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Exhibit 2.1

CONFIDENTIAL
EXECUTION VERSION

Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

AGREEMENT AND PLAN OF MERGER

among:

Onyx Pharmaceuticals, Inc.,
a Delaware corporation;

Profiterole Acquisition Corp.,
a Delaware corporation;

Proteolix, Inc.,
a Delaware corporation;

and

Shareholder Representative Services LLC,
a Colorado limited liability company,
as the Stockholders’ Agent.

Dated as of October 10, 2009

CONFIDENTIAL

Table of Contents


Section	Page
1. Description of Transaction		1

1.1 Merger of Merger Sub into the Company		1
1.2 Effect of the Merger		1
1.3 Closing; Effective Time		1
1.4 Certificate of Incorporation and Bylaws; Directors and Officers		2
1.5 Conversion of Shares		2
1.6 Treatment of Stock Options		6
1.7 Contingent Consideration		7
1.8 Payment of Milestone Payments in Parent Common Stock		15
1.9 Dissenting Shares		17
1.10 Exchange of Certificates		17
1.11 Further Action		19

2. Representations and Warranties of the Company		19

2.1 Due Organization; Subsidiaries; Etc.		19
2.2 Charter Documents; Records		20
2.3 Capitalization		20
2.4 Financial Statements and Related Information		22
2.5 Liabilities		23
2.6 Absence of Changes		24
2.7 Title to Assets		25
2.8 Bank Accounts		25
2.9 Equipment; Real Property		26
2.10 Intellectual Property		26
2.11 Contracts		31
2.12 Compliance with Legal Requirements		33
2.13 Regulatory Matters		33
2.14 Governmental Authorizations; No Subsidies		35
2.15 Tax Matters		36
2.16 Employee and Labor Matters; Benefit Plans		38
2.17 Environmental Matters		41
2.18 Insurance		42
2.19 Related Party Transactions		42
2.20 Legal Proceedings; Orders		42
2.21 Authority; Binding Nature of Agreement; Inapplicability of Anti-takeover Statutes		43
2.22 Non-Contravention; Consents		43
2.23 Vote Required		44
2.24 Brokers		44
2.25 Information Statement		44

CONFIDENTIAL


Section	Page
3. Representations and Warranties of Parent and Merger Sub		45

3.1 Due Organization		45
3.2 Non-Contravention; Consents		45
3.3 Authority; Binding Nature of Agreement		45
3.4 Legal Proceedings		45
3.5 Available Funds		46

4. Certain Covenants of the Company		46

4.1 Access and Investigation		46
4.2 Operation of the Business of the Company		46
4.3 Notification		49
4.4 No Negotiation		49
4.5 Termination of Certain Employee Benefit Plans		49
4.6 Termination/Amendment of Agreements		50
4.7 FIRPTA Matters		50
4.8 Insider Receivables		50
4.9 Net Cash Shortfall Amount		50
4.10 Third Quarter Financial Statements		50

5. Certain Covenants of the Parties		51

5.1 Filings and Consents		51
5.2 Stockholder Consent		51
5.3 Public Announcements		52
5.4 Reasonable Efforts		52
5.5 Employee Benefits		53
5.6 Communications with Employees		53
5.7 Resignation of Officers and Directors		53
5.8 Amendment to Certificate of Incorporation		53
5.9 Directors and Officers		53
5.10 Investor Representation Letters		54

6. Conditions Precedent to Obligations of Parent and Merger Sub		54

6.1 Accuracy of Representations		54
6.2 Performance of Covenants		55
6.3 Governmental Consents		55
6.4 No Material Adverse Effect		55
6.5 Stockholder Approval		55
6.6 Certificate Amendment		55
6.7 Agreements and Documents		55
6.8 FIRPTA Compliance		57
6.9 No Restraints		57
6.10 No Legal Proceedings		57
6.11 No Company Options/Warrants		58
6.12 Termination of Employee Plans		58

CONFIDENTIAL


Section	Page
6.13 Section 280G Stockholder Approval		58
6.14 Pay-Off Letters; Insider Receivables		58
6.15 Securities Exemption		58

7. Conditions Precedent to Obligations of the Company		58

7.1 Accuracy of Representations		58
7.2 Performance of Covenants		59
7.3 Stockholder Approval		59
7.4 Documents		59
7.5 No Restraints		59

8. Termination		59

8.1 Termination Events		59
8.2 Termination Procedures		60
8.3 Effect of Termination		60

9. Indemnification, Etc.		61

9.1 Survival of Representations, Etc.		61
9.2 Indemnification		62
9.3 Limitations		63
9.4 No Contribution		64
9.5 Defense of Third Party Claims		64
9.6 Setoff		65
9.7 Exercise of Remedies Other Than by Parent		65

10. Miscellaneous Provisions		66

10.1 Stockholders’ Agent		66
10.2 Further Assurances		67
10.3 Fees and Expenses		67
10.4 Attorneys’ Fees		68
10.5 Notices		68
10.6 Headings		69
10.7 Counterparts and Exchanges by Electronic Transmission or Facsimile		69
10.8 Governing Law; Dispute Resolution		69
10.9 Assignment; Successors and Assigns		70
10.10 Remedies Cumulative; Specific Performance		70
10.11 Waiver		70
10.12 Waiver of Jury Trial		71
10.13 Amendments		71
10.14 Severability		71
10.15 Parties in Interest		71
10.16 Entire Agreement		71
10.17 Disclosure Schedule		71
10.18 Construction		71

iii

CONFIDENTIAL

Exhibit A Certain Definitions

Annex 1 to Exhibit A Persons Whose Knowledge is Imputed to the Company

Exhibit B Form of Escrow Agreement

Exhibit C Form of Release Agreement

Exhibit D Dispute Resolution Procedures

Exhibit E Form of Certificate Amendment

CONFIDENTIAL

Agreement and Plan of Merger

This Agreement and Plan of Merger (the “ Agreement ”) is made and entered into as of October 10, 2009, by and among: Onyx Pharmaceuticals, Inc., a Delaware corporation (“ Parent ”); Profiterole Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”); Proteolix, Inc., a Delaware corporation (the “ Company ”); and, with respect to Sections 1.7, 1.8, 9, 10.1 and 10.15 only, Shareholder Representative Services LLC , a Colorado limited liability company, as the Stockholders’ Agent (as defined in Section 10.1). Certain other capitalized terms used in this Agreement are defined in Exhibit A .

Recitals

A. Parent, Merger Sub and the Company intend to effect a merger of Merger Sub into the Company (the “ Merger ”) in accordance with this Agreement and the Delaware General Corporation Law (the “ DGCL ”). Upon consummation of the Merger, Merger Sub will cease to exist, and the Company will become a wholly-owned subsidiary of Parent.

