AGREEMENT AND PLAN OF MERGER BY AND BETWEEN EVOTEC AG AND RENOVIS, INC.

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND BETWEEN

EVOTEC AG

AND

RENOVIS, INC.

Dated September 18, 2007

TABLE OF CONTENTS

EXHIBITS

SCHEDULES

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), made and entered into September 18, 2007 by and among EVOTEC AG, an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany (“ Parent ”), and RENOVIS, INC., a Delaware corporation (the “ Company ”). Parent and the Company are sometimes referred to herein each individually as a “ Party ” and, collectively, as the “ Parties .” Certain capitalized terms used herein shall have the respective meanings ascribed thereto in Section 8.13.

RECITALS

WHEREAS, the Supervisory Board and Management Board of Parent and the Board of Directors of the Company have each declared it to be advisable and in the best interests of their respective entities and their respective equity holders that Parent acquire the Company in order to advance each of their long-term business interests; and

WHEREAS, the Supervisory Board and Management Board of Parent and the Board of Directors of the Company have each approved this Agreement and the merger of the Merger Sub with and into the Company (the “ Merger ”), in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”) and the terms and conditions set forth herein; and

WHEREAS, for United States federal income tax purposes, it is intended that (a) the exchange of Company Common Stock for Parent ADSs pursuant to the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the rules and regulations promulgated thereunder, (b) the exchange of Company Common Stock for Parent ADSs shall result in no gain recognition to the Company’s stockholders by reason of Section 367(a) of the Code and the rules and regulations promulgated thereunder, (c) this Agreement constitutes a plan of reorganization, and (d) Parent and the Company will each be a party to such reorganization within the meaning of Section 368(b) of the Code; and

WHEREAS, as a condition to the willingness of, and an inducement to, Parent to enter into this Agreement, contemporaneously with the execution and delivery of this Agreement certain holders of shares of the Company’s common stock are entering into voting agreements in the form attached hereto as Exhibit A (the “ Voting Agreements ”).

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows.

1. THE MERGER

1.1 Formation of Merger Sub . As promptly as practicable following the date hereof, Parent shall cause to be incorporated pursuant to the DGCL a corporation which shall be a constituent company in the Merger (“ Merger Sub ”). Parent shall own 100 percent of the outstanding capital stock of Merger Sub.

1.2 Appointment of Trust Company . As promptly as practicable following the date hereof, Parent shall appoint a bank or trust company or other independent financial institution which shall be reasonably acceptable to the Company (the “ Trust Company ”) to act as (i) contribution agent in connection with the formation of Merger Sub and the Share Exchange (in such function, the “ Contribution Agent ”), pursuant to a contribution agreement between Parent and the Contribution Agent which shall be reasonably acceptable to the Company (the “ Contribution Agreement ”), (ii) depositary under the Deposit Agreement in connection with the issuance of Parent ADSs evidenced by Parent ADRs (in such function, the “ Depositary ”), and (iii) exchange agent in connection with the Share Exchange (in such function, the “ Exchange Agent ”). Parent shall enter into an exchange agent agreement with the Exchange Agent in form and substance reasonably satisfactory to the Company, which agreement shall set forth the duties, responsibilities and obligations of the Exchange Agent consistent with the terms of this Agreement. Parent may appoint one or more substitute persons reasonably acceptable to the Company to perform any of the functions of the Trust Company described herein. Solely to

accommodate the transactions described in this Section 1 and subject to the terms and conditions of the Contribution Agreement, one day prior to the Effective Time Parent shall cause the Contribution Agent to be registered, as Parent’s fiduciary (for the period prior to the Effective Time only), as the record holder of all of the issued and outstanding shares of common stock, $0.01 par value share, of Merger Sub (the “ Sub Common Stock ”); provided , however , that it is understood and agreed that the Contribution Agent shall act as a fiduciary of the former holders of Company Common Stock after the Effective Time. In the Contribution Agreement ( inter alia ) the Contribution Agent shall take on the obligation towards the holders of Company Common Stock to execute a subscription certificate ( Zeichnungsschein ) following the Effective Time pursuant to Section 1.14(a).

1.3 The Merger . In accordance with the DGCL and the terms and conditions of this Agreement, Merger Sub shall be merged with and into the Company. From and after the Effective Time, the separate corporate existence of Merger Sub shall cease and the Company, as the surviving entity in the Merger, shall continue its existence under the Laws of the State of Delaware. The Company as the surviving corporation after the Merger is hereinafter sometimes referred to as the “ Surviving Corporation .”

1.4 Closing . Unless this Agreement shall have been terminated pursuant to the provisions of Section 7, and subject to the satisfaction or waiver, as the case may be, of the conditions set forth in Section 6, the closing of the Merger (the “ Closing ”) shall take place at a time and on a date to be mutually agreed upon by the Parties (the “ Closing Date ”), which date shall be no later than the third Business Day after all the conditions set forth in Section 6 (excluding conditions that, by their nature, cannot be satisfied until the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived, unless another time and/or date is agreed to in writing by Parent and the Company. The Closing shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111, unless another place is agreed to in writing by the Parties. For purposes of this Agreement, “ Business Day ” shall mean any day other than Saturday, Sunday or a legal holiday on which banks are permitted or required to be closed in New York, New York.

1.5 Filing of Certificate of Merger . Subject to the provisions of this Agreement, at the Closing, the Parties shall cause the Merger to become effective by causing the Surviving Corporation to execute and file in accordance with the DGCL a certificate of merger with the Secretary of State of the State of Delaware (the “ Certificate of Merger ”). The Merger shall become effective upon such filing, or at such later date and time as is agreed to by Parent and the Company and set forth in the Certificate of Merger (the “ Effective Time ”).

1.6 Effect of the Merger . Upon the Closing, the Merger shall have the effects set forth in this Agreement and in Section 259 of the DGCL.

1.7 Certificate of Incorporation and Bylaws of the Surviving Corporation . At the Effective Time, (a) the Certificate of Incorporation of the Merger Sub immediately prior to the Closing shall become the Certificate of Incorporation of the Surviving Corporation, and, until amended as provided therein and under the DGCL, it shall be the Certificate of Incorporation of the Surviving Corporation, and (b) the Bylaws of the Merger Sub immediately prior to the Closing shall become the Bylaws of the Surviving Corporation until amended as provided therein and under the DGCL and the Certificate of Incorporation of the Surviving Corporation.

1.8 Directors and Officers . (a) Subject to the requirements of Law, the persons listed on Schedule 1.8(a) shall be the initial directors and officers of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and the Bylaws of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s Certificate of Incorporation and Bylaws.

(b) Subject to the requirements of Law, in particular within the limits of German law, the parties shall use commercially reasonable efforts to cause those persons set forth in Schedule 1.8(b) attached hereto to be appointed and elected to the Supervisory Board of Parent as soon as practicable after the Effective Time. Such persons shall be entitled to compensation from Parent for their service on the Supervisory Board of

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Parent in such amounts and at such times as are consistent with Parent’s compensation policy generally applicable to other non-employee members of the Supervisory Board of Parent, the terms of which have been provided to the Company.

1.9 Effect on Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the Parties or the holders of the following securities:

(a) Each share of the Company’s common stock, par value $0.001 per share (“ Company Common Stock ”), issued and outstanding immediately prior to the Effective Time, excluding Excluded Shares, but including the shares held in the Company Trust pursuant to Section 1.11 hereof, shall be converted into the right to receive 0.5271 of an American Depositary Share of Parent (“ Parent ADS ”) (the “ Exchange Ratio ”), with each Parent ADS representing two (2) ordinary no-par value bearer shares of Parent (“ Parent Ordinary Share ”), pursuant to the terms of the deposit agreement between Parent and the Depositary (the “ Deposit Agreement ”). The Parent ADSs issued hereunder, together with any cash to be paid in lieu of fractional Parent ADSs pursuant to Section 1.13, shall be referred to herein as the “ Merger Consideration .”

(b) At the Effective Time, all outstanding shares of Company Common Stock shall automatically be cancelled and shall cease to exist, and each holder of a certificate which previously represented any such share of Company Common Stock or each holder of shares of Company Common Stock in uncertificated form (each, a “ Company Certificate ” and, collectively, the “ Company Certificates ”) shall cease to have any rights with respect thereto other than the right to receive Merger Consideration.

(c) At the Effective Time, each issued and outstanding share of Sub Common Stock shall be converted into and become one fully paid and nonassessable share of common stock, $0.01 par value per share, of the Surviving Corporation (the “ Surviving Corporation Common Stock ”).

1.10 Cancellation of Shares . At the Effective Time, each share of Company Common Stock owned by the Company as treasury stock immediately prior to the Effective Time (collectively, “ Excluded Shares ”), shall be canceled and extinguished without any conversion thereof or payment therefor.

