership and merger complying with Section 253 of the DGCL, as applicable (the “ Certificate of Merger ”), to be executed and filed on the Closing Date (as defined in Section 1.5) (or on such other date as Parent and the Company may agree) with the Secretary of State of the State of Delaware as provided in the DGCL. The Merger shall become effective on the time and date on which the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or such later time and date as is specified in the Certificate of Merger ( provided , however , that such later time and date shall not be more than five (5) business days after the filing without the written consent of the Company), such time hereinafter referred to as the “ Effective Time .”

1.5. Closing . The closing of the Merger (the “ Closing ”) will take place at 9:00 a.m. (Boston time) on a date to be specified by the parties, such date to be no later than the second (2nd) business day after satisfaction or waiver of all of the conditions set forth in SECTION 7 capable of satisfaction prior to the Closing (the “ Closing Date ”), at the offices of Ropes & Gray LLP, One International Place, Boston, Massachusetts 02110, unless another date or place is agreed to in writing by the parties hereto.

1.6. Directors and Officers of the Surviving Corporation . The directors of Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation, and the officers of Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation, in each case until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws. Prior to the Effective Time, the Company shall cause each member of the Company Board of Directors, other than Parent’s or Sub’s designees pursuant to Section 6.8, to execute and deliver a letter effectuating his or her resignation as a director of the Company upon the Effective Time.

1.7. Subsequent Actions . If at any time after the Effective Time the Surviving Corporation shall determine, in its sole discretion, or shall be advised, that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either the Company or Sub acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of either the Company or Sub, all such deeds, bills of sale, instruments of conveyance, assignments and assurances and to take and do, in the name and on behalf of each such corporation or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title or interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

1.8. Stockholders’ Meeting .

(a) If required by applicable Law in order to consummate the Merger, the Company, acting through the Company Board of Directors, in accordance with applicable Law and the Company’s certificate of incorporation and bylaws, shall:

(i) duly call, give notice of, convene and hold a special meeting of its stockholders to consider the adoption of this Agreement and the approval of the Merger (the “ Special Meeting ”) as soon as reasonably practicable following the Acceptance Time;

(ii) as soon as reasonably practicable following the Acceptance Time, prepare and file with the SEC under the Exchange Act a preliminary proxy or information statement relating to the Merger and this Agreement and use commercially reasonably efforts to obtain and furnish the information required to be included by the SEC in the Proxy Statement (as hereinafter defined) and, after Parent shall have had a reasonable opportunity to review and comment on the Proxy Statement, 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 (in either case, the “ Proxy Statement ”) to be mailed to its stockholders as promptly as practicable;

(iii) subject to Section 5.2, include in the Proxy Statement the recommendation of the Company Board of Directors that the stockholders of the Company vote in favor of the adoption of this Agreement and the approval of the Merger; and

(iv) use commercially reasonable efforts to solicit from holders of Shares proxies in favor of the adoption of this Agreement and the approval of the Merger and take all other action reasonably necessary or advisable to secure the approval of stockholders required by the DGCL and any other applicable Law and the Company’s certificate of incorporation and bylaws (if applicable) to effect the Merger.

(b) Parent agrees to vote, or cause to be voted, all of the Shares then beneficially owned by it or Sub in favor of the adoption of this Agreement and the approval of the Merger.

1.9. Merger Without Meeting of Stockholders . Notwithstanding Section 1.8, in the event that Parent, Sub or any other subsidiary of Parent shall acquire at least ninety percent (90%) of the outstanding shares of each class of capital stock of the Company entitled to vote on the Merger, pursuant to the Offer, upon exercise of the Top-Up Option (as defined in Section 1.10(a)) or otherwise, the parties hereto agree, subject to SECTION 7, to 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 and subject to the DGCL.

1.10. Top-Up Option .

(a) Subject to clause (c) below, the Company hereby grants to Sub an irrevocable option (the “ Top-Up Option ”), exercisable only on the terms and conditions set forth in this Agreement, to purchase at a price per share equal to the Offer Price paid in the Offer up to that number of newly issued Shares (the “ Top-Up Shares ”) equal to the lowest number of Shares that, when added to the number of Shares directly or indirectly owned by Parent or Sub at the time of exercise of the Top-Up Option, shall constitute one share more than ninety percent (90%) of the Shares outstanding immediately after the issuance of the Top-Up Shares (determined on a fully diluted basis); provided , however , that (i) the Top-Up Option shall not be exercisable for a number of Shares in excess of the Shares authorized and unissued at the time of exercise of the Top-Up Option and (ii) the Top-Up Option may not be exercised unless, following the Acceptance Time or after a subsequent offering period, eighty percent (80%) or more of the Shares shall be directly or indirectly owned by Parent or Sub. The Top-Up Option shall be exercisable only once at any time following the Acceptance Time and prior to the earlier to occur of (A) the Effective Time and (B) the termination of this Agreement in accordance with its terms.

(b) The parties shall cooperate to ensure that the issuance and delivery of the Top-Up Shares comply with all applicable Laws, including compliance with an applicable exemption from registration of the Top-Up Shares under the Securities Act. If Sub wishes to exercise the Top-Up Option, Sub shall give the Company one (1) business day’s prior written notice, specifying (i) the number of Shares directly or indirectly owned by Parent at the time of such notice and (ii) a place and a time for the closing of such purchase. The Company shall, as soon as reasonably practicable following receipt of such notice, deliver written notice to Sub specifying, based on the information provided by Sub in its notice, the number of Top-Up Shares. At the closing of the purchase of Top-Up Shares, the purchase price owed by Sub to the Company therefor shall be paid to the Company (A) in cash, by wire transfer or cashier’s check or (B) by issuance by Sub to the Company of a promissory note on terms reasonably satisfactory to the Company.

(c) The obligation of the Company to deliver Top-Up Shares upon the exercise of the Top-Up Option is subject to the conditions that (i) no provision of any applicable Law and no judgment, injunction, order or decree shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Shares in respect of such exercise, (ii) due to the exercise of the Top-Up Option, the number of Shares owned by Parent, Sub and their Affiliates will constitute one Share more than ninety percent (90%) of the number of Shares that will be outstanding on a fully-diluted basis immediately after the issuance of the Top-Up Shares and (iii)

Sub has accepted for payment all Shares validly tendered in the Offer and not withdrawn. For all purposes of this Agreement, the term “ Affiliate ” when used with respect to any person means any other person who is an “affiliate” of that first person within the meaning of Rule 405 under the Securities Act.

(d) Parent and Sub acknowledge that the Shares that Sub may acquire upon exercise of the Top-Up Option will not be registered under the Securities Act and will be issued in reliance upon an exemption for transactions not involving a public offering. Parent and Sub represent and warrant to the Company that Sub is, or will be upon any purchase of Top-Up Shares, an “accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act. Sub agrees that the Top-Up Option, and the Top-Up Shares to be acquired upon exercise of the Top-Up Option, if any, are being and will be acquired by Sub 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 2 - CONVERSION OF SECURITIES

2.1. Conversion of Capital Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of the holders of any Shares or any shares of common stock, par value $0.01 per share, of Sub (“ Sub Common Stock ”):

(a) Sub Common Stock . Each issued and outstanding share of Sub Common Stock shall be converted into and become one (1) fully paid and nonassessable share of common stock of the Surviving Corporation.

(b) Cancellation of Treasury Stock and Parent-Owned Stock. All Shares that are owned by the Company as treasury stock and any Shares owned by Parent or Sub shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be payable in exchange therefor.