B. The respective boards of directors of Parent, Merger Sub and the Company have approved this Agreement and the Merger.

C. As an inducement for Parent and Merger Sub to enter into this Agreement, concurrently with the execution and delivery hereof, certain stockholders and/or optionees of the Company are entering into Noncompetition and Non-Solicitation Agreements in favor of Parent (collectively, the “ Noncompetition and Non-Solicitation Agreements ”), which Noncompetition and Non-Solicitation Agreements shall become effective contingent upon, and subject to, the occurrence of the Effective Time (as defined in Section 1.3).

D. As an inducement for Parent and Merger Sub to enter into this Agreement, concurrently with the execution and delivery hereof, each of the Major Stockholders is entering into a Stockholder Support Agreement in favor of Parent (a “ Support Agreement ”).

Agreement

The parties to this Agreement agree as follows:

1. Description of Transaction

1.1 Merger of Merger Sub into the Company. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub shall be merged with and into the Company, and the separate existence of Merger Sub shall cease. The Company will continue as the surviving corporation in the Merger (the “ Surviving Corporation ”).

1.2 Effect of the Merger. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL.

1.3 Closing; Effective Time. The consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Dewey & LeBoeuf LLP, 1950 University Avenue, East Palo Alto, California 94303 at 10:00 a.m. on a date to be designated by Parent, which shall

CONFIDENTIAL

be no later than the second business day after the satisfaction or waiver of the last to be satisfied or waived of the conditions set forth in Sections 6 and 7 (other than those conditions set forth in Sections 6.6, 6.7(e), 6.7(f), 6.7(g), 6.7(j) and 7.4(b), which are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) or at such other time and date as Parent and the Company may designate. The date on which the Closing actually takes place is referred to in this Agreement as the “ Closing Date .” Contemporaneously with or as promptly as practicable after the Closing, a properly executed certificate of merger (the “ Certificate of Merger ”) conforming to the requirements of the DGCL shall be filed with the Secretary of State of the State of Delaware. The Merger shall become effective as of the time that the Certificate of Merger is filed with and accepted by the Secretary of State of the State of Delaware (the “ Effective Time ”).

1.4 Certificate of Incorporation and Bylaws; Directors and Officers. Unless otherwise determined by Parent prior to the Effective Time:

(a) except as set forth in Section 5.9 hereof, the certificate of incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time in a form acceptable to Parent;

(b) except as set forth in Section 5.9 hereof, the bylaws of the Surviving Corporation shall be amended and restated as of the Effective Time to conform to the bylaws of Merger Sub as in effect immediately prior to the Effective Time; and

(c) the directors and officers of the Surviving Corporation immediately after the Effective Time shall be those Persons designated by Parent in its sole discretion.

1.5 Conversion of Shares.

(a) Conversion . Subject to Sections 1.5(d), 1.8, 1.9 and 1.10, at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any stockholder of the Company, each share of Company Capital Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive from Parent, following the surrender of the certificate representing such share of Company Capital Stock in accordance with Section 1.10, the following consideration:

(i) each share of Company Capital Stock held in the Company’s treasury or owned by Parent, Merger Sub, the Company or any direct or indirect wholly-owned subsidiary of Parent, Merger Sub or the Company immediately prior to the Effective Time, if any, shall be canceled without payment of any consideration with respect thereto;

(ii) each share of Series A Preferred Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive: (A) an amount in cash equal to: (1) the Series A Preference Per Share Amount (as defined in Section 1.5(b)); plus (2) the Residual Upfront Per Share Amount (as defined in Section 1.5(b)); minus (3) the Indemnification Escrow Contribution Amount (as defined in Section 1.5(b)) per share of Series A Preferred Stock; minus (4) the Expenses Escrow Contribution Amount (as defined in Section 1.5(b)) per share of Series A Preferred Stock; plus (B) any cash disbursements required to be made from the Indemnification Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (C) any

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cash disbursements required to be made from the Expenses Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (D) any amounts required to be paid (or shares of Parent Common Stock to be issued) by Parent with respect to such share to the former holder thereof in accordance with the terms of Sections 1.7 and 1.8, as and when such payments (or issuances) are required to be made;

(iii) each share of Series A-1 Preferred Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive: (A) an amount in cash equal to: (1) the Series A-1 Preference Per Share Amount (as defined in Section 1.5(b)); plus (2) the Residual Upfront Per Share Amount; minus (3) the Indemnification Escrow Contribution Amount per share of Series A-1 Preferred Stock; minus (4) the Expenses Escrow Contribution Amount per share of Series A-1 Preferred Stock; plus (B) any cash disbursements required to be made from the Indemnification Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (C) any cash disbursements required to be made from the Expenses Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (D) any amounts required to be paid (or shares of Parent Common Stock to be issued) by Parent with respect to such share to the former holder thereof in accordance with the terms of Sections 1.7 and 1.8, as and when such payments (or issuances) are required to be made;

(iv) each share of Series B Preferred Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive: (A) an amount in cash equal to: (1) the Series B Preference Per Share Amount (as defined in Section 1.5(b)); plus (2) the Residual Upfront Per Share Amount; minus (3) the Indemnification Escrow Contribution Amount per share of Series B Preferred Stock; minus (4) the Expenses Escrow Contribution Amount per share of Series B Preferred Stock; plus (B) any cash disbursements required to be made from the Indemnification Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (C) any cash disbursements required to be made from the Expenses Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (D) any amounts required to be paid (or shares of Parent Common Stock to be issued) by Parent with respect to such share to the former holder thereof in accordance with the terms of Sections 1.7 and 1.8, as and when such payments (or issuances) are required to be made;

(v) each share of Series C Preferred Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive: (A) an amount in cash equal to: (1) the Series C Preference Per Share Amount (as defined in Section 1.5(b)); plus (2) the Residual Upfront Per Share Amount; minus (3) the Indemnification Escrow Contribution Amount per share of Series C Preferred Stock; minus (4) the Expenses Escrow Contribution Amount per share of Series C Preferred Stock; plus (B) any cash disbursements required to be made from the Indemnification Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (C) any cash disbursements required to be made from the Expenses Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (D) any

CONFIDENTIAL

amounts required to be paid (or shares of Parent Common Stock to be issued) by Parent with respect to such share to the former holder thereof in accordance with the terms of Sections 1.7 and 1.8, as and when such payments (or issuances) are required to be made;

(vi) each share of Company Common Stock outstanding immediately prior to the Effective Time (other than those referred to in Section 1.5(a)(i)) shall be converted into the right to receive: (A) an amount in cash equal to : (1) the Residual Upfront Per Share Amount; minus (2) the Indemnification Escrow Contribution Amount per share of Company Common Stock; minus (3) the Expenses Escrow Contribution Amount per share of Company Common Stock; plus (B) any cash disbursements required to be made from the Indemnification Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (C) any cash disbursements required to be made from the Expenses Escrow Fund with respect to such share to the former holder thereof in accordance with the terms of the Escrow Agreement, as and when such disbursements are required to be made; plus (D) any amounts required to be paid by Parent with respect to such share to the former holder thereof in accordance with the terms of Section 1.7, as and when such payments are required to be made; and

(vii) each share of the common stock, par value $0.001 per share, of Merger Sub outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Corporation.