1.11 Company Equity Awards .

(a) Prior to the Effective Time, the Company shall establish a trust (which shall not be affiliated with either Parent or the Company), the purpose of which shall be to hold shares of Company Common Stock (prior to the Merger and Parent ADS thereafter) issuable to holders of Company Equity Awards which are not Out-of-the-Money Options outstanding immediately prior to the Effective Time, and if reasonably requested by Parent, holders of warrants to purchase shares of Company Common Stock outstanding immediately prior to the Effective Time (the “ Company Trust ”). Prior to the Effective Time, the Company shall issue and deliver to the Company Trust such number of shares of Company Common Stock as shall be necessary to satisfy the obligations under all unexercised or unvested Company Equity Awards which are not Out-of-the-Money Options as of immediately prior to the Effective Time, and if reasonably requested by Parent, all warrants to purchase shares of Company Common Stock outstanding immediately prior to the Effective Time.

(b) At the Effective Time, each Company Equity Award which is not an Out-of-the-Money Option shall cease to represent a right to acquire shares of Company Common Stock and shall be converted, at the Effective Time, into an award to acquire from the Company Trust, on the same terms and conditions as were applicable under the Company Equity Award (but taking into account any changes thereto, by reason of this Agreement or the Transactions as may be provided for in the Company Equity Plans, in any award or other agreement or in such award), that number of Parent ADSs determined by multiplying the number of shares of Company Common Stock subject to such Company Equity Award by the Exchange Ratio, with the result rounded down to the nearest whole Parent ADS, and, with respect to options, at a price per share equal to the per share exercise price specified in such Company Equity Award or Company Equity Plan, as applicable, divided by the Exchange Ratio, with the result rounded up to the nearest whole cent; provided , however , that in the case of any Company Equity Award which is not an Out-of-the-Money Option and to

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which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, the option price, the number of shares subject to such Company Equity Award and the terms and conditions related to the exercise of such Company Equity Award shall be determined in a manner consistent with the requirements of Section 424(a) of the Code; provided , further , that in the case of any Company Equity Award to which Section 421 of the Code applies by reason of its qualification under Section 423 of the Code, the option price, the number of shares subject to such Company Equity Award and the terms and conditions related to the exercise of such Company Equity Award shall be determined in a manner consistent with the requirements of Section 424(a) of the Code and the adjustment to the exercise price shall only apply to the determination of the exercise price of the Company Equity Award at the beginning of such option’s offering period.

(c) Prior to the Effective Time, the Company shall (i) cause the plan administrator of each of the Company Equity Plans to determine that the adjustments pursuant to this Section 1.11 are sufficient to not cause any accelerated vesting in connection with the Merger solely as a result of such adjustments, and (ii) deliver to the holders of Company Equity Awards which are not Out-of-the-Money Options appropriate notices setting forth such holders’ rights (including that the Company Trust shall satisfy the obligations under such Company Equity Awards) and the agreements evidencing the grants of such Company Equity Awards shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 1.11).

(d) No later than 2 business days following the Effective Time, Parent shall file a registration statement on Form S-8 (or any successor or other appropriate forms), with respect to the Parent ADSs subject to the Company Equity Awards which are not Out-of-the-Money Options and shall use reasonable efforts to maintain the effectiveness of such registration statement or registration statements for so long as such Company Equity Awards remain outstanding.

(e) Options to purchase Company Common Stock that are outstanding under the Company’s Employee Stock Purchase Plan (the “ Company ESPP ”) shall not be assumed by Parent. In accordance with Section 19(c) of the Company ESPP, any offering period that would otherwise be in progress as of the Effective Time shall end on such date preceding the Effective Time as determined by the Company and the options then outstanding under the Company ESPP shall be exercised pursuant to the terms of the Company ESPP; provided , that if the Effective Time occurs after December 1, 2007, the options then outstanding under the Company ESPP shall not be exercised, but, instead, the offering period shall terminate and the Company shall refund any payroll deferrals without interest and without the purchase of any Company Common Stock, in each case, effective as of immediately prior to the Effective Time or such earlier time as determined by the Company. The Company shall terminate the Company ESPP, effective as of the Effective Time.

(f) At the Effective Time, all outstanding Out-of-the-Money Options under the Company Equity Plans (the “ Cancelled Equity Awards ”) will be terminated or cancelled, as the case may be, in accordance with the terms of such plan and the agreements entered into thereunder. Prior to the Effective Time, the Company shall give any notice required by the Company Equity Plans, which notice shall have been provided to Parent for its review prior to delivery, to holders of Cancelled Equity Awards thereunder of (i) the acceleration in full of the vesting and exercisability of such Cancelled Equity Awards, effective as of a date determined by the Company on or prior to the date of the Effective Time and (ii) the termination or cancellation, as the case may be, upon the Closing of any unexercised Cancelled Equity Awards.

(g) For purposes of this Agreement, “ Out-of-the-Money Option ” means any option to purchase Company Common Stock that has an exercise price that exceeds $9.00 per share.

1.12 Adjustments to Merger Consideration . If, during the Interim Period, all the outstanding Parent Ordinary Shares or, if permitted by the terms of Section 4.1(f), Company Common Stock, shall have been changed, or offered the opportunity to change, into a different number of shares or a different class, by reason of the occurrence of any reclassification, recapitalization, split, combination or exchange of shares, the Exchange Ratio shall be appropriately adjusted, to the extent necessary to reflect such reclassification, recapitalization, split, combination or exchange of shares.

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1.13 No Fractional Shares . No Parent ADRs representing fractional Parent ADSs shall be issued upon the surrender of Company Certificates for exchange, and such fractional share interests will not entitle the owner thereof to vote or to any other rights of a holder of Parent ADSs. In lieu of any such fractional Parent ADSs, each holder of Company Common Stock who would otherwise be entitled to such fractional Parent ADSs shall be entitled to an amount in cash, without interest, rounded to the nearest cent, equal to the amount determined by multiplying (A) such fraction of a Parent ADS by (B) the Exchange Ratio by (C) the closing price of one share of Company Common Stock on the trading day immediately preceding the Effective Time.

1.14 Exchange of Certificates . The procedures for exchanging Company Certificates representing outstanding shares of Company Common Stock for the Merger Consideration pursuant to the Merger are set forth below.

(a) Share Capital Increase and Share Exchange . As soon as possible following the Effective Time and in accordance with Sections 202 et seq. (including Sections 185 and 187 et seq. ) of the German Stock Corporation Law ( Aktiengesetz , the “ GSCL ”) and any additional requirements pursuant to Section 5.14, Parent shall: (i) effect the increase of its stated share capital by (A) passing a resolution of the Parent’s Management Board with the approval of the Parent’s Supervisory Board, both in accordance with section 5 of Parent’s Articles of Association and conditional only upon the Merger becoming effective, to use the authorized share capital ( genehmigtes Kapital ) of Parent (the “ Authorized Capital ”) under exclusion of any preemptive rights ( Bezugsrechte ) in the meaning of Sec. 186 par. 3 and 4, Sec. 203 par. 2 GSCL to issue new Parent Ordinary Shares underlying the Merger Consideration to the Contribution Agent for the benefit of the former holders of shares of the Company Common Stock against the prior contribution by the Contribution Agent to Parent of all of the issued and outstanding shares of Surviving Corporation Common Stock by contribution-in-kind, (B) having a German accounting firm, appointed by the commercial register of Parent (the “ Commercial Register ”), determine the adequacy of the contribution-in-kind as consideration for the new Parent Ordinary Shares, (C) allowing the Contribution Agent to execute a subscription certificate ( Zeichnungsschein ) with the contents and in the form stipulated by the GSCL and the Contribution Agreement, (D) seeing to the effectuation of the contribution-in-kind through a transfer of all of the issued and outstanding shares of Surviving Corporation Common Stock to Parent by the Contribution Agent, (E) registering the implementation of such increase of Parent’s stated capital with the Commercial Register (such registration, the “ Share Capital Increase ”), and (F) issuing the new Parent Ordinary Shares to the Contribution Agent for the benefit of the former holders of shares of the Company Common Stock (the “ Share Issuance ”) (whereby it is understood that steps (A) to (F) are to be effected at the respective times set forth in the following sentence); (ii) file with and have authorized by the German securities regulator ( Bundesanstalt fuer Finanzdienstleistungsaufsicht , the “ BaFin ”) a listing prospectus according to German Law, if required thereunder, and effect the registration and listing of the new Parent Ordinary Shares at the Frankfurt Stock Exchange; and (iii) cause (A) the Contribution Agent to deposit with the Depositary, for the benefit of the holders of shares of Company Common Stock, the Parent Ordinary Shares underlying the Merger Consideration, (B) the Depositary to issue to the Exchange Agent the Parent ADSs comprising the Merger Consideration and (C) the Exchange Agent to deliver in accordance with this Section 1 the Parent ADSs reflecting the Merger Consideration and evidenced by Parent ADRs to the former holders of shares of Company Common Stock (such Parent ADSs, together with any dividends or distributions with respect thereto, being referred to as the “ Exchange Fund ”) and any cash in lieu of Parent ADRs representing fractional Parent ADSs (the actions described in clauses (i), (ii) and (iii) above, collectively, the “ Share Exchange ”). Subject to both the Management Board’s and Supervisory Board’s fiduciary duties, Parent shall approve the resolutions described in clause (i)(A) above prior to Closing; the appointment of the German accounting firm by the Commercial Register (clause (i)(B) above) shall be requested by Parent as soon as practicable after the execution of this Agreement, and a draft of the determination of the adequacy of the contribution-in-kind shall be delivered by the accounting firm to the Parties at Closing; the subscription certificate (clause (i)(C) above) shall be executed by the Contribution Agent on the Business Day following the day of the Effective Time; the transfer of all issued and outstanding Surviving Corporation Common Stock by the Contribution Agent to Parent (clause (i)(D) above) shall be effected on the Business Day

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following the day of the Effective Time; and the Share Capital Increase and the Share Issuance shall be effected as soon as reasonably practicable thereafter. The Exchange Agent shall, pursuant to irrevocable instructions, deliver the Parent ADSs evidenced by American Depositary Receipts issued by the Depository on behalf of Parent (“ Parent ADRs ”) contemplated to be issued pursuant to this Section 1 out of the Exchange Fund in accordance with Section 1.14(b). The Exchange Fund shall not be used for any other purpose. At the Effective Time, Parent’s obligation to effect the Share Exchange shall become unconditional, subject only to the completion of the contribution-in-kind by the Contribution Agent described in this Section 1.14(a).