(c) Conversion of Shares . Each issued and outstanding Share (other than Shares to be cancelled in accordance with Section 2.1(b) and other than Dissenting Shares (as defined in Section 2.3(a))) shall be converted into the right to receive the Offer Price, payable to the holder thereof in cash, without interest (the “ Merger Consideration ”). From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate (a “ Certificate ”) or book-entry share (a “ Book-Entry Share ”) representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor, without interest thereon, upon the surrender of such certificate in accordance with Section 2.2.

2.2. Exchange of Certificates .

(a) Paying Agent . Parent shall designate Continental Stock Transfer & Trust Company or another bank or trust company that is reasonably acceptable to the Company to act as agent for the holders of Shares in connection with the Merger (the “ Paying Agent ”) and to receive the aggregate funds to which holders of Shares shall become entitled pursuant to Section 2.1(c). Parent shall cause the Surviving Corporation to provide to the Paying Agent on a timely basis, promptly after the Effective Time and as and when needed after the Effective Time, cash

necessary to pay for the Shares converted into the right to receive the Merger Consideration (such cash being hereinafter referred to as the “ Exchange Fund ”). If for any reason the Exchange Fund is inadequate to pay the amounts to which holders of Shares shall be entitled under Section 2.1(c), Parent shall promptly deposit or cause the Surviving Corporation promptly to deposit additional cash with the Paying Agent sufficient to make all payments of Merger Consideration, and Parent and the Surviving Corporation shall in any event be liable for payment thereof. The Paying Agent may invest the cash in the Exchange Fund as directed by Parent. Any interest and other income resulting from such investments shall be paid to Parent.

(b) Exchange Procedures . Promptly after the Effective Time, the Paying Agent shall, and Parent shall cause the Paying Agent to, mail to each holder of record of a Certificate or a Book-Entry Share, which immediately prior to the Effective Time represented outstanding Shares, whose shares were converted pursuant to Section 2.1(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 Certificate or Book-Entry Shares shall pass, only upon delivery of the Certificates or Book-Entry Shares to the Paying Agent and shall be in such form and have such other provisions as Parent may reasonably specify); and (ii) instructions for effecting the surrender of the Certificates or Book-Entry Shares in exchange for payment of the Merger Consideration. Upon surrender of a Certificate or Book-Entry Shares for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed and properly completed and such other documents as may be reasonably requested by the Paying Agent, the holder of such Certificate or Book-Entry Share shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate or Book-Entry Share, and the Certificate or Book-Entry Share so surrendered shall forthwith be cancelled. Until surrendered as contemplated by this Section 2.2, each Certificate or Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration as contemplated by this Section 2.2, without interest thereon, and shall not evidence any interest in, or any right to exercise the rights of a stockholder or other equity holder of, the Company or the Surviving Corporation.

(c) Transfer Books; No Further Ownership Rights in Shares . At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Certificates or Book-Entry Shares evidencing ownership of 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. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this SECTION 2.

(d) Termination of Exchange Fund; No Liability . At any time following six (6) months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Paying Agent and not disbursed (or for which disbursement is pending subject only to the Paying Agent’s routine administrative procedures) or required by the terms of this Agreement to be disbursed at or prior to such date to holders of Certificates and Book-Entry Shares, and thereafter such holders shall be entitled to look only to the Surviving Corporation

(subject to abandoned property, escheat or other similar Laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates or Book-Entry Shares, without any interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate or Book-Entry Share for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If Certificates or Book-Entry Shares are not surrendered prior to two (2) years after the Effective Time, unclaimed Merger Consideration payable with respect to such Shares shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto.

(e) Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed, the Paying Agent shall issue in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect thereto; provided , however , that Parent may, in its sole discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificate to deliver an agreement of indemnification in form reasonably satisfactory to Parent, or a bond in such sum as Parent may reasonably direct as indemnity, against any claim that may be made against Parent or the Paying Agent in respect of the Certificate alleged to have been lost, stolen or destroyed.

2.3. Dissenting Shares .

(a) Notwithstanding anything in this Agreement to the contrary, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has complied with Section 262 of the DGCL (the “ Dissenting Shares ”) shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect or withdraws or otherwise loses his, her or its right to appraisal. From and after the Effective Time, a stockholder who has properly exercised such appraisal rights shall not have any rights of a stockholder of the Company or the Surviving Corporation with respect to such Shares, except those provided under Section 262 of the DGCL. A holder of Dissenting Shares shall be entitled to receive payment of the appraised value of such Shares held by him, her or it in accordance with Section 262 of the DGCL, unless, after the Effective Time, such holder fails to perfect or withdraws or loses his, her or its right to appraisal, in which case such Shares shall be converted into and represent only the right to receive the Merger Consideration, without interest thereon, upon surrender of the Certificates or Book-Entry Shares, pursuant to Section 2.2.

(b) The Company shall give Parent (i) prompt written notice of any written demands for appraisal (including copies of such demands) and attempted withdrawals of such demands and (ii) the opportunity to participate in the conduct of all negotiations and proceedings with respect to demands for appraisal. Except with the prior written consent of Parent, the Company shall not voluntarily make any payment with respect to any demands for appraisal or settle or offer to settle any such demands for appraisal.

2.4. Company Stock Plans .

(a) The Company shall use commercially reasonable efforts to provide that, effective as of the Effective Time, each of the Company’s 1999 Stock Option Plan, 2000 Stock Option Plan, 2004 Stock Incentive Plan and 2007 Equity Incentive Plan (collectively, the “ Company Stock Plans ”) and each stock option, or other right to acquire Shares granted under the Company Stock Plans (each, a “Company Option” and collectively, the “Company Options”) outstanding immediately before the Effective Time shall be cancelled and of no further force or effect. In consideration for the cancellation of the Company Options that are outstanding immediately before the Effective Time, the holders thereof (whether or not such Company Options shall otherwise be exercisable at the Effective Time) shall automatically (and without any further action being required on the part of the holders thereof) receive from Parent or its affiliates an amount in respect thereof equal to the product of (i) the excess, if any, of the Merger Consideration over the exercise price of each such Company Option and (ii) the number of unexercised Shares subject thereto (with all such payments to be subject to any applicable Tax withholding in accordance with Section 2.8).

(b) As of the Effective Time, the Company Stock Plans shall terminate and all rights under any provision of any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any Company Subsidiary (as defined in Section 3.4(a)) shall be cancelled. The Company shall use commercially reasonable efforts to effectuate the foregoing, including, but not limited to, sending out the requisite notices.

2.5. Company Warrants . The Company shall issue a letter to each holder of any warrant or other outstanding right (other than Company Options) to purchase Shares (such outstanding warrants or other rights, the “ Company Warrants ”), in which the Company shall request such holder to agree in writing within ten (10) calendar days that such warrant or other outstanding right shall terminate as of immediately prior to the Effective Time without any payment or Merger Consideration payable with respect thereto. After the expiration of the ten (10) calendar day period, the Company shall send a follow up letter or make a single phone call to any holders that have not so agreed in writing to such termination prior to such time, in which the Company shall request that such holders promptly agree in writing that such warrant or other outstanding right shall terminate as of immediately prior to the Effective Time without any payment or Merger Consideration payable with respect thereto. All Company Warrants not terminated prior to the Effective Time (the “ Carryover Warrants ”), whether vested or unvested, shall become, as of the Effective Time, a warrant to acquire with respect to each Share that the holder of such Carryover Warrant would have been entitled to receive had such holder exercised such Carryover Warrant in full immediately prior to the Effective Time, the Merger Consideration and shall otherwise be on the same terms and conditions as were applicable under such Carryover Warrant immediately prior to the Effective Time, including without limitation the same exercise price per share of Company Common Stock.