The amount of cash, if any, that each stockholder of the Company is entitled to receive at any particular time for the shares of Company Capital Stock held by such stockholder shall be rounded to the nearest cent (with $0.005 being rounded upward) and computed after aggregating the cash amounts payable at such time for all shares of each class and series of Company Capital Stock held by such stockholder.

(b) Definitions . For purposes of this Agreement:

(i) The “ Aggregate Liquidation Preference Amount ” shall be the sum of : (A) the Series A Preference Per Share Amount multiplied by the aggregate number of shares of Series A Preferred Stock outstanding immediately prior to the Effective Time; plus (B) the Series A-1 Preference Per Share Amount multiplied by the aggregate number of shares of Series A-1 Preferred Stock outstanding immediately prior to the Effective Time; plus (C) the Series B Preference Per Share Amount multiplied by the aggregate number of shares of Series B Preferred Stock outstanding immediately prior to the Effective Time; plus (D) the Series C Preference Per Share Amount multiplied by the aggregate number of shares of Series C Preferred Stock outstanding immediately prior to the Effective Time.

(ii) The “ Aggregate Residual Upfront Consideration Amount ” shall be: (A) the Aggregate Upfront Transaction Value; minus (B) the Aggregate Liquidation Preference Amount.

(iii) The “ Aggregate Upfront Transaction Value ” shall be: (A) $276,000,000; minus (B) if and only if the Closing Date occurs on or prior to November 15, 2009, the Net Cash Shortfall Amount, if any, as set forth and represented in the Merger Consideration Certificate (as defined in Section 6.7(f)).

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(iv) The “ Expenses Escrow Amount ” shall mean $250,000.

(v) The “ Expenses Escrow Contribution Amount ” means, with respect to each share of Company Capital Stock held by a Non-Dissenting Stockholder and each share of Company Common Stock subject to a Company Option, in each case outstanding immediately prior to the Effective Time, an amount determined by dividing : (A) the Expenses Escrow Amount; by (B) the sum of (1) the total number of outstanding shares of Company Capital Stock held by the Non-Dissenting Stockholders immediately prior to the Effective Time; plus (2) the total number of shares of Company Common Stock that were subject to Company Options outstanding immediately prior to the Effective Time.

(vi) The “ Fully Diluted Company Share Number ” shall be the sum of: (A) the aggregate number of shares of Company Common Stock outstanding immediately prior to the Effective Time (including: (1) any such shares that are subject to a repurchase option or risk of forfeiture under any restricted stock purchase agreement or other Contract; (2) any such shares subject to issuance pursuant to Company Options and Company Warrants that are exercised or deemed exercised as of immediately prior to the Effective Time; and (3) any such shares subject to issuance pursuant to any Company Preferred Stock converted to Company Common Stock prior to the Effective Time); plus (B) the aggregate number of shares of Company Common Stock issuable upon the conversion of Company Preferred Stock outstanding immediately prior to the Effective Time; plus (C) the aggregate number of shares of Company Capital Stock purchasable under or otherwise subject to Company Options (whether vested or unvested) outstanding immediately prior to the Effective Time; plus (D) the aggregate number of shares of Company Capital Stock purchasable under or otherwise subject to any rights (other than Company Options and Company Warrants) to acquire shares of Company Capital Stock (whether or not immediately exercisable) outstanding immediately prior to the Effective Time; plus (E) the aggregate number of shares of Company Common Stock issuable upon the conversion of any convertible securities of the Company (other then shares of Company Preferred Stock) outstanding immediately prior to the Effective Time.

(vii) The “ Initial Indemnification Escrow Amount ” shall mean $27,600,000.

(viii) The “ Indemnification Escrow Amount ” shall mean $31,600,000.

(ix) The “ Indemnification Escrow Contribution Amount ” means, with respect to each share of Company Capital Stock held by a Non-Dissenting Stockholder and each share of Company Common Stock subject to a Company Option, in each case outstanding immediately prior to the Effective Time, an amount determined by dividing : (A) the Initial Indemnification Escrow Amount; by (B) the sum of (1) the total number of outstanding shares of Company Capital Stock held by the Non-Dissenting Stockholders immediately prior to the Effective Time; plus (2) the total number of shares of Company Common Stock that were subject to Company Options outstanding immediately prior to the Effective Time.

(x) “ Net Cash Shortfall Amount ” shall mean the amount, if any, by which: (A) the sum (without duplication) of (1) unpaid Company Transaction Expenses as of immediately after the Closing and (2) $5,002,984; exceeds (B) the amount by which the aggregate amount of all cash and cash equivalents of the Company as of immediately after the Closing, determined in accordance with GAAP, exceeds the aggregate amount of all Indebtedness of the

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Company as of immediately after the Closing (it being understood that all amounts used in calculating “Net Cash Shortfall Amount” shall be based on the amounts set forth and represented in the Merger Consideration Certificate).

(xi) The “ Residual Upfront Per Share Amount ” shall be determined by dividing : (A) the Aggregate Residual Upfront Consideration Amount; by (B) the Fully Diluted Company Share Number.

(xii) The “ Series A Preference Per Share Amount ” shall be equal to $1.00.

(xiii) The “ Series A-1 Preference Per Share Amount ” shall be equal to $1.00.

(xiv) The “ Series B Preference Per Share Amount ” shall be equal to $2.22.

(xv) The “ Series C Preference Per Share Amount ” shall be equal to $2.66.

(c) Escrow Contribution . At the Effective Time, Parent shall cause to be delivered to the Escrow Agent in cash:

(i) as a contribution to the Indemnification Escrow Fund and the Expenses Escrow Fund with respect to each share of Company Capital Stock held by the Non-Dissenting Stockholders immediately prior to the Effective Time, an amount equal to the Indemnification Escrow Contribution Amount and the Expenses Escrow Contribution Amount, respectively, applicable to such share of Company Capital Stock; and

(ii) as a contribution to the Indemnification Escrow Fund and the Expenses Escrow Fund with respect to each share of Company Common Stock that is subject to a Company Option that is outstanding immediately prior to the Effective Time, an amount equal to the Indemnification Escrow Contribution Amount and the Expenses Escrow Contribution Amount, respectively, applicable to such share of Company Common Stock.

Each of the Indemnification Escrow Fund and the Expenses Escrow Fund: (A) shall be held by the Escrow Agent in accordance with the terms of this Agreement and the terms of the Escrow Agreement; (B) shall be held as a trust fund and shall not be subject to any lien, attachment, trustee process or other judicial process of any creditor of any Person; and (C) shall be held and disbursed solely for the purposes and in accordance with the terms of this Agreement and the Escrow Agreement.