(b) Exchange Procedures . In furtherance of the Share Exchange, as promptly as reasonably practicable after the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of a Company Certificate, a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Company Certificates shall pass, only upon delivery of the Company Certificates to the Exchange Agent in customary form) and instructions for use in effecting the surrender of the Company Certificates in exchange for the Merger Consideration. Upon surrender of a Company Certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto and such other documents as may reasonably be required by the Exchange Agent, the holder of such Company Certificate shall be entitled to receive promptly in exchange therefor (A) a Parent ADR representing that number of whole Parent ADSs that such holder has the right to receive as part of the Merger Consideration and (B) a check for the cash that such holder is entitled to receive in lieu of fractional Parent ADSs, and the Company Certificate so surrendered shall forthwith be cancelled. Until such time as a Parent ADR representing Parent ADSs is issued to or at the direction of the holder of a surrendered Company Certificate, such Parent ADSs, and the Parent Ordinary Shares underlying such Parent ADSs, shall be deemed not outstanding and shall not be entitled to vote on any matter. In the event of a transfer of ownership of Company Common Stock that is not registered in the transfer records of the Company, a Parent ADR representing the appropriate number of shares of Parent ADSs may be issued to a person other than the person in whose name the Company Certificate so surrendered is registered, if such Company Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other taxes required by reason of the issuance of Parent ADSs to a person other than the registered holder of such Company Certificate or establish to the satisfaction of Parent that such tax has been paid or is not applicable. Until so surrendered, each outstanding Company Certificate shall be deemed from and after the Effective Time, for all corporate purposes, to evidence the right to receive upon such surrender the Merger Consideration.

(c) Distributions With Respect to Unexchanged Shares . No dividends or other distributions declared or made after the Closing with respect to Parent ADSs, or the Parent Ordinary Shares underlying such Parent ADSs, with a record date after the Closing will be paid to the holder of any unsurrendered shares of Company Common Stock with respect to the Parent ADSs issuable upon surrender thereof, and no cash in lieu of fractional Parent ADSs shall be paid to any such holder, until the holder of record of the Company Certificate representing such Company Common Stock shall surrender such Company Certificate or deliver an affidavit pursuant to Section 1.15. Subject to Law, following surrender of any such Company Certificate or delivery of an affidavit, there shall be paid to the holder of Parent ADRs representing whole Parent ADSs issued in exchange therefor, any cash in lieu of fractional Parent ADSs and any dividends or other distributions with a record date after the Closing theretofore paid with respect to such whole number of Parent ADSs.

(d) Termination of Exchange Fund . Any portion of the Exchange Fund that remains undistributed to the holders of Company Common Stock for one year after the Effective Time shall be delivered, subject to applicable Law, to Parent (or, at the election of Parent, the Exchange Agent or the Company Trust), upon demand, and any holder of Company Common Stock who has not theretofore complied with this Section 1 shall thereafter look only to Parent (or the Exchange Agent or the Company Trust, as applicable) for payment of its claim for Merger Consideration and any dividends or distributions with respect to Parent ADSs as contemplated by this Section 1.

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(e) Withholding of Tax . Parent, Surviving Corporation or the Exchange Agent will be entitled to deduct and withhold from the Merger Consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock such amounts as Parent, the Surviving Corporation or the Exchange Agent are required to deduct and withhold with respect to the making of such payment under the Code or any provision of federal, state, local or foreign tax Law. To the extent that amounts are so withheld by Parent, Surviving Corporation or the Exchange Agent, such withheld amounts (i) shall be remitted by Parent, the Surviving Corporation or the Exchange Agent, as the case may be, to the applicable Governmental Authority and (ii) shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock in respect of whom such deduction and withholding were made by Parent.

1.15 Lost Certificates . If any Company Certificate is lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Company Certificate to be lost, stolen or destroyed, and an indemnification against loss in customary form, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Company Certificate the Merger Consideration deliverable in respect thereof pursuant to this Agreement.

1.16 No Liability . To the extent permitted by applicable Law, none of the Exchange Agent, Parent, Merger Sub or the Surviving Corporation shall be liable to a holder of shares of Company Common Stock for any Parent ADSs or any amount of cash from the Exchange Fund properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law or retained by Parent.

1.17 Investment of Exchange Fund . The Exchange Agent shall invest any cash included in the Exchange Trust, on a daily basis, in obligations of the United States of America. Any interest and other income resulting from such investments shall be the property of and shall be paid to Parent.

1.18 Taking of Necessary Action; Further Action . If, at any time and from time to time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest in the Surviving Corporation full right, title, interest and possession of all properties, assets, rights, privileges, powers and franchises of the Company and Merger Sub, the officers and directors of the Surviving Corporation shall be and are fully authorized, in the name of and on behalf of any of the Company, Merger Sub or the Surviving Corporation, to take, or cause to be taken, all such lawful and necessary action as is not inconsistent with this Agreement.

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the disclosure schedule provided by the Company to Parent on the date hereof, or in a reference to a Company SEC Report filed and publicly available prior to the date of this Agreement referred to in such disclosure schedule, provided by the Company to Parent on the date hereof (the “ Company Disclosure Schedule ”), the Company represents and warrants to Parent that the statements contained in this Section 2 are true and correct. The Company Disclosure Schedule shall be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Section 2, and the disclosure in any paragraph shall qualify (A) the corresponding paragraph of this Section 2, and (B) the other paragraphs of this Section 2 to the extent that it is readily apparent from a reading of the Company Disclosure Schedule, without reference to anything other than the Company Disclosure Schedule, that it also qualifies or applies to such other paragraphs. As used in this Agreement, a “ Company Material Adverse Effect ” means any change, event or effect that is materially adverse to the business, assets (including intangible assets), financial condition, or results of operations of the Company, taken as a whole, or to the Company’s ability to consummate the transactions contemplated in this Agreement, provided that none of the following shall constitute a Company Material Adverse Effect:

(a) general economic conditions worldwide, in the United States, or in any nation or region in which the Company has a substantial presence or operations, provided that such conditions do not disproportionately affect the Company relative to other industry participants;

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(b) any acts of terrorism not directed at the Company or any outbreak of war, provided that such conditions do not disproportionately affect the Company relative to other industry participants;

(c) the public announcement by the Parties of this Agreement, the pendency of the Merger and the other transactions contemplated hereby, or any action taken which is required by this Agreement or specifically requested by Parent;

(d) factors generally affecting the industries or markets in which the Company operates, provided that such factors do not disproportionately affect the Company relative to other industry participants;

(e) changes in Law or GAAP or the interpretation thereof, provided that such changes do not disproportionately affect the Company relative to other industry participants; or

(f) a decline in the trading price or change in trading volume of the Company Common Stock; provided that this clause will not exclude any underlying change, event, circumstance, development or effect that may have resulted in, or contributed to, a decline in trading price or change in trading volume.

2.1 Organization and Qualification . The Company is a corporation duly incorporated, validly existing and in corporate good standing under the Laws of the State of Delaware. The Company is duly qualified or licensed as a foreign corporation to conduct business, and is in corporate good standing, under the Laws of each jurisdiction where the character of the properties owned, leased or operated by it, or the nature of its activities, makes such qualification or licensing necessary, except where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, would not be reasonably likely to have a Company Material Adverse Effect. Complete and correct copies of the Company’s Certificate of Incorporation and Bylaws, each as in effect on the date of this Agreement, are on file as exhibits to the Company SEC Reports and, as so filed, are in full force and effect. The Company is not in violation of any provisions of its Certificate of Incorporation or Bylaws in any material respect.

2.2 Subsidiaries . The Company does not have any Subsidiaries. For purposes of this Agreement, the term “Subsidiary” means, with respect to any Party, any corporation or other organization, whether incorporated or unincorporated, of which (i) such Party (or any other Subsidiary of such Party) is a general partner or (ii) at least a majority of the securities or other equity interests having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization, is directly or indirectly owned or controlled by such Party or by any one or more of its Subsidiaries, or by such Party and one or more of its Subsidiaries.