2.6. Convertible Notes . Promptly after the date hereof, the Company shall amend the outstanding 7% convertible senior secured notes due 2010 issued by the Company on March 30, 2007 (the “ Convertible Notes ”) to provide that the Convertible Notes, after the Effective Time, shall be convertible into the portion of the Merger Consideration receivable by a holder of that number of Shares into which the holder would have received had such holder converted the Convertible Notes in full immediately prior to the Effective Time.

2.7. Section 16 . The Company Board of Directors shall, to the extent necessary, take appropriate action, prior to or as of the Acceptance Time, to approve, for purposes of Section 16(b) of the Exchange Act the disposition and cancellation of Shares (including derivative securities with respect to Shares) resulting from the transactions contemplated by this Agreement.

2.8. Withholding . Each of Parent and Surviving Corporation shall be entitled to deduct or withhold, or cause the Paying Agent to deduct or withhold, from any amounts payable or otherwise deliverable pursuant to this Agreement to any holder or former holder of Shares, Company Options or Company Warrants such amounts as are required to be deducted or withheld therefrom under the Internal Revenue Code of 1986, as amended (the “ Code ”) or any provision of Tax (as defined in Section 3.15) Law. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the person to whom such amounts would otherwise have been paid.

2.9. Transfer Taxes . If any payment pursuant to the Offer or the Merger is to be made to a person other than the person in whose name the surrendered Certificate or Book-Entry Share is registered or who is the holder of a Company Warrant or a Company Option as of the Effective Time, it shall be a condition of payment that the Certificate, Book-Entry Share, Company Warrant or Company Option so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid all transfer and other Taxes required by reason of the issuance to a person other than the registered holder of the Certificate or Book-Entry Share surrendered (or with respect to a Company Warrant or a Company Option, the holder as of the Effective Time) or shall have established to the satisfaction of Parent that such Tax either has been paid or is not applicable.

SECTION 3 - REPRESENTATIONS AND WARRANTIES OF COMPANY

Except as set forth on the disclosure schedule delivered by the Company to Parent on the date hereof (the “ Company Disclosure Schedule ”), the section numbers of which are numbered to correspond to the section numbers of this Agreement to which they refer ( provided , however , that an item disclosed in any section of the Company Disclosure Schedule shall be deemed to have been disclosed for each other section of the Company Disclosure Schedule to the extent the relevance of such disclosure to such other section of the Company Disclosure Schedule is reasonably apparent on the face of such disclosure), the Company hereby makes the following representations and warranties to, and agreements with, Parent and Sub:

3.1. Organization and Qualification .

(a) Each of the Company and each Company Subsidiary is a corporation or other legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has corporate or similar power and authority to own, lease and operate its assets and to carry on its business as now being conducted. Each of the Company and each Company Subsidiary is qualified or otherwise authorized to transact business as a foreign corporation or other organization in all jurisdictions in which such qualification or authorization is required by Law, except for jurisdictions in which the failure to be so qualified or authorized and in good standing would not reasonably be expected to have a Company Material Adverse

Effect. “ Company Material Adverse Effect ” shall mean any change, event, circumstance, effect or development that, individually or in the aggregate with all other changes, events, circumstances, effects or developments that exist on the date of determination of the occurrence of a Company Material Adverse Effect, has had or is reasonably likely to have a material adverse effect on (i) the assets, properties, business, results of operations or condition (financial or other) of the Company and the Company Subsidiaries, taken as a whole or (ii) the ability of the Company to consummate the transactions contemplated by this Agreement, provided , however , that in no event shall changes, events, circumstances, effects or developments to the extent resulting from any of the following be taken into account in determining whether there is, has been or is reasonably likely to be a “Company Material Adverse Effect”: (A) changes in conditions of the economy or financial, debt, credit or securities markets in general that in each case, do not have a materially disproportionate impact on the Company and the Company Subsidiaries, taken as a whole, relative to other persons engaged in business in the medical device industry, (B) changes in conditions affecting the medical device industry, in each case, without a materially disproportionate impact on the Company and the Company Subsidiaries, taken as a whole, relative to other persons engaged in business in the medical device industry, (C) changes to applicable Law or generally accepted accounting principles or, in either case, the interpretation thereof, that do not have a materially disproportionate impact on the Company and the Company Subsidiaries, taken as a whole, relative to other persons engaged in business in the medical device industry, (D) any change in the trading price or trading volume of the Shares (it being understood that the underlying facts or circumstances giving rise to any such change may be taken into account in determining whether there has been or is likely to be a Company Material Adverse Effect if such facts and circumstances are not otherwise excluded pursuant to clauses (A) through (I) of this definition), (E) the announcement of the execution of this Agreement or the pendency of the Offer and the Merger, (F) any failure of the Company to meet securities analysts’ published or internal projections or forecasts or estimates of earnings or revenues (it being understood that the underlying facts or circumstances giving rise to any such failure may be taken into account in determining whether there has been or is likely to be a Company Material Adverse Effect if such facts and circumstances are not otherwise excluded pursuant to clauses (A) through (I) of this definition), (G) war, sabotage or terrorism in the United States or any other country or region in the world that does not have a materially disproportionate impact on the Company and the Company Subsidiaries, taken as a whole, relative to other persons engaged in business in the medical device industry, (H) the Company’s failure to maintain the listing of the Shares on the NASDAQ Global Market with respect to matters prior to November 21, 2008 or (I) failure by the Company or any Company Subsidiary to maintain an adequate amount of operating cash (it being understood that the underlying facts or circumstances giving rise to any such failure may be taken into account in determining whether there has been or is likely to be a Company Material Adverse Effect if such facts and circumstances are not otherwise excluded pursuant to clauses (A) through (I) of this definition).

(b) The Company has previously provided or made available to Parent true and complete copies of the certificate of incorporation and bylaws or other organizational documents of the Company and each Company Subsidiary as presently in effect, and none of the Company or any Company Subsidiary is in default in the performance, observation or fulfillment of such documents, except, in the case of Company Subsidiaries, such defaults that, in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect.

3.2. Authority to Execute and Perform Agreement . The Company has the corporate power and authority to enter into, execute and deliver this Agreement and, subject, in the case of the consummation of the Merger, to the adoption of this Agreement by the holders of the Shares, to perform fully its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Company Board of Directors. No other corporate action on the part of the Company is necessary to consummate the transactions contemplated hereby (other than the adoption of this Agreement by the holders of the Shares and the filing of a certificate of merger or other appropriate document with the Secretary of State of the State of Delaware). This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery by each of Parent and Sub, constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent enforceability may be limited by the effect of applicable bankruptcy, reorganization, insolvency, moratorium or other Laws affecting the enforcement of creditors’ rights generally and the effect of general principles of equity, regardless of whether such enforceability is considered in a proceeding at Law or in equity.

3.3. Capitalization .

(a) The authorized capital stock of the Company as of the date of this Agreement consists of 200,000,000 Shares and 5,000,000 shares of preferred stock, par value $0.001 per share (“ Company Preferred Stock ”). The rights and privileges of each class of the Company’s capital stock are as set forth in the Company’s certificate of incorporation. As of July 23, 2009, (i) 17,187,791 Shares were issued and outstanding and (ii) no shares of Company Preferred Stock were issued or outstanding.