(d) Adjustments . In the event that the Company, at any time or from time to time between the date of this Agreement and the Effective Time, declares or pays any dividend on Company Capital Stock payable in Company Capital Stock or in any right to acquire Company Capital Stock, or effects a subdivision of the outstanding shares of Company Capital Stock into a greater number of shares of Company Capital Stock, or in the event the outstanding shares of Company Capital Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Company Capital Stock, or a record date with respect to any of the foregoing shall occur during such period, then the amounts payable in respect of shares of Company Capital Stock pursuant to Section 1.5(a) and the amounts payable in respect of shares of Company Capital Stock subject to Company Options pursuant to Section 1.6 shall be appropriately adjusted.

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1.6 Treatment of Stock Options . Subject to Section 1.10(h), at the Effective Time, each Company Option that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, shall become fully vested immediately prior to the Effective Time and shall be cancelled at the Effective Time and the holder thereof shall be entitled to receive for each share of Company Common Stock subject to such Company Option (a) an amount in cash equal to: (i) the Residual Upfront Per Share Amount; minus (ii) the exercise price per share of Company Common Stock subject to such Company Option; minus (iii) the Indemnification Escrow Contribution Amount per share of the applicable Company Common Stock; minus (iv) the Expenses Escrow Contribution Amount per share of the applicable Company Common Stock; plus (b) any cash disbursements required to be made from the Indemnification Escrow Fund with respect to such share to the former holder of such Company Option in accordance with the Escrow Agreement, as and when such disbursements are required to be made; plus (c) any cash disbursements required to be made from the Expenses Escrow Fund with respect to such share to the former holder of such Company Option in accordance with the Escrow Agreement, as and when such disbursements are required to be made; plus (d) any amounts required to be paid by Parent with respect to such share to the former holder thereof in accordance with the terms of Section 1.7, as and when such payments are required to be made. Prior to the Effective Time, the Company shall take all action that may be necessary (under the Company Option Plan or otherwise) to effectuate the provisions of this Section 1.6. and to ensure that, from and after the Effective Time, each holder of an outstanding Company Option cancelled as provided in this Section 1.6 shall cease to have any rights with respect thereto, except the right to receive the consideration specified in this Section 1.6 without interest.

1.7 Contingent Consideration .

(a) Definitions . For purposes of this Section 1.7:

(i) “ 003-A1 Study ” shall mean that human clinical study of the Product referred to internally by the Company as PX-171-003-A1, which is ongoing as of the date of this Agreement, in relapsed and refractory multiple myeloma patients.

(ii) “009 Study ” shall mean the planned human clinical study of the Product referred to internally by the Company as PX-171-009 in relapsed multiple myeloma patients.

(iii) “011 Study ” shall mean the planned human clinical study of the Product referred to internally by the Company as PX-171-011 in relapsed and refractory multiple myeloma patients.

(iv) “ Agreed Trial Design ” with respect to the 003-A1 Study, 009 Study and 011 Study shall mean a human clinical study of the Product that reflects, in all material respects, the material elements for such study as described in the protocol summary for such study agreed between Parent and the Company as of the date of this Agreement.

(v) “ Applicable Efforts ” shall mean those efforts and resources consistent with the usual practice of Parent and its Subsidiaries in pursuing, in a reasonably timely manner, the development and approval of its own pharmaceutical products that are of similar market potential and strategic value to the Product, taking into account relevant factors including product labeling or anticipated labeling, market potential, past performance of the Product, medical and clinical considerations, safety and tolerability profile, present and future regulatory environment and competitive conditions, all as measured by the facts and circumstances at the time such

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efforts are due; provided, however, that in no event shall Parent’s obligation to use Applicable Efforts ever require Parent to conduct any registrational studies other than the 003-A1 Study, the 011 Study and the 009 Study.

(vi) “ Contingent Payment Shares ” of a particular Participating Securityholder shall mean: (A) each outstanding share of Company Capital Stock held by such Participating Securityholder immediately prior to the Effective Time; and (B) each share of Company Common Stock subject to outstanding Company Options held by such Participating Securityholder immediately prior to the Effective Time.

(vii) “ MAA ” shall mean a marketing authorization application filed with the EMEA.

(viii) A “ Material Modification ” to the Agreed Trial Design for the 003-A1 Study, 009 Study or 011 Study shall mean a material modification to such Agreed Trial Design, other than any Permitted Modification to the Agreed Trial Design for such study.

(ix) “ Milestone Event 2 Termination Date ” shall mean [ * ]; provided, however, that (A) if Milestone Event 2 has not occurred by [ * ], and such failure to occur by [ * ] is due to (1) a request by the FDA for an updated safety database, or to allow the FDA to hold an advisory committee meeting, or to complete either clinical or manufacturing audits or to finalize the prescribing information content, (2) a request by the FDA for Parent to further analyze, format or submit Product data available from studies at the time of such request or (3) an extension by the FDA of the PDUFA action date with respect thereto, then the Milestone Event 2 Termination Date shall be extended until [ * ]; or (B) if Parent implements a Material Modification to the Agreed Trial Design for the 011 Study, the Milestone Event 2 Termination Date, as may be extended in accordance with clause “(A)”, will be extended further by the time period equal to the difference, in days, between (1) the expected date of completion (measured by the date of last visit of the last patient enrolled) of the 011 Study, under the Agreed Trial Design for such study (as modified by any Permitted Modifications) and (2) the actual date of completion (measured by the date of last visit of the last patient enrolled) of the 011 Study as implemented with such Material Modification.

(x) “ Milestone Event ” shall mean each event referred to in the chart in Section 1.7(b) under the heading “Milestone Event”.

(xi) “ Milestone Payment ” shall mean any payment that becomes due and payable upon the occurrence of a Milestone Event pursuant to Section 1.7(b).

(xii) “ Milestone Termination Date ” means, with respect to each Milestone Event other than Milestone 1, the date for completion of such event in the chart set forth in Section 1.7(b).

(xiii) “ NDA ” shall mean a new drug application filed with the FDA.

(xiv) A “ Permitted Modification ” to the Agreed Trial Design for the 003-A1 Study, 009 Study or 011 Study shall mean a modification to the Agreed Trial Design for such study: (A) that a Regulatory Authority clearly indicates in writing or in such Regulatory

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Authority’s minutes of an oral meeting is required for such Regulatory Authority to grant Regulatory Approval based on the results of such study; (B) with respect to the 011 Study only, that is required to obtain the approval of a sufficient number of institutional review boards (as described in 21 CFR 56), or any similar bodies in the European Union, that would reasonably be expected to allow Parent to (1) conduct and complete the 011 Study and (2) be in a position to submit the MAA referred to in Section 1.7(h)(ii)(B) to CHMP by [ * ]; (C) with respect to the 011 Study only, that is required to address a negative public reaction to the 011 Study in the medical or general community in such a manner as would reasonably be expected to allow Parent to (1) conduct and complete the 011 Study and (2) be in a position to submit the MAA referred to in Section 1.7(h)(ii)(B) to CHMP by [ * ]; or (D) with respect to the 011 Study only, that would not, individually or in the aggregate with all other modifications that are not otherwise excluded pursuant to clause “(A),” clause “(B)” or clause “(C)” of this sentence, reasonably be expected to have, and does not in fact have, an adverse impact on the achievement by Parent of Milestone Event 2 or Milestone Event 3.