2.3 Capital Structure .

(a) The authorized capital stock of the Company as of the date of this Agreement consists of (i) 100,000,000 shares of Company Common Stock and (ii) 5,000,000 shares of Preferred Stock, $0.001 par value per share (“ Company Preferred Stock ”).

(b) As of the close of business on the last Business Day prior to the date hereof: (i) 29,730,401 shares of Company Common Stock were issued and outstanding, including 142 shares of Company Common Stock which are subject to a right of repurchase in favor of the Company; (ii) no shares of Company Preferred Stock were issued or outstanding; (iii) no shares of Company Common Stock were held in the treasury of the Company, (iv) warrants to purchase an aggregate of 33,358 shares of Company Common Stock were issued and outstanding and (v) 3,843,386 shares of Company Common Stock were duly reserved for future issuance pursuant to, either upon the exercise of or otherwise, equity awards made or granted on or prior to the date hereof (the “ Company Equity Awards ”), of which 822,889 shares are subject to Out-of-the-Money Options and 3,020,497 shares are subject to Company Equity Awards which are not Out-of-the-Money Options, pursuant to Amended and Restated 2000 Equity Incentive Plan, Amended and Restated 2003 Equity Incentive Plan, Amended and Restated 2003 Stock Plan, Amended and Restated 2005 Employment Commencement Incentive Plan, Amended and Restated 2006 Employment Commencement Incentive Plan, 2007 Employment Commencement Incentive Plan, and certain stock options granted to an executive hired

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in August 2004 (collectively the “ Company Stock Plans ” and with the Company ESPP, the “ Company Equity Plans ”), 938,415 shares of Company Common Stock were duly reserved for future grants or awards made after the date hereof pursuant to the Company Stock Plans, and 824,786 shares of Company Common Stock were duly reserved for issuance pursuant to the Employee Stock Purchase Plan. Except as described above, as of the close of business on the last Business Day prior to the date hereof, there were no shares of voting or non-voting capital stock, equity interests or other securities of the Company authorized, issued, reserved for issuance or otherwise outstanding.

(c) All outstanding shares of Company Common Stock are, and all shares which may be issued pursuant to the Company Equity Plans and the Company Equity Awards will be, when issued against payment therefor in accordance with the terms thereof, duly authorized, validly issued, fully paid and non-assessable. No outstanding shares of Company Common Stock were issued in violation of any preemptive, subscription or any kind of similar rights.

(d) There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into securities having the right to vote) on any matters on which stockholders of the Company may vote. Except as described in subsection (b) above, there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind (contingent or otherwise) to which the Company is a party or bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or obligating the Company to issue, grant, extend or enter into any agreement to issue, deliver or sell any such capital stock or securities. The Company is not subject to any obligation or requirement to provide material funds for, make any guarantee with respect to the obligations of or to make any material investment (in the form of a loan or capital contribution) in, any Person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)).

(e) Section 2.3(e) of the Company Disclosure Schedule contains a complete and correct list of the holders of all Company Equity Awards outstanding as of the date of this Agreement, including, for each Company Equity Award, as applicable: (i) the date of grant; (ii) the exercise price; (iii) the vesting schedule and expiration date and (iv) any terms regarding the acceleration of vesting.

(f) All grants of Company Equity Awards were made in material compliance with the terms of the applicable Company Equity Plan under which such Company Equity Awards were made and with applicable Laws. All Company Equity Awards have been reported in the Company’s financial statements in material compliance with GAAP and applicable Tax requirements and the published rules and regulations of the SEC with respect thereto, and there is no reasonable basis for any claim that the grant date of any Company Equity Award is inaccurate or the exercise price of any option to purchase Company Common Stock granted under a Company Equity Plan is less than the fair market value of Company Common Stock on the date of grant. All of the issued and outstanding shares of Company Common Stock were issued in compliance in all material respects with all applicable U.S. federal and state securities Laws.

(g) There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock (or options to acquire any such shares) or other security or equity interests of the Company, other than rights of forfeiture of Company Common Stock pursuant to Company Equity Awards made pursuant to the Company Equity Plans. Except for Company Equity Awards and except as described in Section 2.3(g) of the Company Disclosure Schedule, there are no stock-appreciation rights, security-based performance units, phantom stock or other security rights pursuant to which any Person is or may be entitled to receive any payment or other value based on the stock price performance of the Company or to cause the Company to file a registration statement under the Securities Act of 1933, as amended (the “ Securities Act ”), or which otherwise relate to the registration of any securities of the Company.

(h) Other than the Voting Agreements or as set forth on Section 2.3(h) of the Company Disclosure Schedule, there are no voting trusts, proxies or other agreements, commitments or understandings to which

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the Company or, to the knowledge of the Company, any of the stockholders of the Company is a party or by which any of them is bound with respect to the issuance, holding, acquisition, voting or disposition of any shares of capital stock or other security or equity interest of the Company.

(i) Other than the Company Rights Plan, there is no other stockholder rights plan (or similar plan commonly referred to as a “poison pill”) or agreement under which the Company is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities.

2.4 Authority; No Conflict; Required Filings .

(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and, subject to the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock in accordance with the DGCL and the Company’s Certificate of Incorporation (the “ Company Requisite Stockholder Approval ”), to perform its obligations hereunder and consummate the Merger and other transactions contemplated hereby. The execution and delivery of this Agreement by the Company and, subject to obtaining the Company Requisite Stockholder Approval, the performance by the Company of its obligations hereunder and the consummation by the Company of the Merger and other transactions contemplated hereby, have been duly authorized by all necessary corporate action on the part of the Company.

(b) This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to: (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting the enforcement of creditors’ rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law) (collectively, the “ Bankruptcy and Equitable Exceptions ”).

(c) The execution and delivery of this Agreement by the Company do not, and the performance by the Company of its obligations hereunder and the consummation by the Company of the Merger and other transactions contemplated hereby will not, conflict with or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit, or result in the creation of any liens, claims, security interests, pledges and similar encumbrances (collectively, “ Liens ”) in or upon any of the properties or other assets of the Company under any provision of: (i) the Certificate of Incorporation or Bylaws of the Company; (ii) subject to the governmental filings and other matters referred to in paragraph (d) below, any (A) permit, license, franchise or Law or (B) judgment, decree or order applicable to the Company or by which any of its properties or assets is bound or (iii) except as set forth in Section 2.4(c) of the Company Disclosure Schedule, any loan or credit agreement, note, bond, mortgage, indenture, contract, agreement, lease or other instrument or obligation to which the Company is a party or by which any of its properties is bound, other than in the case of the foregoing clauses (i), (ii) and (iii), any such conflicts, violations, defaults, rights, losses or Liens that, individually or in the aggregate, have not had and would not be reasonably likely to have a Company Material Adverse Effect.

(d) No consent, approval, order or authorization of, or registration, declaration or filing with, any government, governmental, statutory, regulatory or administrative authority, agency, body or commission or any court, tribunal or judicial body, whether federal, state, local or foreign (each, a “ Governmental Authority ”) is required by the Company in connection with the execution and delivery by the Company of this Agreement or the consummation by the Company of the Merger and other transactions contemplated hereby except for: (i) compliance with any applicable requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”); (ii) the filing with the European Commission of a merger notification in accordance with Council Regulation (EC) 139/2004, the E.C. Merger Regulation (the “ ECMR ”); (iii) the applicable requirements of the competent authority of any member state of the European Union to which any of the transactions contemplated by this Agreement is referred pursuant to Article 9 of the ECMR; (iv) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL and appropriate corresponding documents with the appropriate authorities of

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other states in which the Company is qualified as a foreign corporation to transact business; (v) any notices required under the U.S. Federal Food, Drug, and Cosmetic Act, as amended (the “ FDA Act ”); and (iv) such other consents, approvals, orders, authorizations, registrations, declarations and filings, the failure of which to be obtained or made, individually or in the aggregate, have not had and would not be reasonably likely to have a Company Material Adverse Effect.

2.5 Board Approval; Section 203; Required Vote; Company Rights Plan .

(a) The Board of Directors of the Company (the “ Company Board ”) has, at a meeting duly called and held, by a unanimous vote of all directors: (i) approved and declared advisable this Agreement; (ii) determined that the Merger is advisable, fair to and in the best interests of the Company and its stockholders; (iii) resolved to recommend to the stockholders of the Company (the “ Board Recommendation ”) the adoption of this Agreement and (iv) directed that this Agreement be submitted to the stockholders of the Company for their adoption.

(b) The Company Board has taken all actions so that the restrictions contained in Section 203 of the DGCL applicable to a “business combination” (as defined therein) will not apply to the execution, delivery or performance of this Agreement or the consummation of the Merger or other transactions contemplated by this Agreement.

(c) The Company Requisite Stockholder Approval is the only vote of the holders of any class or series of capital stock of the Company necessary to adopt this Agreement.