(b) Section 3.3(b) of the Company Disclosure Schedule includes a list, as of the date of this Agreement, of (i) each outstanding Company Option, including the name of the applicable holder, the Company Stock Plan under which each Company Option is granted, the grant date, the applicable vesting schedule, the expiration date, the exercise price, and whether any option is an incentive stock option, (ii) the total number of Shares reserved for future issuance under each Company Stock Plan, and (iii) each grant of Shares that are subject to repurchase by the Company or forfeiture (such shares, “ Restricted Shares ”), including the name of the applicable holder, the Company Stock Plan under which such Restricted Shares were issued, the issue date, the applicable vesting schedule and the repurchase price relating to each grant of Restricted Shares, if any. The Company Stock Plans (including all amendments) have been duly approved by the Company’s stockholders to the extent required by applicable Law, stock exchange rule or the terms of such Company Stock Plan. The Company has made available to the Parent complete and accurate copies of all (x) Company Stock Plans, (y) forms of stock option agreements evidencing Company Options and (z) forms of agreements evidencing Restricted Shares.

(c) Section 3.3(c) of the Company Disclosure Schedule includes a list, as of the date of this Agreement, of each outstanding Company Warrant, including the name of the applicable holder, the agreement or other document under which such Company Warrants were granted and sets forth a complete and accurate list of all holders of Company Warrants indicating

the number of Shares subject to each Company Warrant, and the exercise price, the date of grant and the expiration date thereof.

(d) Except as set forth in Section 3.3(a) of this Agreement or Section 3.3(b), Section 3.3(c) or Section 3.3(d) of the Company Disclosure Schedule, (i) there are not as of the date of this Agreement, and at the Acceptance Time there will not be, any equity securities of any class of the Company, or any security exchangeable into or exercisable for such equity securities, issued, reserved for issuance or outstanding and (ii) there are not as of the date of this Agreement, and at the Acceptance Time there will not be, any options, warrants, equity securities, calls, rights, commitments or agreements to which the Company or any Company Subsidiary is a party or by which the Company or any Company Subsidiary is bound obligating the Company or any Company Subsidiary to issue, exchange, transfer, deliver, sell or cause to be issued, exchanged, transferred, delivered or sold, additional shares of capital stock or other equity or voting interests of the Company or any security or rights convertible into or exchangeable or exercisable for any such shares or other equity or voting interests, or obligating the Company or any of Company Subsidiary to grant, extend, accelerate the vesting of, otherwise modify or amend or enter into any such option, warrant, equity security, call, right, commitment or agreement, other than the Top-Up Option. The Company does not have any outstanding stock appreciation rights, phantom stock, performance based rights or similar rights or obligations. None of the Company, the Company Subsidiaries, or to the Company’s knowledge, any Affiliate of the Company, is a party to or is bound by any agreement with respect to the voting (including proxies) or sale or transfer of any shares of capital stock or other equity or voting interests of the Company. Except as contemplated by this Agreement and except to the extent arising pursuant to applicable state takeover or similar Laws, there are no registration rights, and there is no rights agreement, “poison pill” anti-takeover plan or other similar agreement to which the Company or any Company Subsidiary is bound with respect to any securities of the Company.

(e) All outstanding Shares are, and all Shares subject to issuance as specified in Section 3.3(b) above, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Company’s certificate of incorporation or bylaws or any agreement to which the Company is bound.

(f) There are no obligations, contingent or otherwise, of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any Shares or the capital stock of the Company or any Company Subsidiary. The Company has no outstanding bonds, debentures, notes or other indebtedness that have the right to vote on any matters on which stockholders may vote.

3.4. Company Subsidiaries .

(a) Section 3.4(a) of the Company Disclosure Schedule sets forth a true and complete list of the names, jurisdictions of organization and capitalization of each Company Subsidiary and, for the Company and each Company Subsidiary, the jurisdictions in which it is qualified to do business. Section 3.4(a) of the Company Disclosure Schedule also sets forth for

each such Company Subsidiary the individuals who comprise the board of directors or comparable body for each such entity. The Company agrees to take, or cause to be taken, commercially reasonable actions to ensure that those individuals will resign and be replaced by individuals specified by Parent effective as of the Effective Time. All issued and outstanding shares or other equity interests of each Company Subsidiary are owned directly by the Company free and clear of any charges, liens, encumbrances, security interests or adverse claims. As used in this Agreement, “ Company Subsidiary ” means any corporation, partnership or other organization, whether incorporated or unincorporated, of which (i) the Company or any Company Subsidiary is a general partner or (ii) at least 50% of the securities or other interests having voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation, partnership or other organization are directly or indirectly owned or controlled by the Company or by any Company Subsidiary, or by the Company and one or more Company Subsidiary.

(b) Each Company Subsidiary is a corporation duly organized, validly existing and in good standing (to the extent such concepts are applicable) under the Laws of the jurisdiction of its incorporation, has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted, and is duly qualified to do business and is in good standing as a foreign corporation (to the extent such concepts are applicable) in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except for such failures to be so organized, qualified or in good standing, individually or in the aggregate, that are not reasonably likely to have a Company Material Adverse Effect. There are not as of the date hereof, and at the Effective Time there will not be, any subscriptions, options, conversion or exchange rights, warrants, repurchase or redemption agreements, or other agreements, claims or commitments of any nature whatsoever obligating any Company Subsidiary to issue, transfer, deliver or sell, or cause to be issued, transferred, delivered, sold, repurchased or redeemed, shares of the capital stock or other securities of any Company Subsidiary or obligating the Company or any Company Subsidiary to grant, extend or enter into any such agreement. To the knowledge of the Company, there are no stockholder agreements, voting trusts, proxies or other agreements, instruments or understandings with respect to the voting of the capital stock of any Company Subsidiary.

(c) Section 3.4(c) of the Company Disclosure Schedule sets forth, for each Company Joint Venture (as defined below), the interest held by the Company and the jurisdiction in which such Company Joint Venture is organized. Interests in Company Joint Ventures held by the Company are held directly by the Company, free and clear of any charges, liens, encumbrances, security interests or adverse claims. The term “ Company Joint Venture ” means any corporation or other entity (including partnership, limited liability company and other business association) that is not a Company Subsidiary and in which the Company or one or more Company Subsidiaries owns an equity interest (other than equity interests held for passive investment purposes which are less than five percent (5%) of any class of the outstanding voting securities or other equity of any such entity).

(d) The Company does not control, directly or indirectly, any corporation, partnership or other entity that is not a Company Subsidiary.

3.5. SEC Reports . The Company has filed or furnished (as applicable) all registration statements, forms, reports, certifications and other documents required to be filed by the Company with the SEC since June 30, 2006. All such registration statements, forms, reports and other documents (including those filed or furnished by the Company during such period, whether or not required to be so filed or furnished, and that the Company may file after the date hereof until the Closing) are referred to herein as the “ Company SEC Reports .” The Company SEC Reports, and giving effect to any amendments or supplements thereto, (i) were or will be filed on a timely basis, (ii) at the time filed, complied, or will comply when filed, as of each respective filing date as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act applicable to such Company SEC Reports and (iii) except as set forth in Section 3.5 of the Company Disclosure Schedule, did not or will not at the time they were or are filed contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Company SEC Reports or necessary in order to make the statements in such Company SEC Reports, in the light of the circumstances under which they were made, not misleading in any material respect. No Company Subsidiary is required to file any form, report or other document with the SEC. Section 3.5 of the Company Disclosure Schedule lists all effective registration statements filed by the Company on Form S-3 or Form S-8 or otherwise relying on Rule 415 under the Securities Act.