(xv) “ Related Milestone Event ” shall mean: (A) with respect to the 001-A3 Study, Milestone Event 2 and Milestone Event 3; (B) with respect to the 011 Study, Milestone Event 3; and (C) with respect to the 009 Study, Milestone Event 4 and Milestone Event 5.

(xvi) “ Technical Failure ” shall mean Parent’s reasonable determination that the Product presents unacceptable levels of safety risks such that Parent terminates development of the Product.

(b) Milestone Events and Milestone Payments . Upon the occurrence of any of the Milestone Events set forth in the chart below under the heading “Milestone Event,” the Milestone Payment set forth opposite such Milestone Event in the chart below shall become due and payable in accordance with Section 1.7(c):

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Milestone Event	Milestone Payment
The occurrence of the date that is 180 days after the date of the final patient’s first visit (as determined pursuant to the protocol for the 003-A1 Study as of the date of this Agreement) in the 003-A1 Study (the occurrence of the date that is 180 days after the date of such patient’s first visit, “ Milestone Event 1 ”)	$	40,000,000

Regulatory Approval by the FDA, on or before the Milestone Event 2 Termination Date, of the Product as therapy in treating relapsed/refractory multiple myeloma based on the results of the 003-A1 Study and/or the 011 Study (“ Milestone Event 2 ”)	$	170,000,000

Regulatory Approval by the EMEA, on or before [ * ], of the Product as therapy in treating relapsed/refractory multiple myeloma based on the results of the 011 Study and/or the 003-A1 Study (“ Milestone Event 3 ”)	$	65,000,000

Regulatory Approval by the FDA, on or before [ * ], of the Product as therapy in treating relapsed multiple myeloma based on the results of the 009 Study (“ Milestone Event 4 ”)	$	150,000,000

Regulatory Approval by the EMEA, on or before [ * ], of the Product as therapy in treating relapsed multiple myeloma based on the results of the 009 Study (“ Milestone Event 5 ”)	$	150,000,000

For purposes of the foregoing Milestone Events, where such event is referred to as being based on the results of the 003-A1 Study, the 011 Study or the 009 Study, as the case may be, it is understood that such reference includes any Permitted Modification or Material Modification, or other modification to such study, as may be implemented in accordance with this Section 1.7.

In the event that: (1) Parent does not conduct and/or complete the 011 Study; (2) Parent elects to conduct another study in Europe; and (3) the EMEA grants Regulatory Approval, on or before [ * ], of the Product as therapy in treating relapsed/refractory multiple myeloma based on the results of such other study and/or the 003-A1 Study, the Milestone Payment that would otherwise have become due and payable upon the occurrence of Milestone Event 3 shall instead become due and payable upon the occurrence of such Regulatory Approval.

Notwithstanding anything to the contrary contained in this Agreement, each Milestone Payment is payable one time only, regardless of the number of Products that satisfy the condition or the number of indications for which the condition is satisfied.

(c) Distribution of Milestone Payments .

(i) Subject to Section 1.10(h) and to the Stockholders’ Agent’s rights pursuant to Section 10.1(d), if the Milestone Payment that becomes due and payable upon the occurrence of Milestone Event 1 (the “ First Milestone Payment ”) becomes due and payable

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pursuant to Section 1.7(b), Parent shall: (A) pay to each Participating Securityholder (or, at Parent’s election, cause the Payment Agent (as defined in Section 1.10(a)) to deliver to each Participating Securityholder), within seven business days following the achievement of Milestone Event 1, in respect of each Contingent Payment Share of such Participating Securityholder, an amount determined by dividing $36,000,000 by the Fully Diluted Share Number; and (B) cause to be delivered to the Escrow Agent as a contribution to the Indemnification Escrow Fund with respect to each Contingent Payment Share of such Participating Securityholder, an amount equal to $4,000,000 divided by the aggregate number of Contingent Payment Shares held by all Participating Securityholders.

(ii) Subject to Parent’s rights pursuant to Sections 1.8 and 9.6 and the Stockholders’ Agent’s rights pursuant to Section 10.1(d), if any other Milestone Payment becomes due and payable pursuant to Section 1.7(b), Section 1.7(d) or Section 1.7(i), Parent shall pay to each Participating Securityholder (or, at Parent’s election, cause the Payment Agent to deliver to each Participating Securityholder), within 25 Trading Days following the achievement of the Milestone Event applicable to such Milestone Payment, in respect of each Contingent Payment Share of such Participating Securityholder, an amount determined by dividing such Milestone Payment by the Fully Diluted Share Number.

(d) Acceleration of Milestone Payments . Notwithstanding anything to the contrary in this Agreement, immediately upon the occurrence of a Specified Bankruptcy Event, to the extent not previously paid, 100% of the Milestone Payments as to which a Milestone Termination Date has not yet occurred shall become due and payable; provided, however , that in a case under title 11 of the United States Code, if Parent or the Surviving Corporation assumes this Agreement in accordance with section 365 of title 11 of the United States Code and cures any and all outstanding defaults, including any and all monetary and non-monetary defaults, within five business days of entry of an order authorizing such assumption, then any Milestone Payments as to which a Milestone Termination Date has not yet occurred shall not be deemed accelerated in accordance with this Section 1.7(d), but shall remain due and payable in accordance with the deadlines and subject to the conditions set forth in Sections 1.7(b) and 1.7(i). Nothing in this Agreement shall be construed, explicitly or implicitly, as consent or agreement by or on behalf of the Stockholders’ Agent or the Participating Securityholders to any proposed action by the Parent or the Surviving Corporation in a bankruptcy proceeding, including any proposed assumption, assumption and assignment or other disposition of this Agreement.

(e) Milestone Payments Generally . The parties acknowledge and agree that Parent’s or the Surviving Corporation’s achievement of the Milestone Events are material factors in determining the valuation of the Company by Parent. Therefore, except as provided in Sections 1.7(d) or 1.7(i), the Participating Securityholders shall have no right to receive any particular Milestone Payment (or any portion thereof) unless and until the particular Milestone Event that must be achieved in order for the Participating Securityholders to receive such Milestone Payment is achieved by the applicable Milestone Termination Date as determined pursuant to this Section 1.7.

(f) Milestone Rights Not Transferable . The right of any Participating Securityholder to receive any Milestone Payment: (i) does not give the Participating Securityholder dividend rights, voting rights, liquidation rights, preemptive rights or other rights of holders of capital stock of the Surviving Corporation; (ii) shall not be evidenced by a certificate or other instrument; (iii) shall not be assignable or otherwise transferable by such Participating Securityholder, except by will, upon death or by operation of law; (iv) shall not accrue or pay interest on any portion thereof; and (v) does not represent

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any right other than the right to receive the consideration set forth in this Section 1.7 and Section 1.8. Any attempted transfer of the right to any Milestone Payment by any holder thereof (other than as specifically permitted by the immediately preceding sentence) shall be null and void.