(d) The Company Board has taken all actions so that the Company Rights Plan has been amended to (i) render the Company Rights Plan inapplicable to the Merger and the other transactions contemplated by this Agreement, (ii) ensure that (x) none of Parent or its Subsidiaries is an Acquiring Person (as defined in the Company Rights Plan) pursuant to the Company Rights Plan by virtue of the execution of this Agreement or the consummation of the Merger or the other transactions contemplated hereby and (y) a Shares Acquisition Date (as such term is defined in the Company Rights Plan) does not occur by reason of the execution of this Agreement, the consummation of the Merger, or the consummation of the transactions contemplated hereby, and such amendment may not be further amended by Company without the prior consent of Parent in its sole discretion.

2.6 SEC Filings; Sarbanes-Oxley Act .

(a) Since January 1, 2005, the Company has filed all forms, reports and documents required to be filed by the Company with the SEC, including all exhibits required to be filed therewith (the “ Company SEC Reports ”). The Company SEC Reports: (i) at the time filed complied (or, if later filed, amended or superseded, then on the date of such later filing) as to form in all material respects with the applicable requirements of the Securities Act and/or the Exchange Act, as the case may be and (ii) did not at the time they were filed (or, if later filed, amended or superseded, then on the date of such later filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading.

(b) Each of the financial statements (including, in each case, any related notes thereto) contained in the Company SEC Reports (collectively, the “ Company Financial Statements ”), at the time filed (or, if later filed, amended or superseded, then on the date of such later filing), (i) complied as to form in all material respects with the applicable published rules and regulations of the SEC with respect thereto; (ii) was prepared in accordance with U.S. generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved, except as may otherwise be indicated in the notes thereto or, in the case of unaudited interim financial statements, as permitted by Form 10-Q promulgated by the SEC and (iii) fairly presented in all material respects the financial position of the Company as of the dates indicated and the results of operations and cash flows for the periods therein indicated, except, in the case of the unaudited interim financial statements, as permitted by Form 10-Q promulgated by the SEC.

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(c) The Company has established and maintains “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to provide reasonable assurance that information (both financial and non-financial) required to be disclosed by Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the principal executive officer and principal financial officer of Company required under the Exchange Act with respect to such reports. As of December 31, 2006, there were no “material weaknesses” in Company’s internal controls as contemplated under Section 404 of the Sarbanes-Oxley Act of 2002 (“ SOX ”). The Company has disclosed, based on the most recent evaluation of its internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) by its principal executive officer and principal financial officer, to the Company’s auditors and the audit committee of the Company Board, (a) any significant deficiencies in the design or operation of its internal control over financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and has identified for the Company’s auditors and audit committee of the Company Board any material weaknesses in its internal control over financial reporting and (b) 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. Since the date of Company’s most recent evaluation of internal control over financial reporting, the Company has not received any notification of any facts or circumstances that have arisen or occurred that would be required to be disclosed to Company’s auditors or Company’s audit committee regarding (x) a significant deficiency in the design or operation of its internal control over financial reporting, (y) a material weakness in its internal control over financial reporting or (z) fraud, whether or not material, that involves management or other employees who have a significant role in Company’s internal control over financial reporting. For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in SOX.

(d) The Company does not have any outstanding, nor has it arranged any outstanding, “extensions of credit” to directors or executive officers within the meaning of Section 402 of SOX. To the Company’s knowledge, there are no other violations of the Company’s code of conduct, adopted pursuant to NASDAQ Rule 4350(n), except for any such violations that, individually or in the aggregate, would not be reasonably likely to have a Company Material Adverse Effect. The Company has delivered to Parent complete and correct copies of any written complaints, reports or allegations, and a reasonably detailed summary of any verbal complaints, reports or allegations, that have been submitted or made by any party to the Audit Committee of the Company Board since January 1, 2005 pursuant to the procedures established in accordance with Section 10A(m)(4) of the Exchange Act. The Company is not a party to, nor does it have any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar arrangement, including without limitation any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K promulgated by the SEC), 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 any Company Financial Statement or Company SEC Report.

2.7 Absence of Undisclosed Liabilities . The Company does not have any material liabilities or obligations, whether fixed, contingent, accrued or otherwise, liquidated or unliquidated and whether due or to become due, in each case of a nature required by GAAP to be reflected on a balance sheet of the Company, other than: (i) liabilities reflected or reserved against on the balance sheet contained in the Company’s Form 10-Q (the “ Most Recent Balance Sheet ”) filed with the SEC on August 8, 2007; and (ii) liabilities or obligations incurred since June 30, 2007 (the “ Most Recent Balance Sheet Date ”) in the ordinary course of business consistent with past practice, none of which has had or would be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

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2.8 Absence of Certain Changes or Events . Since the Most Recent Balance Sheet Date, the Company has conducted its business only in the ordinary course of business consistent with past practice, and there has not been any action, event or occurrence which would be reasonably likely to have a Company Material Adverse Effect.

2.9 Agreements, Contracts and Commitments .

(a) The Company has made available to Parent a complete and correct copy of the following contracts and agreements to which the Company is a party as of the date of this Agreement: (i) any agreement, contract or commitment in connection with which or pursuant to which the Company will spend or receive (or is reasonably expected to spend or receive), in the aggregate, more than $200,000 during the current fiscal year or during the next fiscal year; (ii) any non-competition or other agreement that prohibits or otherwise restricts the Company from freely engaging in business anywhere in the world; (iii) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company; and (iv) any employment or consulting agreement with any executive officer or other employee of the Company or member of the Company Board earning an annual base salary in excess of $100,000, other than those that are terminable by the Company on no more than thirty (30) days’ notice without material liability or financial obligation to the Company (collectively, the “ Company Material Contracts ”).

(b) Each Company Material Contract is valid and binding on the Company and enforceable against the Company in accordance with its terms, subject to the Bankruptcy and Equitable Exceptions and except to the extent any Company Material Contract has expired in accordance with its terms. The Company is not in breach, nor has it received in writing any claim that it is in breach, of any of the terms or conditions of any Company Material Contract in such a manner as would permit any other party thereto to cancel or terminate the same or to collect material damages from the Company, except if such breach, cancellation or termination has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) (i) Each Company Material Contract that has not expired or otherwise been terminated in accordance with its terms is in full force and effect and (ii) to the knowledge of the Company, no other party to such contract is in default, except in the case of each of clauses (i) and (ii) if the failure to be in full force or effect or such other party’s default has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

2.10 Compliance with Laws; Regulatory Matters . Except as set forth in Section 2.10 of the Company Disclosure Schedule or except as, individually or in the aggregate, has not had and would not be reasonably likely to have a Company Material Adverse Effect:

(a) The Company is in compliance with all Laws that apply to the conduct of its business and the sale of its products, including Laws enforced by the United States Food and Drug Administration (“ FDA ”) and comparable foreign regulatory or Governmental Authorities.

(b) The Company is not debarred under the FDA Act or otherwise excluded from or restricted in any manner from participation in, any government program (“ Debarred ”), and to its knowledge, does not employ or use the services of any individual or entity that is or, during the time when such individual or entity was employed by or providing services to the Company, was Debarred.

(c) With respect to all third party manufacturers and suppliers of key raw materials used by the Company in the development, testing and manufacture of drug products (each a “ Company Third Party Manufacturer ”), to the Company’s knowledge, each such Company Third Party Manufacturer:

(i) has complied and is complying with all Laws, including the FDA Act and any applicable similar state or foreign Laws;

(ii) has all permits necessary to perform its obligations as a Third Party Manufacturer and all such permits are in full force and effect.

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(d) The clinical trials, animal studies and other preclinical tests conducted by the Company were, and if still pending, are, being conducted in accordance with experimental protocols and to the extent applicable, with requirements of the FDA and comparable Governmental Authorities including, but not limited to, the FDA Act and its applicable implementing regulations at 21 C.F.R. Parts 50, 54, 56, 58 and 312. The Company has not received any written notice from the FDA or any other Governmental Authority requiring the termination or suspension of clinical trial conducted by or on behalf of the Company.

(e) The Company is not subject to any pending or, to the knowledge of the Company, threatened investigation by the FDA.

(f) The Company is in compliance in all material respects with the applicable criteria for continued listing of the Company Common Stock on the NGM, including all applicable corporate governance rules and regulations.

2.11 Material Permits . Except as set forth in Section 2.11 of the Company Disclosure Schedule or except as, individually or in the aggregate, has not had and would not be reasonably likely to have a Company Material Adverse Effect, the Company holds all federal, state, local and foreign governmental licenses, permits, franchises and authorizations necessary under applicable Laws for the conduct of its business as presently conducted and the ownership and operation of its properties and other assets (such licenses, permits, franchises and authorizations, the “ Permits ”). Except as set forth in Section 2.11 of the Company Disclosure Schedule or except as, individually or in the aggregate, has not had and would not be reasonably likely to have a Company Material Adverse Effect, the Company has submitted to the FDA and all similar applicable foreign Governmental Authorities all material registrations, applications, licenses, requests for exemptions, permits and other regulatory authorizations necessary to conduct the business of the Company as currently conducted, and the Company is in compliance with all such Permits.