3.6. Financial Statements .

(a) Each of the consolidated financial statements (including, in each case, any related notes and schedules) contained or to be contained in the Company SEC Reports at the time filed, and giving effect to any amendments or supplements thereto filed prior to the date of this Agreement, (i) complied or will comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (ii) were or will be prepared in accordance with United States generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited interim financial statements, as permitted by the SEC on Form 10-Q under the Exchange Act), and (iii) fairly presented or will fairly present in all material respects the consolidated financial position of the Company and the Company Subsidiaries as of the dates indicated and the consolidated results of its operations and cash flows for the periods indicated, consistent with the books and records of the Company and the Company Subsidiaries, except that the unaudited interim financial statements were or are subject to normal and recurring year end adjustments which were or will not be material in amount or effect. The consolidated audited balance sheet of the Company as of December 31, 2008 included in the audited financial statements set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 is referred to herein as the “ Company Balance Sheet .”

(b) The Company is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002, as amended (the “ Sarbanes-Oxley Act ”). Each required form, report and document (including any amendment thereof and supplement thereto) containing financial statements that has been filed with or submitted or will be filed with or submitted to the SEC since June 30, 2006 was or will be accompanied by the certifications required to be filed or submitted by the Company’s principal executive officer and principal financial officer pursuant to the Sarbanes-Oxley Act and Rule 13a-14 or 15d-14 promulgated

under the Exchange Act and, at the time of filing or submission of each such certification, such certification complied or will comply in all material respects with the applicable provisions of the Sarbanes-Oxley Act and Rule 13a-14 or 15d-14 promulgated under the Exchange Act.

(c) The Company maintains a system of internal accounting controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP. The Company maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls and procedures are designed to ensure that all material information concerning the Company is made known on a timely basis to the individuals responsible for the preparation of the Company SEC Reports. Since the date of the filing of the Company’s most recent annual report on Form 10-K, prior to the date of this Agreement, the Company’s outside auditors and the audit committee of the Company Board of Directors have been advised of all significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting existing on or prior to the date hereof which adversely affect the Company’s ability to record, process, summarize and report financial information, each of which is set forth in Section 3.6(c) of the Company Disclosure Schedule, and have not been advised of any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. Any material change in internal control over financial reporting and any significant deficiency or material weakness in the design or operation of internal control over financial reporting required to be disclosed in any Company SEC Report or in any form, report or document filed by the Company with the SEC has been so disclosed.

(d) The Company is not a party to, or does not have any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract (including any contract or arrangement relating to any transaction or relationship between or among the Company, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, the Company in the Company SEC Reports.

3.7. Absence of Undisclosed Liabilities . The Company has no liabilities of a type required to be reflected or disclosed on the consolidated balance sheet of the Company (including the notes thereto) prepared in accordance with GAAP, other than liabilities (a) adequately reflected or reserved against on the Company Balance Sheet, (b) included in Section 3.7 of the Company Disclosure Schedule, (c) incurred since the date of the Company Balance Sheet in the ordinary course of business, in all material respects and consistent with past practice, or (d) in connection with this Agreement or the transactions contemplated hereby, for which estimates of such liabilities as of the date of this Agreement are set forth in Section 3.7 of the Company Disclosure Schedule.

3.8. Absence of Adverse Changes . Since the date of the Company Balance Sheet until the date of this Agreement, there has not occurred any change, event, circumstance or development that is reasonably likely to have a Company Material Adverse Effect. From the date of the Company Balance Sheet until the date of this Agreement, except as contemplated hereby or as set forth in Section 3.8 of the Company Disclosure Schedule, (a) the business of the Company and the Company Subsidiaries, taken as a whole, has been conducted in the ordinary course of business and (b) none of the Company or any Company Subsidiary has taken any action that would have required the consent of Parent under Section 5.1(b) of this Agreement, had such action or event occurred after the date of this Agreement.

3.9. Compliance with Laws .

(a) The Company and the Company Subsidiaries, including their respective employees (to the extent applicable), have obtained each material Federal, state, county, local or foreign governmental consent, license, permit, grant or other authorization of a Governmental Entity (i) pursuant to which the Company or any Company Subsidiary currently operates or holds any interest in any of its properties or (ii) that is required for the operation of the business of the Company or any Company Subsidiary or the holding of any such interest ((i) and (ii) are herein collectively called “ Permits ”), and all of such Permits are in full force and effect, except where the failure to obtain or have any such Permit would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect; and no proceeding is pending or, to the knowledge of the Company, threatened, to revoke, suspend, cancel, terminate or adversely modify any such Permit.

(b) Except as set forth in Section 3.9(b) of the Company Disclosure Schedule, the Company and the Company Subsidiaries are, and since June 30, 2006 have been, in compliance in all material respects with all federal, state, local or foreign laws, statutes, regulations, rules, ordinances and judgments, decrees, orders, writs and injunctions, of any court or Governmental Entity (collectively, “ Laws ”) relating to any of the property owned, leased or used by them, or applicable to their business, including, but not limited to, Laws relating to equal employment opportunity, discrimination, occupational safety and health, interstate commerce, anti-kickback, healthcare and antitrust.

(c) Neither the Company, the Company Subsidiaries, nor any of their respective directors, officers or employees, nor, to the knowledge of the Company, any of their respective agents or distributors or any other person acting on behalf of the Company or any Company Subsidiary has since June 30, 2006 (i) violated in any material respect or is in violation in any material respect of any provision of the U.S. Foreign Corrupt Practices Act of 1977 (the “ FCPA ” ), (ii) violated in any material respect or is in violation in any material respect of any applicable Law enacted in any jurisdiction in connection with or arising under the OECD Convention Combating Bribery of Foreign Public Officials in International Business Transactions (the “ OECD Convention ” ), (iii) made, offered to make, promised to make or authorized the payment or giving of, directly or indirectly, any bribe, rebate, payoff, influence payment, kickback or other unlawful payment or gift of money or anything of value prohibited under any applicable Law addressing matters comparable to those addressed by the FCPA or the OECD Convention implementing legislation concerning such payments or gifts in any jurisdiction (any such payment, a “ Prohibited Payment ” ), (iv) been subject to any investigation

by any Governmental Entity with regard to any Prohibited Payment, or (v) violated in any material respect or is in violation in any material respect of any other Laws regarding use of funds for political activity or commercial bribery.

(d) Except as set forth in Section 3.9(d) of the Company Disclosure Schedule, the Company and the Company Subsidiaries, including their respective employees (to the extent applicable), are not, and since June 30, 2006 have not been, in violation of and have no liabilities, whether accrued, absolute, contingent or otherwise, under any Federal, state, local or foreign Law, including without limitation the Sarbanes-Oxley Act of 2002 and any rules and regulations promulgated thereunder, or any order, judgment, injunction, decree or other requirement of any court, arbitrator or governmental or regulatory body, relating to the operation of clinical testing laboratories, labor and employment practices, health and safety, zoning, pollution or protection of the environment; in each case, except for violations of or liabilities under any of the foregoing which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(e) Neither the Company nor any Company Subsidiary has knowledge of any actual or threatened enforcement action by the U.S. Food and Drug Administration (the “ FDA ”) or any other Governmental Entity which has jurisdiction over the operations of the Company and the Company Subsidiaries, and none has received written notice of any pending or threatened claim by the FDA or any other Governmental Entity which has jurisdiction over the operations of the Company and the Company Subsidiaries against the Company or the Company Subsidiaries.

(f) All material reports, documents, claims and notices required to be filed, maintained, or furnished to the FDA or any Governmental Entity by the Company or the Company Subsidiaries have been so filed, maintained or furnished. All such reports, documents, claims, and notices were complete and correct in all material respects on the date filed (or were corrected in or supplemented by a subsequent filing) such that no material liability exists with respect to the completeness or accuracy of such filing.