(g) Information Obligations . Subject to the Stockholders’ Agent first entering into a confidentiality agreement with Parent in form and substance reasonably satisfactory to Parent containing restrictions on the use and disclosure of confidential information of Parent or its affiliates, for so long as one or more Milestone Payments may reasonably become payable: (x) (i) during the period commencing on the date that is three months following the Closing Date and ending on the date of acceptance of the NDA described in Section 1.7(h)(i) or, if applicable, Section 1.7(i)(ii)(1) (the “ Acceptance Date ”), Parent shall provide, on a quarterly basis, a written report to the Stockholders’ Agent in reasonable detail regarding the technical development of the Products and the status of efforts to achieve the Milestone Payments (each such report, an “ Update Report ”); and (ii) after the Acceptance Date, Parent shall provide an Update Report to the Stockholders’ Agent on a semi-annual basis; and (y) Parent shall notify the Stockholders’ Agent of a proposed implementation of a material modification to the Agreed Trial Design for the 003-A1 Study, 009 Study or 011 Study at least 30 days prior to any such implementation (unless a patient safety issue requires any such material modification to be implemented in less than 30 days, in which case Parent shall provide such notice to the Stockholders’ Agent as soon as is practicable) and shall notify the Stockholders’ Agent that such material modification has been implemented within 10 days after any such implementation (each such report, a “ Material Modification Report ”) and (z) Parent shall notify the Stockholders’ Agent within five business days after the date on which any Milestone Payment becomes payable. Within 30 days after delivery of an Update Report, or within 10 days after delivery of a Material Modification Report, if the Stockholders’ Agent requests a meeting with representatives of Parent to discuss such report, Parent shall use its commercially reasonable efforts to make available for such a meeting those of its senior medical and regulatory employees as are responsible for the applicable activities set forth in the Update Report or Material Modification Report. Provided that Parent has made available to the Stockholders’ Agent at the requested meeting those employees of Parent as the Stockholders’ Agent may have reasonably requested, the Stockholders’ Agent may not request more than one such meeting for any Update Report or Material Modification Report. All information contained in any Update Report or Material Modification Report, or conveyed to the Stockholders’ Agent in any meeting regarding an Update Report or Material Modification Report, shall be subject to the confidentiality agreement between Parent and the Stockholders’ Agent.

(h) Applicable Efforts . Subject to Section 1.7(i), commencing upon the Closing, Parent and its Subsidiaries shall use Applicable Efforts to implement and conduct all research, development and clinical manufacturing activities for, and regulatory activities with respect to, the Product (which may include activities conducted through third parties) that are components of or directly related to or required for the achievement of the Milestone Events by the applicable Milestone Termination Dates. Without limiting and notwithstanding the foregoing, subject to Section 1.7(i), commencing upon the Closing, Parent and its Subsidiaries shall:

(i) with respect to Milestone Event 2 only: (A) conduct and complete the 003-A1 Study based on the Agreed Trial Design for such study (as modified by any Permitted Modifications); (B) submit the NDA for the Product for the Milestone Event 2 indication to the FDA by [ * ] and use Applicable Efforts to cause such NDA to be accepted for filing by the FDA, provided in each case that Parent determines in its reasonable discretion that Milestone Event 2 would reasonably be expected to be achieved based upon the outcome of the relevant studies; and (C) if Parent was required to submit the NDA referred to in clause “(B)” above to the FDA, use

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Applicable Efforts to obtain Regulatory Approval for the Product for the Milestone Event 2 indication such that Milestone Event 2 would reasonably be expected to be achieved on or before the Milestone Event 2 Termination Date;

(ii) with respect to Milestone Event 3 only: (A) use Applicable Efforts to conduct and complete the 011 Study based on the Agreed Trial Design for such study (as modified by any Permitted Modifications); (B) submit the MAA for the Product for the Milestone Event 3 indication to the EMEA’s Committee for Medicinal Products for Human Use (“ CHMP ”) by [ * ] and use Applicable Efforts to cause the designation of day 0 of the MAA review clock by EMEA with respect to such MAA, provided in each case that there is a reasonable basis for submission thereof based upon the outcome of the relevant studies; and (C) if Parent was required to submit the MAA referred to in clause “(B)” above to CHMP, use Applicable Efforts to obtain Regulatory Approval for the Product for the Milestone Event 3 indication such that Milestone Event 3 would reasonably be expected to be achieved on or before [ * ];

(iii) with respect to Milestone Event 4 only: (A) conduct and complete the 009 Study based on the Agreed Trial Design for such study (as modified by any Permitted Modifications); (B) complete the interim analysis for the 009 Study using the Independent Review Committee as contemplated by the Agreed Trial Design for such study; (C) complete the final analysis for the 009 Study using the Independent Review Committee as contemplated by the Agreed Trial Design for such study; (D) submit the NDA for the Product for the Milestone Event 4 indication to the FDA by [ * ] and use Applicable Efforts to cause such NDA to be accepted for filing by the FDA, provided in each case that there is a reasonable basis for submission thereof based upon the outcome of the relevant studies; and (E) if Parent was required to submit the NDA referred to in clause “(D)” above to the FDA, use Applicable Efforts to obtain Regulatory Approval for the Product for the Milestone Event 4 indication such that Milestone Event 4 would reasonably be expected to be achieved on or before [ * ]; and

(iv) with respect to Milestone Event 5 only: (A) conduct and complete the 009 Study based on the Agreed Trial Design for such study (as modified by any Permitted Modifications); (B) complete the interim analysis for the 009 Study using the Independent Review Committee as contemplated by the Agreed Trial Design for such study; (C) complete the final analysis for the 009 Study using the Independent Review Committee as contemplated by the Agreed Trial Design for such study; (D) submit the MAA for the Product for the Milestone Event 5 indication to CHMP by [ * ] and use Applicable Efforts to cause the designation of day 0 of the MAA review clock by EMEA with respect to such MAA, provided in each case that there is a reasonable basis for submission thereof based upon the outcome of the relevant studies; and (E) if Parent was required to submit the MAA referred to in clause “(D)” above to CHMP, use Applicable Efforts to obtain Regulatory Approval for the Product for the Milestone Event 5 indication such that Milestone Event 5 would reasonably be expected to be achieved on or before [ * ].

The provisions of this Section 1.7(h) with respect to any specified Milestone Event shall terminate and be of no further force and effect upon the earliest of: (i) the payment of the applicable Milestone Payment pursuant to Section 1.7(c), Section 1.7(d) or Section 1.7(i)(i); (ii) the occurrence of the applicable Milestone Termination Date; and (iii) the occurrence of a Technical Failure (it being understood that if a Technical Failure occurs, then all provisions in Section 1.7(h) shall terminate with respect to all Milestone Events). Notwithstanding anything to the contrary in this Agreement, but subject to Section 1.7(i),

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Parent, the Company and the Stockholders’ Agent hereby acknowledge and agree that no failure by Parent or its Subsidiaries to complete any of the actions referenced in this Section 1.7(h) by the specified date shall, in and of itself, be the basis of any claim relating to any alleged breach of this Agreement by Parent, where Parent has undertaken Applicable Efforts to achieve such actions within such specified timeframe.