2.12 Litigation and Product Liability . Except as set forth in Section 2.12 of the Company Disclosure Schedule and other than any investigation by the FDA, which is covered by Section 2.10, there is no suit, action, arbitration, claim or other proceeding before any Governmental Authority pending or, to the knowledge of the Company, threatened against the Company. No product liability claims have been asserted in writing or, to the knowledge of the Company, threatened against the Company in respect of any product candidate tested, researched, developed, manufactured, marketed, distributed, or sold by, on behalf of, or in cooperation with the Company.

2.13 Restrictions on Business Activities . There is no judgment, injunction, order or decree binding upon the Company which has the effect of prohibiting or materially impairing (a) any current business practice of the Company or (b) any acquisition of any Person or property by the Company, except in the case of each of clause (a) and (b) where such judgment, injunction, order or decree has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

2.14 Employee Benefit Matter s. Section 2.14(a) of the Company Disclosure Schedule lists all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)) and all material bonus, stock or other security option, stock or other security purchase, stock or other security appreciation rights, incentive, deferred compensation, retirement or supplemental retirement, severance, golden parachute, vacation, cafeteria, dependent care, medical care, employee assistance program, education or tuition assistance programs, and all material insurance and other similar fringe or employee benefit plans, programs or arrangements for the benefit of, or relating to, any present or former employee or director of the Company or any ERISA Affiliate under which the Company or any ERISA Affiliate has any current liability (together, the “ Company Employee Plans ”). The Company has made available to Parent correct and complete copies of (where applicable) (i) all plan documents, summary plan descriptions, summaries of material modifications, amendments, and resolutions related to such plans; (ii) the most recent determination or opinion letters received from the Internal Revenue Service (“ IRS ”); (iii) the three most recent Form 5500 Annual Reports (with audited financial statements and schedules) and summary annual reports; (iv) applicable nondiscrimination

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testing for the three (3) most recent Company Employee Plan years; (v) the most recent audited financial statement and actuarial valuation, if applicable, and (vi) all material agreements, insurance contracts and other material agreements which implement each such Company Employee Plan. For purposes of this Agreement, “ ERISA Affiliate ” means any entity which is a member of a controlled group or which is under common control with the Company within the meaning of Section 414 of the Code.

(a) (i) There has been no “prohibited transaction,” as such term is defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended (“ Code ”), with respect to any Company Employee Plan that would reasonably be expected to result in a material liability to the Company or any ERISA Affiliate; (ii) there are no claims pending (other than routine claims for benefits) or, to the knowledge of the Company, threatened against any Company Employee Plan or against the assets of any Company Employee Plan that could result in material liability to the Company or an ERISA Affiliate, nor are there any current or, to the knowledge of the Company, threatened Liens on the assets of any Company Employee Plan; (iii) all Company Employee Plans conform to, and in their operation and administration are in all material respects in compliance with the terms thereof and requirements prescribed by any and all Laws (including ERISA and the Code), orders, or governmental rules and regulations currently in effect with respect thereto; (iv) the Company and ERISA Affiliates have performed all material obligations required to be performed by them under, are not in default under or violation of, and the Company has no knowledge of any default or violation by any other party with respect to, any of the Company Employee Plans; (v) each Company Employee Plan intended to qualify under Section 401(a) of the Code and each corresponding trust exempt under Section 501 of the Code has received or is the subject of a favorable determination or opinion letter from the IRS, and nothing has occurred which would reasonably be expected to cause the loss of such qualification or exemption; (vi) all contributions required to be made to any Company Employee Plan pursuant to Section 412 of the Code or otherwise, the terms of the Company Employee Plan or any collective bargaining agreement, have been made and a reasonable amount has been accrued for contributions to each Company Employee Plan for the current plan years to the extent required by GAAP; (vii) other than as set forth on Section 2.14(a)(vii) of the Company Disclosure Schedule, the transactions contemplated herein will not directly or indirectly result in an increase of benefits, acceleration of vesting or acceleration of timing for payment of any benefit to any participant in or beneficiary of any Company Employee Plan; (viii) each Company Employee Plan, if any, which is maintained outside of the United States has been operated in all material respects in conformance with the applicable statutes or governmental regulations and rulings relating to such plans in the jurisdictions in which such Company Employee Plan is present or operates and, to the extent relevant, the United States and (ix) neither the Company nor any ERISA Affiliate has ever made a complete or partial withdrawal from a Multiemployer Plan (as such term is defined in Section 3(37) of ERISA) resulting in “withdrawal liability” (as such term is defined in Section 4201 of ERISA), without regard to any subsequent waiver or reduction under Section 4207 or 4208 of ERISA.

(b) No Company Employee Plan is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA, and neither the Company nor any ERISA Affiliate has ever partially or fully withdrawn from any such plan. No Company Employee Plan is a Multiemployer Plan or “single-employer plan under multiple controlled groups” as described in Section 4063 of ERISA, and neither the Company nor any ERISA Affiliate has ever contributed to or had an obligation to contribute, or incurred any liability in respect of a contribution, to any Multiemployer Plan or multiple employer plan (within the meaning of Section 3(40) of ERISA or Section 413 of the Code).

(c) Each Company Employee Plan that is a “group health plan” (within the meaning of Section 5000(b)(1) of the Code) has been operated in material compliance with applicable Law, its terms, and with the group health plan continuation coverage requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA (“ COBRA Coverage ”), Section 4980D of the Code and Sections 701 through 707 of ERISA, Title XXII of the Public Health Service Act and the provisions of the Social Security Act, to the extent such requirements are applicable. No Company Employee Plan or written or oral agreement exists which obligates the Company or any ERISA Affiliate to provide health care coverage,

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medical, surgical, hospitalization, death or similar benefits (whether or not insured) to any employee, former employee or director of the Company or any ERISA Affiliate following such employee’s, former employee’s or director’s termination of employment with the Company or any ERISA Affiliate, including, but not limited to, retiree medical, health or life benefits, other than COBRA Coverage.

(d) Except as set forth on Section 2.14(d)(i) of the Company Disclosure Schedule, no Company Employee Plan, excluding any short-term disability, non-qualified deferred compensation or flexible spending account plan or program, is self-funded, self-insured or funded through the general assets of the Company or an ERISA Affiliate. Except as set forth on Section 2.14(d)(ii) of the Company Disclosure Schedule, no Company Employee Plan which is an employee welfare benefit plan under Section 3(1) of ERISA is funded by a trust or is subject to Section 419 or 419A of the Code.

(e) Except as set forth on Section 2.14(d) of the Company Disclosure Schedule, no payment in connection with the Merger will constitute an “excess parachute payment” within the meaning of Section 280G of the Code. No payment under any Company Employee Plan or other agreement with respect to any “Covered Employee” (as defined in Section 162(m)(3) of the Code) of the Company or an ERISA Affiliate will be nondeductible by operation of Section 162(m) of the Code.

(f) With respect to each Company Employee Plan, (A) other than restrictions under the Code and ERISA, there are no restrictions on the ability of the sponsor of each Company Employee Plan to amend or terminate any Company Employee Plan and has made no material written representations which would conflict with or contradict such reservation or right and (B) the Company has satisfied any and all bond coverage requirements of ERISA.

(g) Neither the Company nor any of its ERISA Affiliates is a party to any union or collective bargaining agreement.

(h) Other than as set forth on Section 2.14(h) of the Company Disclosure Schedule, no Company Employee Plan or other agreement provides for “deferred compensation” subject to Section 409A of the Code (“ Deferred Compensation Plan ”). No Company Employee Plan or other agreement providing for equity related based compensation or payments, including, without limitation, stock options, restricted stock, phantom stock or performance shares, provides for “deferred compensation” subject to Section 409A of the Code. Each Deferred Compensation Plan is in “good faith” compliance with Section 409A of the Code and the U.S. Treasury guidance related thereto.

2.15 Labor and Employment Matters .

(a) (i) There are no material labor grievances pending or, to the knowledge of the Company, threatened in writing between the Company, on the one hand, and any of its employees or former employees, on the other hand and (ii) the Company is not a party to any collective bargaining agreement, work council agreement, work force agreement or any other labor union contract applicable to persons employed by the Company, nor has the Company been notified of any activities or proceedings of any labor union to organize any such employees. The Company has not received written notice of any pending or threatened charge, other than any that are immaterial, of (i) an unfair labor practice as defined in the National Labor Relations Act, as amended; (ii) safety violations under the Occupational Safety and Health Act; (iii) wage or hour violations; (iv) discriminatory acts or practices in connection with employment matters or (v) claims by governmental agencies that the Company has failed to comply with any Law relating to employment or labor matters. The Company has not received written notice of any threatened or actual “whistleblower” claims by past or current employees or any other persons.

(b) The Company is currently in material compliance with all Laws relating to employment, including those related to wages, hours, collective bargaining and the payment and withholding of taxes and other sums as required by the appropriate Governmental Authority and has withheld and paid to the appropriate Governmental Authority all amounts required to be withheld from Company employees and is not liable for any arrears of wages, taxes, penalties or other sums for failing to comply with any of the foregoing.