(g) Except as set forth in Section 3.9(g) of the Company Disclosure Schedule, the Company and the Company Subsidiaries have not received any FDA Form 483 or Warning Letter or other material written correspondence or notice from the FDA or other Governmental Entity alleging or asserting noncompliance with any applicable Laws or Permits.

(h) As of the date of this Agreement, neither the Company nor any Company Subsidiary has any ongoing clinical trials. All studies, tests and preclinical and clinical trials being conducted by the Company or the Company Subsidiaries have been and are being conducted in material compliance with experimental protocols, procedures and controls pursuant to accepted professional scientific standards and applicable local, state and federal Laws, rules, and regulations, including, but not limited to the applicable requirements of Good Laboratory Practices or Good Clinical Practices, as applicable. The Company and the Company Subsidiaries have not received any written notices or correspondence from the FDA or any other Governmental Entity requiring the termination, suspension or material modification of any ongoing or planned clinical trials conducted by, or on behalf of, the Company or the Company Subsidiaries, or in which the Company or the Company Subsidiaries have participated. For the

purposes of this Agreement, (i) “ Good Clinical Practices ” means the FDA’s standards for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical trials contained in 21 C.F.R. Parts 50, 54, and 812 and (ii) “ Good Laboratory Practices ” means the FDA’s standards for conducting non-clinical laboratory studies contained in 21 C.F.R. Part 58.

(i) Except as set forth in Section 3.9(i) of the Company Disclosure Schedule, the manufacture of products by the Company and the Company Subsidiaries is being, and since June 30, 2006 has been, conducted in material compliance with the applicable provisions of FDA’s current Good Manufacturing Practices. In addition, since June 30, 2006, the Company and the Company Subsidiaries have been in material compliance with all other applicable FDA requirements, including, but not limited to, registration and listing requirements set forth in 21 U.S.C. Section 360 and 21 C.F.R. Part 807. For the purposes of this Agreement, “ Good Manufacturing Practices ” means the requirements set forth in the Quality System Regulation for medical devices contained in 21 C.F.R. Part 820.

(j) Except as set forth in Section 3.9(j) of the Company Disclosure Schedule, since June 30, 2006, the Company and the Company Subsidiaries have not either voluntarily or involuntarily, initiated, conducted, or issued, or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, warning, “dear doctor” letter, investigator notice or other notice or action relating to any product or product candidate. The Company is not aware of any facts which are reasonably likely to cause (i) the recall, market withdrawal or replacement of any product sold or intended to be sold by the Company or the Company Subsidiaries; (ii) a change in the marketing classification or a material change in labeling of any such products; or (iii) a termination or suspension of marketing of any such products.

(k) Since June 30, 2006, the Company and the Company Subsidiaries have been in material compliance with federal or state criminal or civil Laws applicable to the business of the Company and the Company Subsidiaries (including without limitation the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), Stark Law (42 U.S.C. §1395nn), False Claims Act (31 U.S.C. §3729 et seq.), Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq), and any comparable state Laws), or the regulations promulgated pursuant to such Laws, or which are cause for civil penalties or mandatory or permissive exclusion from Medicare, Medicaid or any other state or federal health care program (“ Program ”). There is no civil, criminal, administrative or other action, suit, demand, claim, hearing, investigation, proceeding, notice or demand, received by, or to the knowledge of the Company, pending or threatened against, the Company or any Company Subsidiary which could reasonably result in its exclusion from participation in any Program or other third party payment programs in which the Company or any Company Subsidiary participates.

(l) The Company and the Company Subsidiaries are, and since June 30, 2006 have been, in compliance in all material respects with their respective obligations to report accurate pricing information for their products to Governmental Entities and to price reporting services relied upon by Governmental Entities and other payors, including, as applicable and without limitation, their obligation to report accurate Best Price and Average Manufacturer Price as required and defined in 42 U.S.C.A. § 1396r-8 and Medicaid rebate agreements entered into by the Company and the Company Subsidiaries, and Average Sales Price under the Medicare

Modernization Act of 2003, and their obligation to charge accurate prices to purchasers entitled to Federal Supply Schedule prices, Federal Upper Limit prices, and Federal Ceiling Prices.

(m) The Company and the Company Subsidiaries are and since June 30, 2006 have been, in compliance in all material respects with all export control Laws, including those administered by the U.S. Department of Commerce and the U.S. Department of State, and asset control Laws, including those administered by the U.S. Department of the Treasury.

3.10. Actions and Proceedings .

(a) There are no material outstanding orders, judgments, injunctions, decrees or other requirements of any Governmental Entity against the Company, any Company Subsidiary or any of their securities, assets or properties. Except as disclosed under the heading “Legal Proceedings” in the Company SEC Reports filed prior to the date hereof, there are no material actions, suits or claims or legal, administrative or arbitration proceedings pending or, to the knowledge of the Company, threatened against the Company, any Company Subsidiary, or any of their securities, assets or properties.

(b) Except as set forth in Section 3.10(b) of the Company Disclosure Schedule, there are no pending nor, to the knowledge of the Company, threatened civil, criminal or administrative actions, suits, demands, claims, hearings, notices of violation, investigations, proceedings or demand letters relating to any alleged hazard or alleged defect in design, manufacture, materials or workmanship, in each case by, with or from a Governmental Entity, as applicable, including any failure to warn or alleged breach of express or implied warranty or representation, relating to any product manufactured, distributed or sold by or on behalf of the Company or any Company Subsidiary. There are no product liability claims pending against the Company other than as set forth in Section 3.10(b) of the Company Disclosure Schedule.

3.11. Contracts and Other Agreements .

(a) Except as set forth on Section 3.11(a) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary is a party to or bound by, and neither they nor their properties are subject to, any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K under the Exchange Act) required to be filed as an exhibit to or disclosed in the Company SEC Reports prior to the date of this Agreement (each a “ Material Contract ”) that has not been so filed or disclosed. Each Material Contract required to be (i) filed as an exhibit to the Company’s Annual Report on Form 10-K filed on March 27, 2009 or (ii) filed or disclosed in any Company SEC Report filed after December 31, 2008, is valid, in full force and effect and binding upon the Company or the applicable Company Subsidiary, and to the knowledge of the Company, binding upon the other parties thereto in accordance with its terms (except to the extent enforceability may be limited by the effect of applicable bankruptcy, reorganization, insolvency, moratorium or other Laws affecting the enforcement of creditors’ rights generally and the effect of general principles of equity, regardless of whether such enforceability is considered in a proceeding at Law or in equity), the Company and the Company Subsidiaries have performed in all material respects their respective covenants thereunder, and neither the Company nor any applicable Company Subsidiary and, to the knowledge of the Company, no other party to any such Material Contract is in material default thereunder, nor, to

the knowledge of the Company, does any condition exist that with notice or lapse of time or both would constitute a material default under any such Material Contract. True and complete copies of all of the Material Contracts required to be filed as an exhibit to the Company’s Annual Report on Form 10-K filed on March 27, 2009 or filed or disclosed in any Company SEC Report filed after December 31, 2008 have been made available to Parent.

(b) Except as provided in the Company SEC Reports filed prior to the date hereof, neither the Company nor any Company Subsidiary is a party to any agreement that limits or restricts in any material respects the Company, any Company Subsidiary or any of their affiliates or successors in competing or engaging in any line of business, in any therapeutic area, in any geographic area or with any person.