(i) Failure to Achieve Milestone Events .

(i) If: (A) a Milestone Event is not satisfied by the applicable Milestone Termination Date; (B) prior to the occurrence of the applicable Milestone Termination Date, other than with respect to a Material Modification to the applicable Agreed Trial Design (which shall be subject to Section 1.7(i)(ii)), Parent breached its obligations under Section 1.7(h) with respect to such Milestone Event, including by the failure by Parent or its Subsidiaries to complete any of the actions referenced in Section 1.7(h) by the date specified therefor; and (C) the Stockholders’ Agent demonstrates that Parent’s breach was a direct and primary cause of the failure of such Milestone Event to be satisfied prior to the applicable Milestone Termination Date, then the Milestone Payment that would otherwise have become due and payable upon the satisfaction of such Milestone Event (but no other Milestone Payment) shall immediately become due and shall be payable in accordance with Section 1.7(c).

(ii) If Parent implements a Material Modification to the Agreed Trial Design for the 003-A1 Study, 009 Study or 011 Study, then (x) the Milestone Termination Date(s) applicable to such study’s Related Milestone Event(s) (but no other Milestone Event) shall cease to be applicable, and the Milestone Payment(s) that would become due and payable upon the satisfaction of such Milestone Event(s) (but no other Milestone Payment) shall become due and payable in accordance with Section 1.7(c) upon the occurrence of the Milestone Event(s) (without regard to the Milestone Termination Date contemplated thereby) at any time and (y) the obligations of Parent set forth in Sections 1.7(h)(i) through (iv) shall cease to be applicable with respect to such study’s Related Milestone Event(s) (but no other Milestone Event) and shall thereafter be replaced with the following obligations, as applicable:

(1) with respect to Milestone Event 2 only: (A) conduct and complete the 003-A1 Study based on the Agreed Trial Design for such study, as modified, using Applicable Efforts; (B) submit the NDA for the Product for the Milestone Event 2 indication to the FDA and use Applicable Efforts to cause such NDA to be accepted for filing by the FDA on or before the date that is 9 months after the last patient’s last visit in the 003-A1 Study, provided in each case that Parent determines in its reasonable discretion that Milestone Event 2 (without regard to the Milestone Termination Date contemplated thereby) would reasonably be expected to be achieved based upon the outcome of the relevant studies; and (C) if Parent was required to submit the NDA referred to in clause “(B)” above to the FDA, use Applicable Efforts to obtain Regulatory Approval for the Product for the Milestone Event 2 indication such that Milestone Event 2 would reasonably be expected to be achieved;

(2) with respect to Milestone Event 3 only: (A) conduct and complete the 011 Study, based on the Agreed Trial Design for such study, as modified, using Applicable Efforts and, if a Material Modification is made to the 003-A1 Study, the 003-A1 Study, based on the Agreed Trial Design for such study, as modified, using

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Applicable Efforts; (B) submit the MAA for the Product for the Milestone Event 3 indication to the CHMP and use Applicable Efforts to cause the designation of day 0 of the MAA review clock by EMEA with respect to such MAA on or before the date that is 9 months after the last patient’s last visit in the 011 Study, provided in each case that there is a reasonable basis for submission thereof based upon the outcome of the relevant studies; and (C) if Parent was required to submit the MAA referred to in clause “(B)” above to CHMP, use Applicable Efforts to obtain Regulatory Approval for the Product for the Milestone Event 3 indication such that Milestone Event 3 would reasonably be expected to be achieved;

(3) with respect to Milestone Event 4 only: (A) conduct and complete the 009 Study based on the Agreed Trial Design for such study, as modified, using Applicable Efforts; (B) complete the interim analysis for the 009 Study using the Independent Review Committee as contemplated by the Agreed Trial Design for such study, as modified; (C) complete the final analysis for the 009 Study using the Independent Review Committee as contemplated by the Agreed Trial Design for such study, as modified; (D) submit the NDA for the Product for the Milestone Event 4 indication to the FDA and use Applicable Efforts to cause such NDA to be accepted for filing by the FDA on or before the date that is 9 months after the last patient’s last visit in the 009 Study, provided in each case that there is a reasonable basis for submission thereof based upon the outcome of the relevant studies; and (E) if Parent was required to submit the NDA referred to in clause “(D)” above to the FDA, use Applicable Efforts to obtain Regulatory Approval for the Product for the Milestone Event 4 indication such that Milestone Event 4 would reasonably be expected to be achieved; and

(4) with respect to Milestone Event 5 only: (A) conduct and complete the 009 Study based on the Agreed Trial Design for such study, as modified, using Applicable Efforts; (B) complete the interim analysis for the 009 Study using the Independent Review Committee as contemplated by the Agreed Trial Design for such study, as modified; (C) complete the final analysis for the 009 Study using the Independent Review Committee as contemplated by the Agreed Trial Design for such study, as modified; (D) submit the MAA for the Product for the Milestone Event 5 indication to CHMP and use Applicable Efforts to cause the designation of day 0 of the MAA review clock by EMEA with respect to such MAA on or before the date that is 9 months after the last patient’s last visit in the 009 Study, provided in each case that there is a reasonable basis for submission thereof based upon the outcome of the relevant studies; and (E) if Parent was required to submit the MAA referred to in clause “(D)” above to CHMP, use Applicable Efforts to obtain Regulatory Approval for the Product for the Milestone Event 5 indication such that Milestone Event 5 would reasonably be expected to be achieved.

For greater clarity, a Permitted Modification to the Agreed Trial Design for the 003-A1 Study, 009 Study or 011 Study shall not constitute a Material Modification to such Agreed Trial Design. The provisions of Section 1.7(i)(ii) with respect to any specified Milestone Event shall terminate and be of no further force and effect upon the earliest of: (i) the payment of the applicable Milestone Payment pursuant to Section 1.7(c), Section 1.7(d) or Section 1.7(i)(i); and (ii) the occurrence of a Technical Failure (it being understood that if a Technical Failure occurs, then all provisions in Section 1.7(i)(ii) shall terminate with respect to all Milestone Events). Notwithstanding anything to the contrary in this Agreement, Parent, the

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Company and the Stockholders’ Agent hereby acknowledge and agree that no failure by Parent or its Subsidiaries to complete any of the actions referenced in Section 1.7(i)(ii)(1), Section 1.7(i)(ii)(2), Section 1.7(i)(ii)(3) or Section 1.7(i)(ii)(4) by the specified date shall, in and of itself, be the basis of any claim relating to any alleged breach of this Agreement by Parent, where Parent has undertaken Applicable Efforts to achieve such actions within such specified timeframe.