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(c) Except as otherwise set forth in Section 2.15(c) of the Company Disclosure Schedule, (i) all written contracts of employment to which the Company is a party are, and to the knowledge of the Company all verbal or implied-in-fact contracts of employment binding upon the Company are, terminable by the Company on three months’ or less notice without penalty; (ii) no change of control or other payments to any employee will be triggered as a result of the Merger or this Agreement and (iii) there are no legally binding established practices, plans or policies of the Company, requiring the payment of any material amounts or the provision of any material benefits as a result of the termination of employment of any of its employees (whether voluntary or involuntary).

(d) During the two year period prior to Closing, the Company has not effectuated (i) a plant closing affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company, or (ii) a mass layoff (as defined in the Worker Adjustment and Retraining Notification Act of 1988 (“ WARN Act ”)) affecting any site of employment or facility of the Company, nor has the Company been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state or local law.

2.16 Properties and Assets .

(a) Other than properties and assets disposed of by the Company in the ordinary course of business since the Most Recent Balance Sheet Date, the Company has good and valid title to all of its properties and assets, real and personal, reflected on the Most Recent Balance Sheet or acquired since the Most Recent Balance Sheet Date, or, in the case of leased properties and assets, valid leasehold interests in such properties and assets, except where the failure to have such good and valid title to, or valid leasehold interests in, has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) Section 2.16(b) of the Company Disclosure Schedule sets forth a complete and correct list of each parcel of real property ever owned or leased by the Company as of the date of this Agreement and material to the conduct of the business of the Company, taken as a whole (the material leases pursuant to which the Company is a tenant of any such real property being hereinafter referred to as the “ Leases ”). As of the date of this Agreement, (i) the Leases are in full force and effect in accordance with their terms and (ii) the Company is not in default of any of its obligations under the Leases, except where such default has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) The facilities, property and equipment owned, leased or otherwise used by the Company are in a good state of maintenance and repair, free from material defects and in good operating condition (subject to normal wear and tear), and suitable for the purposes for which they are presently used, except in each case as has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

2.17 Insurance .

(a) Section 2.17(a) of the Company Disclosure Schedule sets forth a list, as of the date of this Agreement, of each insurance policy that is material to the Company (the “ Insurance Policies ”), and all material claims made under such Insurance Policies since January 1, 2005. All premiums due and payable under the Insurance Policies have been paid on a timely basis and the Company is in compliance in all material respects with all other material terms thereof. Complete and correct copies of the Insurance Policies have been made available to Parent.

(b) The Insurance Policies are in full force and effect and there are no material claims pending as of the date of this Agreement as to which coverage has been denied by the Company’s respective insurer. Since January 1, 2005, all claims thereunder have been filed in a due and timely fashion, except where the failure to so file has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

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2.18 Taxes .

(a) For purposes of this Agreement, a “ Tax ” means any and all federal, state, local and foreign taxes, and any assessments and other governmental charges, duties, impositions and liabilities in the nature of a tax, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts, including any liability for Taxes of a predecessor entity.

(b) The Company has timely filed all material federal, state, local and foreign returns, estimates, information statements and reports required to be filed by it (collectively, “ Returns ”) relating to any and all Taxes concerning or attributable to the Company or to its operations, and all such Returns are complete and correct in all material respects.

(c) The Company (i) has paid all material Taxes it is obligated to pay as reflected on the Returns or otherwise to the extent such payment was legally due (except for Taxes which are being contested in good faith and which have been provided for on the financial statements of the Company in accordance with GAAP) and (ii) has withheld all federal, state, local and foreign Taxes required to be withheld with respect to its employees or otherwise, except for any failure to withhold that would not reasonably be expected to have a Company Material Adverse Effect.

(d) There is no material Tax deficiency proposed in writing or assessed against the Company that is not accurately reflected as a liability on the Most Recent Balance Sheet, nor has the Company executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any material Tax which waiver or extension is currently in effect (except to the extent that such extension is attributable solely to the Company having received a routine extension to file the Tax Return for the subject year).

(e) The Company does not have any material liability for unpaid Taxes that has not been properly accrued for under GAAP and reserved for on the Most Recent Balance Sheet, whether asserted or unasserted, contingent or otherwise.

(f) The Company is not a party to or bound by any material Tax allocation or sharing agreement (other than customary gross up provisions on credit agreements, derivatives, leases and similar agreements entered into in the ordinary course). The Company does not have (A) any liability for the Taxes of any Person as a result of being a member of an affiliate group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or (B) any liability for the Taxes of any Person (other than the Company) under Treasury Regulation Section 1.1502-6 (or any similar provision of Law), as a transferee or successor, by contract, or otherwise, except with respect to sales, use or similar tax liabilities incurred in connection with leases, contracts and commercial agreements entered into in the ordinary course of business and which would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

(g) The Company has not taken any action, has not failed to take any action, and does not know of any fact or circumstance that would (i) prevent the qualification of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code or (ii) cause the stockholders of the Company, other than any such stockholder that would be a “five-percent transferee shareholder” of Parent (within the meaning of Treasury Regulation Section 1.367(a)-3(c)(5)(ii)) following the Merger and that does not enter into a five-year gain recognition agreement in the form provided in Treasury Regulation Section 1.367(a)-8(b), to recognize gain pursuant to Section 367(a) of the Code.

2.19 Environmental Matters . Except as set forth on Section 2.19 of the Company Disclosure Schedule:

(a) The Company is in compliance with applicable Environmental Laws, except for noncompliance which has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect. The Company holds, and is in compliance with, all Permits required under

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applicable Environmental Laws for the conduct of its business as now conducted, except where the failure to hold such a Permit or such noncompliance has not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) The Company has not received any written communication, whether from a Governmental Authority or other Person, that alleges that the Company is not in compliance with any Environmental Laws or any Permit required under any applicable Environmental Law, or that it has liability under any Environmental Law, or that it is responsible (or potentially responsible) for the remediation of any Materials of Environmental Concern at, on or beneath its facilities or at, on or beneath any land adjacent thereto or any other property.

(c) To the knowledge of the Company, there are no past or present facts, circumstances, conditions, activities or practices existing at the facilities currently or formerly owned or operated by the Company, including, without limitation, the release or threatened release of any Materials of Environmental Concern, that could reasonably be expected to give rise to any liability or result in a claim against the Company under any Environmental Law or that would interfere with or prevent compliance with any Permits, except for such past or present facts, circumstances, conditions, activities or practices which have not had and would not be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect.

(d) The Company is not a party to any federal, state, local or private litigation, proceedings, administrative action, or, to the knowledge of the Company, the subject of any investigation involving a demand for damages or other potential liability under any Environmental Laws, and the Company has not received nor, to the knowledge of the Company, is the Company subject to any order or decree of any Governmental Authority relating to a violation of or liability under Environmental Laws.

(e) To the knowledge of the Company, no underground storage tanks or surface impoundments exist on any property currently or formerly owned or leased by the Company.

(f) For purposes of this Agreement, the terms “ release ” and “ environment ” shall have the meaning set forth in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, “ Environmental Law ” shall mean any federal or state Law existing and in effect on the date hereof relating to pollution or protection of the environment, health and safety including without limitation any statute or regulation pertaining to the: (i) manufacture, processing, use, distribution, management, possession, treatment, storage, disposal, generation, transportation or remediation of Materials of Environmental Concern; (ii) air, water and noise pollution; (iii) the protection and use of surface water, groundwater and soil; (iv) the release or threatened release into the environment of hazardous substances, or solid or hazardous waste, including, without limitation, the emissions, discharges, releases, injections, spills, escapes or dumping of Materials of Environmental Concern; (v) the conservation, management, or use of natural resources and wildlife, including all endangered and threatened species; (vi) aboveground or underground storage tanks, vessels and containers and (vii) abandoned, disposed of or discarded barrels, tanks, vessels, containers and other closed receptacles. “ Materials of Environmental Concern ” shall mean any chemical, substance, material, product, by-product or waste defined or regulated under any Environmental Law, and includes without limitation petroleum or petroleum byproducts, medical or infectious waste, radioactive material, asbestos, asbestos-containing material, polychlorinated biphenyls, and hazardous waste.

2.20 Intellectual Property .

(a) To the best of the Company’s knowledge, the Company owns, licenses or otherwise possesses the rights to use, subject to any existing licenses or other grants of rights to third parties pursuant to agreements previously made available to Parent, all patents (including any registrations, continuations, continuations in part, divisionals, renewals, reexaminations, reissues and applications therefor), copyrights, trademarks, service marks, trade names, Uniform Resource Locators and Internet URLs, designs, slogans, computer programs and other computer software, databases, technology, trade secrets and other confidential information, know-how, processes, formulae, algorithms, models, user interfaces, customer lists, inventions,

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source codes and object codes, methodologies, architecture, structure, display screens, layouts, development tools, instructions, templates, trade dress, logos and all documentation and media constituting, describing or relating to each of the foregoing, together with all goodwill related to any of the foregoing, in each case as is necessary to conduct its business as presently conducted (collectively, the “ Company Intellectual Property Rights ”).