(c) Neither the Company nor any Company Subsidiary is a party to any agreement obligating the Company to file a registration statement under the Securities Act of 1933, as amended (the “ Securities Act ”), which filing has not yet been made, and the Company is in material compliance with each such agreement, all of which are listed on Section 3.11(c) of the Company Disclosure Schedule. No registration rights involving the Company’s securities shall survive the consummation of the Merger.

(d) Other than Material Contracts filed with the SEC prior to the date hereof and except as set forth on Section 3.11(d) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary is a party to any agreement (i) involving research, development or the license of Proprietary Rights (as defined in Section 3.12(a)), (ii) granting a right of first refusal, or right of first offer or comparable right with respect to Proprietary Rights, (iii) relating to a joint venture, partnership or other arrangement involving a sharing of profits, losses, costs or liabilities with another person, (iv) providing for the payment or receipt by the Company or any Company Subsidiary of milestone payments or royalties, (v) including or involving a loan to a director or officer, or (vi) that individually requires or that the Company reasonably expects will require aggregate expenditures by the Company and/or any Company Subsidiary in any twelve (12) month period of more than $100,000.

(e) To the knowledge of the Company (as limited by the disclosure set forth on Section 3.11(e) of the Company Disclosure Schedule), no officer or director of the Company has (whether directly or indirectly through another entity in which such person has a material interest, other than as the holder of less than two percent (2%) of a class of securities of a publicly traded company) any material interest in any property or assets of the Company (except as a stockholder or employee), a Company Subsidiary, any competitor, customer, supplier or agent of the Company or a Company Subsidiary or any person that is currently a party to any material contract or agreement with the Company or any Company Subsidiary.

(f) Neither the Company nor any Company Subsidiary is party to any interest rate, equity or other swap or derivative instrument.

3.12. Property .

(a) To the Company’s knowledge, and except as subject to the licenses identified in Section 3.12(a) of the Company Disclosure Schedule, the Company and the

Company Subsidiaries own, are licensed to use, or otherwise have the right to use all patents, trademarks, service marks, trade names, trade secrets, copyrights and all other intellectual property (including, without limitation, biological materials), all registrations of any of the foregoing, or applications therefor that are material to their businesses as presently conducted or as contemplated to be conducted (collectively, the “ Proprietary Rights ”), in each case free and clear of all liens, encumbrances, security agreements and restrictions (other than restrictions set forth in any licenses pursuant to which any such Proprietary Rights are granted to the Company or the Company Subsidiaries and other than restrictions set forth in any licenses pursuant to which any such Proprietary Rights are granted by the Company or the Company Subsidiaries). To the knowledge of the Company, the issued patents, registered trademarks and registered copyrights referred to above are subsisting and in full force and effect. With respect to patents, registered trademarks and registered copyrights owned by the Company, the Company has made payment when due of all maintenance fees and annuities and the filing of all necessary renewals, statements and certifications. Assignment documents have been executed to transfer to the Company or a Company Subsidiary title to any registered or pending Company-owned Proprietary Rights previously owned by a third party, and the named inventors of each of the Company’s owned patent applications have assigned to the Company such patent applications. To the Company’s knowledge, assignment documents have been filed with relevant Governmental Entities as may be necessary or appropriate to record the transfer to the Company or a Company Subsidiary title to any registered or pending Company-owned Proprietary Rights. On the expiration date of the Offer, the Company shall provide Parent with a schedule of any Taxes, maintenance fees or actions falling due within 90 days of such expiration with respect to such patents, trademarks and copyrights. Except as identified in Section 3.12(a) of the Company Disclosure Schedule, to the Company’s knowledge, the Company is not aware of any reasonable basis for any claim by any third party that the conduct of the businesses of the Company or the Company Subsidiaries infringe upon the proprietary rights of others, nor, to the Company’s knowledge, has the Company or any Company Subsidiary received any written charge, complaint, claim, demand, or notice alleging any such infringement, misappropriation or dilution (including any claim that the Company, a Company Subsidiary or any of their affiliates must license or refrain from using any intellectual property rights). To the Company’s knowledge, no third party has infringed upon any of the Proprietary Rights, or asserted any competing claim of right to use or own any of, the Proprietary Rights owned by the Company. Section 3.12(a) of the Company Disclosure Schedule identifies (i) all issued patents and registered trademarks that have been issued to the Company or a Company Subsidiary, (ii) each pending application therefor submitted by the Company or a Company Subsidiary, (iii) all issued patents, registered trademarks and pending applications therefor owned by a third party who has granted the Company or a Company Subsidiary exclusive rights thereto, (iv) all agreements to which the Company or a Company Subsidiary is a party and in which intellectual property rights of the Company or a Company Subsidiary are licensed by the Company or Company Subsidiary to a third party and (v) patent litigation proceedings involving the Company or a Company Subsidiary. To the knowledge of the Company, none of the employment activities conducted by the employees of the Company or any Company Subsidiary on behalf of such entity violates any agreement or arrangement which any such employees have with former employers. To the knowledge of the Company, all employees and consultants who contributed to the discovery or development of any of the subject matter of the Company’s owned patent applications did so either (x) within the scope of their employment such that, in accordance with applicable Law, all

rights to such developed subject matter became the exclusive property of the Company or the Company Subsidiary or (y) pursuant to written agreements assigning all rights to such developed subject matter to the Company or a Company Subsidiary. To the knowledge of the Company, each employee, contractor or consultant of the Company who has proprietary knowledge of or information relating to the manufacturing processes, or the formulation of the products, of the Company or a Company Subsidiary has executed and delivered to the Company an agreement or agreements by which such person agreed to restrict such person’s use and disclosure of confidential information of the Company. Except as identified in Section 3.12(a) of the Company Disclosure Scheduled, or as would not reasonably be expected to have a Company Material Adverse Effect, there are no settlements, forbearances to sue, consents, judgments, or orders or similar obligations to which the Company or any Company Subsidiary is party that: (i) restrict the conduct of the business of the Company or any of its employees; or (ii) grant to third parties any material rights under Proprietary Rights. To the knowledge of the Company and except as would not reasonably be expected to have a Company Material Adverse Effect, no material trade secret of the Company has been disclosed to any third party in violation of confidentiality obligations to the Company and, to the knowledge of the Company, no party to a nondisclosure agreement with the Company is in material breach or default thereof. No current or former director, officer, consultant or employee of the Company will, after giving effect to the Offer and the Merger, own any of the Proprietary Rights. To the knowledge of the Company and except as would not reasonably be expected to have a Company Material Adverse Effect, the execution of, the delivery of, the consummation of the Offer and Merger contemplated by, and the performance of the Company’s obligations under, this Agreement will not result in any loss or impairment of any Proprietary Rights. To the knowledge of the Company, neither government funding nor government, academic or non-profit research facilities were used in the development of any of the patent applications owned by the Company.