(b) Section 2.20(b) of the Company Disclosure Schedule sets forth, with respect to all Company Intellectual Property Rights owned by or exclusively licensed to the Company that are registered with any Governmental Authority or for which an application has been filed by the Company with any Governmental Authority, as of the date of this Agreement, (i) the registration or application number, the date filed and the title, if applicable, of the registration or application and (ii) the names of the jurisdictions covered by the applicable registration or application. Section 2.20(b) of the Company Disclosure Schedule also identifies each Company Material Contract in effect as of the date of this Agreement containing any ongoing royalty or payment obligations in excess of $75,000 per annum with respect to Company Intellectual Property Rights that are licensed or otherwise made available to the Company.

(c) (i) To the knowledge of the Company, all Company Intellectual Property Rights that have been registered with any Governmental Authority and are owned by or exclusively licensed to the Company are valid and subsisting and (ii) to the knowledge of the Company, as of the Closing Date, in connection with such registered Company Intellectual Property Rights, all necessary registration, maintenance and renewal fees will have been paid and all necessary documents and certificates will have been filed with the relevant Governmental Authorities.

(d) The Company is not, nor will as a result of the consummation of the Merger or other transactions contemplated by this Agreement be, in breach in any material respect of any license, sublicense or other agreement relating to the Company Intellectual Property Rights, or any licenses, sublicenses and other agreements to which the Company is a party and pursuant to which the Company uses any patents, copyrights (including software), trademarks or other intellectual property rights of or owned by third parties material to the conduct of the business of the Company (the “ Third Party Intellectual Property Rights ”).

(e) The Company has not been named as a defendant in any suit, action or proceeding which involves a claim of infringement or misappropriation of any Third Party Intellectual Property Right. Except as set forth in Section 2.20(e)(i) of the Company Disclosure Schedule, the Company has not as of the date of this Agreement received any written notice of any actual or alleged infringement, misappropriation or unlawful or unauthorized use of any Third Party Intellectual Property. With respect to the Company’s product candidates identified in Section 2.20(e)(ii) of the Company Disclosure Schedule, to the knowledge of the Company, after the same are marketed, such marketing would not infringe any third party intellectual property rights publicly disclosed as of the Closing Date other than Third Party Intellectual Property Rights.

(f) As of the date hereof, to the knowledge of the Company, no other Person is infringing, misappropriating or making any unlawful or unauthorized use of any Company Intellectual Property Rights. As of the Closing Date, to the knowledge of the Company, no Person will be infringing, misappropriating or making any unlawful or unauthorized use of any Company Intellectual Property Rights.

2.21 Brokers . No broker, financial advisor, investment banker or other financial intermediary is entitled to any fee, commission or expense reimbursement in connection with the Merger or other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company, other than Cowen and Company, LLC and any other investment bank who renders a fairness opinion to the Company Board in connection with the Merger.

2.22 Certain Business Practices . To the knowledge of the Company, neither the Company, nor any director, officer, employee, consultant, service provider, or agent of the Company has, in the course of his or her duties on behalf of the Company: (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity; (b) made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the

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Foreign Corrupt Practices Act of 1977, as amended; or (c) consummated any transaction, made any payment, entered into any agreement or arrangement or taken any other action in violation of Section 1128B(b) of the Social Security Act, as amended.

2.23 Government Contracts . The consummation of the Merger and other transactions contemplated by this Agreement will not result in any Debarment of the Company or the Surviving Corporation or, to the knowledge of the Company, Parent.

2.24 Interested Party Transactions . Between January 1, 2007 and the date of this Agreement, no event has occurred that would be required to be reported by the Company as a “Certain Relationship or Related Transaction” pursuant to Item 404 of Regulation S-K.

2.25 Opinion of Financial Advisor . The Company Board has received the opinion of its financial advisor, Cowen and Company, LLC, dated as of the date of this Agreement, to the effect that, in its opinion, as of such date the Exchange Ratio is fair, from a financial point of view, to the stockholders of the Company other than the Company Trust. The Company has provided, or will provide, a complete and correct copy of such opinion to Parent solely for informational purposes.

3. REPRESENTATIONS AND WARRANTIES OF PARENT

Except as set forth in the disclosure schedule provided by Parent to the Company on the date hereof (the “ Parent Disclosure Schedule ”), Parent represents and warrants to the Company that the statements contained in this Section 3 are true and correct. The Parent Disclosure Schedule shall be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Section 3, and the disclosure in any paragraph shall qualify (A) the corresponding paragraph of this Section 3 and (B) the other paragraphs of this Section 3 to the extent that it is readily apparent from a reading of the Parent Disclosure Schedule, without reference to anything other than the Parent Disclosure Schedule, that it also qualifies or applies to such other paragraphs. As used in this Agreement, a “ Parent Material Adverse Effect ” means any change, event or effect that is materially adverse to the business, assets (including intangible assets), financial condition, or results of operations of Parent and its Subsidiaries, taken as a whole, or on Parent’s ability to consummate the transactions contemplated in this Agreement, provided that none of the following shall constitute a Parent Material Adverse Effect:

(a) general economic conditions worldwide, in the United States, or in any nation or region in which Parent or any of its Subsidiaries has a substantial presence or operations, provided that such conditions do not disproportionately affect Parent and its Subsidiaries relative to other industry participants;

(b) any acts of terrorism not directed at Parent or any of its Subsidiaries or any outbreak of war, provided that such conditions do not disproportionately affect Parent and its Subsidiaries relative to other industry participants;

(c) the public announcement by the Parties of this Agreement, the pendency of the Merger and the other transactions contemplated hereby, or any action taken which is required by this Agreement or specifically requested by the Company;

(d) factors generally affecting the industries or markets in which Parent and its Subsidiaries operate, provided that such factors do not disproportionately affect Parent and its Subsidiaries relative to other industry participants;

(e) changes in Law or IFRS or the interpretation thereof, provided that such changes do not disproportionately affect Parent and its Subsidiaries relative to other industry participants; or

(f) a decline in the trading price or change in trading volume of the Parent Common Shares, provided that this clause will not exclude any underlying change, event, circumstance, development or effect that may have resulted in, or contributed to, a decline in trading price or change in trading volume.

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3.1 Organization and Qualification .

(a) Parent is a corporation ( Aktiengesellschaft ) duly incorporated, validly existing and in corporate good standing (to the extent such concepts are applicable) under the laws of the Federal Republic of Germany. Parent is duly qualified or licensed as a foreign corporation to conduct business, and is in corporate good standing, under the Laws of each jurisdiction that recognizes the concept of good standing where the character of the properties owned, leased or operated by it, or the nature of its activities, makes such qualification or licensing necessary, except where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, would not be reasonably likely to have a Parent Material Adverse Effect.

(b) Parent has heretofore furnished or otherwise made available to the Company a true, complete and correct copy of its articles of association (the “ Articles of Association ”) and the charters of the Supervisory and Management Boards of Parent and any committees thereof. The Articles of Association and the charters of the Supervisory and Management Boards of Parent and any committees thereof, as so made available, are in full force and effect and no other organizational documents are applicable to or binding upon Parent. Parent is not in violation of any provisions of its Articles of Association in any material respect.

3.2 Subsidiaries .

(a) Section 3.2(a) of the Parent Disclosure Schedule sets forth a complete and correct list of each Subsidiary of Parent as of the date of this Agreement.

(b) Each Subsidiary of Parent 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 organization, and is duly qualified or licensed as a foreign corporation to conduct business, and is in good standing (to the extent such concepts are applicable), under the Laws of each jurisdiction where the character of the properties and other assets owned, leased or operated by it, or the nature of its activities, makes such qualification or licensing necessary, except where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, would not be reasonably likely to have a Parent Material Adverse Effect.

(c) All of the issued and outstanding shares of capital stock of, or other equity interests in, each Subsidiary of Parent are: (i) duly authorized, validly issued, fully paid, non-assessable (to the extent such concepts are applicable); (ii) owned, directly or indirectly, by Parent (other than directors’ qualifying shares in the case of foreign Subsidiaries) free and clear of all Liens and (iii) free of any restriction which prevents the payment of dividends to Parent or any other Subsidiary of Parent, or which otherwise restricts the right to vote, sell or otherwise dispose of such capital stock or other ownership interest other than restrictions under the Securities Act and state securities Law.

(d) None of Parent’s Subsidiaries is required to file any forms, reports or other documents with the SEC.

3.3 Capital Structure .

(a) The capital stock ( Grundkapital ) of Parent under the Articles of Association as of the date of this Agreement amounts to EUR 73,699,128.00 divided into 73,699,128 Parent Ordinary Shares. As of the date of this Agreement, the Authorized Capital amounts to EUR 36,849,564.00.

(b) As of the close of business on the last Business Day prior to the date hereof: (i) 73,868,447 Parent Ordinary Shares were issued and outstanding, including new Parent Ordinary Shares issued out of contingent capital ( bedingtes Kapital ) for recently exercised stock options; (ii) 24,692 Parent Ordinary Shares were held in the treasury of Parent ( eigene Aktien ); (iii) 7,199,380 Parent Ordinary Shares (the “ Parent Option Shares ”) were available as contingent capital ( bedingtes Kapital ) for future issu