(b) With respect to property other than Proprietary Rights, the Company and each Company Subsidiary has all assets, properties, rights and contracts necessary to permit the Company and the Company Subsidiaries to conduct their business as it is currently being conducted, except where the failure to have such assets, properties, rights and contracts would not reasonably be expected to have a Company Material Adverse Effect. The Company and each Company Subsidiary has good, valid and marketable title to all of its material properties and material interests in properties and assets, real and personal, reflected in the Company Balance Sheet (except properties, interests in properties and assets sold or otherwise disposed of since the date of the Company Balance Sheet in the ordinary course of business consistent with past practice), or with respect to leased properties and assets, valid leasehold interests in such properties and assets, in each case, free and clear of all imperfections of title, restrictions, encroachments, liens and easements, except (i) liens for current Taxes not yet due and payable, that are payable without penalty or that are being contested in good faith by appropriate proceedings, (ii) such imperfections of title, restrictions, encroachments, liens and easements as do not and would not reasonably be expected to materially detract from or interfere with the use or value of the properties subject thereto or affected thereby, or otherwise materially impair the business operations of the Company or the Company Subsidiaries and (iii) liens securing debt which are reflected on the Company Balance Sheet. To the Knowledge of the Company, there are no written or oral subleases, licenses, occupancy agreements or other contractual obligations that grant the right of use or occupancy of any real property leased by the Company or any Company Subsidiary (collectively, the “ Real Property ”), and there is no person in possession of

the Real Property other than the Company and the Company Subsidiaries. There is no pending, or, to the knowledge of the Company, threatened eminent domain, condemnation or similar proceeding affecting any Real Property leased by the Company or a Company Subsidiary. Section 3.12(b) of the Company Disclosure Schedule lists all Real Property leased by the Company or any Company Subsidiary. Neither the Company nor any Company Subsidiary owns any Real Property.

3.13. Insurance . All policies or binders of material fire, liability, product liability, workers’ compensation, vehicular, directors’ and officers’ and other material insurance held by or on behalf of the Company and the Company Subsidiaries are in full force and effect in all material respects, are reasonably adequate for the businesses engaged in by the Company and the Company Subsidiaries as compared to companies of comparable sizes in comparable stages of development and, to the knowledge of the Company, are valid and enforceable in accordance with their terms. Neither the Company nor any Company Subsidiary is in default in any material respect with respect to any provision contained in such policy or binder nor has any of the Company or a Company Subsidiary failed to give any notice or present any material claim under any such policy or binder in due and timely fashion. All premiums for each policy or binder have been paid for the current period, and there are no outstanding premium finance payments due for such period. There are no material outstanding unpaid claims under any such policy or binder. Neither the Company nor any Company Subsidiary has received notice of cancellation or non-renewal of any such policy or binder. To the actual knowledge of the Company (without any duty of inquiry), all applications for the Company’s currently effective directors’ and officers’ insurance were true, correct and complete in all material respects when submitted to the carrier. No coverage limits of material insurance policies covering the Company or a Company Subsidiary have been exhausted. To the Company’s knowledge, none of the insurers of the Company or any Company Subsidiary have been declared insolvent or placed in receivership, conservatorship or liquidation.

3.14. [ Intentionally Omitted .]

3.15. Tax Matters .

(a) For purposes of this Agreement, the term “ Tax ” (and, with correlative meaning, “ Taxes ” and “ Taxable ”) means all United States federal, state and local, and all non-U.S., income, profits, franchise, gross receipts, payroll, transfer, sales, employment, social security, unemployment insurance, workers’ compensation, use, property, excise, value added, ad valorem, estimated, stamp, alternative or add-on minimum, recapture, capital, withholding and any other taxes, charges, duties, impositions or assessments, and any other taxes, fees, charges, levies, excises, duties or assessments of any kind whatsoever, together with all interest, penalties and additions imposed on or with respect to such amounts. “ Tax Return ” means any return, declaration, report, claim for refund, tax shelter disclosure statements or information return or statement filed or required to be filed with any taxing authority in connection with the determination, assessment, collection or imposition of any Taxes, including any attachments thereto and any amendments thereof.

(b) All federal income Tax Returns and other material Tax Returns required to be filed by or with respect to the Company and the Company Subsidiaries have been timely and

properly filed. All such Tax Returns are true, correct and complete in all material respects, and all material Taxes due and payable by the Company or the Company Subsidiaries, whether or not shown on any Tax Return, have been paid except for those Taxes that are being contested in good faith by appropriate proceedings and for which a specific reserve has been established on the Company Balance Sheet in accordance with generally accepted accounting principles. To the Company’s knowledge, no claim has ever been made by any taxing authority in any jurisdiction where the Company or the Company Subsidiaries do not file Tax Returns that the Company or the Company Subsidiaries are or may be subject to taxation by that jurisdiction.

(c) To the Company’s knowledge, there are no liens or other encumbrances with respect to Taxes upon any of the assets or properties of the Company or the Company Subsidiaries, other than with respect to Taxes not yet due and payable or Taxes that are being contested in good faith through appropriate proceedings and for which a specific reserve has been established on the Company Balance Sheet in accordance with generally accepted accounting principles.

(d) Except as set for on Schedule 3.15(d) of the Company Disclosure Schedule, no audit is currently pending or threatened with respect to any Tax Return of the Company or the Company Subsidiaries, nor have any material deficiencies for any outstanding Taxes been proposed, asserted, threatened or assessed against the Company or the Company Subsidiaries.

(e) Neither the Company nor the Company Subsidiaries has extended or waived the application of any statute of limitations of any jurisdiction regarding the assessment or collection of any Tax of the Company or the Company Subsidiaries.

(f) With respect to any period for which Tax Returns have not yet been filed, or for which Taxes are not yet due or owing, the Company has, in accordance with generally accepted accounting principles, made due and sufficient accruals for such Taxes (excluding any “deferred taxes” or similar items that reflect timing differences between tax and financial accounting principles) in the Company’s books and records.

(g) The Company and the Company Subsidiaries have withheld all material amounts of Tax required by Law or contract to be withheld from the wages, salaries or other payments to (i) employees, independent contractors, creditors, stockholders of or consultants to the Company and (ii) any other third party. Such withheld amounts were or will be duly and timely paid to the appropriate taxing authority to the extent required by applicable Law. The Company and the Company Subsidiaries have complied in all material respects with all record-keeping and reporting requirements in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.

(h) The Company and the Company Subsidiaries are not a party to or bound by, nor do they have any obligation under, any Tax sharing agreement or similar contract or arrangement. Neither the Company nor any Company Subsidiary has any material liability for the Taxes of any other person (other than Taxes of any member of a consolidated group of which the Company is the common parent) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract, or otherwise.

(i) Except as set for on Schedule 3.15(i) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary has made any payment, or has been or is a party to any agreement, contract, arrangement or plan, that has resulted in or is reasonably likely to result in, separately or in the aggregate, the payment of any “excess parachute payment” within the meaning of Section 280G of the Code or in the imposition of an excise Tax under Section 4999 of the Code (or any corresponding provisions of state, local or non-U.S. Tax Law). Except as set for on Schedule 3.15(i) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary has been or is a party to, nor is otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of the excise Tax imposed by Section 4999 of the Code (or any corresponding provisions of state, local or non-U.S. Tax Law).

(j) Neither the Company nor any Company Subsidiary has made any payment, or has been or is a party to any agreement, contract, arrangement or plan, that has resulted or is reasonably likely to result, separately or in the aggregate, in the payment of any compensation that will not be fully deductible as the result of Section 162(m) of the Code.

(k) Since December 31, 2005, neither the Company nor any Company Subsidiary has distributed stock of another corporation, or has had its stock distributed by another corporation, in a transaction that was governed, or purported or intended to be governed, in whole or in part, by Sections 355 or 361 of the Code.

(l) Since December 31, 2005, neither the Company nor any Company Subsidiary has (i) changed any financial or Tax accounting methods, policies or practices of the Company or any of the Company Subsidiaries, except as required by a change in generally accepted accounting principles or SEC rules, regulations or guidelines or applicable Law, (ii) made, revoked or amended any material Tax election of the Company or any of the Company Subsidiaries, (iii) filed any amended Tax Return or claim for refund of the Company or any of the Company Subsidiaries, (iv)

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