1.8 Payment of Milestone Payments in Parent Common Stock .

(a) Definitions . For purposes of this Section 1.8:

(i) “ Participating Preferred Securityholders ” shall mean each of the Participating Securityholders that held shares of Company Preferred Stock immediately prior to the Effective Time.

(ii) “ Principal Market ” shall mean the principal trading market or quotation system for shares of Parent Common Stock at any applicable time.

(iii) “ SEC ” shall mean the Securities and Exchange Commission.

(iv) “ Share Issuance Amount ” shall mean the portion (expressed in dollars) of the applicable Milestone Payment that Parent elects to satisfy by issuing shares of Parent Common Stock to each of the Participating Preferred Securityholders.

(v) “ Share Payment Closing Date ” shall mean the date on which a Milestone Payment as to which Parent has delivered a Share Payment Notice is distributed pursuant to Section 1.7(c).

(vi) “ Share Payment Notice ” shall mean a notice delivered by Parent to Participating Preferred Securityholders of Parent’s election to issue shares of Parent Common Stock pursuant to the provisions of this Section 1.8 in satisfaction of all or a portion of the applicable Milestone Payment.

(vii) “ Trading Day ” means any day on which the Parent Common Stock is traded for at least two hours on the Principal Market.

(viii) “ Volume Weighted Average Price ” for the Parent Common Stock with respect to each Share Payment Closing Date means the average of the daily volume-weighted average prices for a share of Parent Common Stock on the Principal Market during the period beginning at 9:30 a.m., New York City time, and ending at 4:00 p.m., New York City time, as reported by Bloomberg, over the 10-Trading Day period commencing on the sixth Trading Day following the public announcement by Parent of achievement of the applicable Milestone Event (adjusted as appropriate to reflect any stock split, reverse stock split or similar transaction effected by Parent between the commencement of such period and the Stock Payment Closing Date).

(b) Right to Make Share Issuance . Subject to Section 1.8(e) below, in lieu of making any Milestone Payment (other than the First Milestone Payment) to the Participating Preferred Securityholders in cash, except in connection with an acceleration of any Milestone Payment pursuant to

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Section 1.7(d), Parent may elect to satisfy all or any portion of such Milestone Payment that is owed to the Participating Preferred Securityholders by the issuance to the Participating Preferred Securityholders of shares of Parent Common Stock (a “ Share Issuance ”) in accordance with the provisions of this Section 1.8; provided, however, that in no event shall Parent issue, or be obligated to issue, shares of Parent Common Stock in payment of all or any portion of any Milestone Payment if the issuance of such shares would require or would have required the approval of Parent’s stockholders under applicable rules of the Principal Market or other Legal Requirements.

(c) Exercise of Right to Make Share Issuance . No less than 15 Trading Days prior to the Share Payment Closing Date, Parent may deliver to the Participating Preferred Securityholders the Share Payment Notice. The Share Payment Notice shall be irrevocable and shall specify the Share Issuance Amount. Parent agrees that if Parent delivers a Share Payment Notice, Parent shall, to the extent not previously publicly announced, publicly announce the achievement of the Milestone Event with respect to the applicable Milestone Payment by no later than 9:30 a.m., New York City time, on the Trading Day that is 15 Trading Days prior to the Share Payment Closing Date.

(d) Share Issuance Closing . On the Share Payment Closing Date, subject to Section 1.8(f), Parent shall: (i) issue to each Participating Preferred Securityholder, with respect to each share of Company Preferred Stock held by such Participating Preferred Securityholder immediately prior to the Effective Time, a fraction of a share of Parent Common Stock having a numerator equal to the Share Issuance Amount and having a denominator determined by multiplying the aggregate number of shares of Company Preferred Stock held by the Participating Preferred Securityholders immediately prior to the Effective Time by the Volume Weighted Average Price; and (ii) reduce the amount of cash otherwise payable in respect of each share of Company Preferred Stock in connection with the payment of such Milestone Payment pursuant to Section 1.7(c) by subtracting from such amount the amount determined by dividing (A) the Share Issuance Amount by (B) the aggregate number of shares of Company Preferred Stock held by the Participating Preferred Securityholders immediately prior to the Effective Time. By no later than 5:30 p.m., New York City time, on each Share Payment Closing Date, Parent shall cause its transfer agent to electronically transmit the applicable Milestone Shares, by crediting the account of each Participating Preferred Securityholder’s broker (as specified by such Participating Preferred Securityholder no later than two Trading Days prior to the Share Payment Closing Date) with DTC through its Deposit Withdrawal Agent Commission (DWAC) system.

(e) Limitations on Share Issuances . It shall be a condition precedent to any Share Issuance on any Share Payment Closing Date that the shares of Parent Common Stock to be issued in such Share Issuance shall as of such Share Payment Closing Date: (i) be freely transferable without restriction under applicable securities laws by the Participating Preferred Securityholders, without any requirement for any further delivery of any opinion of counsel or other instruction to Parent’s transfer agent by Parent or otherwise, except to the extent that a Participating Securityholder is an affiliate of Parent as of such Share Payment Closing Date; (ii) have been duly authorized by all necessary corporate action; (iii) be listed for trading on a national securities exchange or quotation system in the United States; and (iv) be validly issued, fully paid and nonassessable. If Parent determines that registration of the shares to be issued to the Participating Preferred Securityholders for resale pursuant to a registration statement under the Securities Act (as defined in Exhibit D ) is required for such shares to meet the requirements set forth in Section 1.8(e)(i), then the Stockholders’ Agent shall use reasonable efforts to facilitate the negotiation, and the execution and delivery by the Participating Preferred Securityholders, of a customary registration rights agreement relating thereto.

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(f) No Fractional Shares . No fractional shares of Parent Common Stock shall be issued pursuant to this Agreement, and no certificates or scrip for any such fractional shares shall be issued. Any Participating Securityholder who would otherwise be entitled to receive a fraction of a share of Parent Common Stock in a Share Issuance (after aggregating all fractional shares of Parent Common Stock issuable to such Participating Securityholder in such Share Issuance) shall, in lieu of such fraction of a share, be paid in cash the amount, rounded to the nearest whole cent (with $0.005 being rounded upward), without interest, determined by multiplying such fraction by the closing price of a share of Parent Common Stock on the Principal Market on the date of issuance of such share of Parent Common Stock.

(g) Successors . In the event that a Person purchases either (i) all of the issued and outstanding shares of capital stock, or (ii) all or substantially all of the assets of Parent or the Surviving Corporation in a transaction in which Parent assigns its rights under Section 1.7 to such Person in accordance with Section 10.9, in the case of clauses “(i)” and “(ii)” all references to Parent contained in this Section 1.8 shall be deemed to instead refer to such Person, and all references to Parent Common Stock shall be deemed to instead refer to shares of common stock shares (or any equivalent class of shares) of such Person.

1.9 Dissenting Shares .

(a) Effect on Dissenting Shares . Notwithstanding any provisions of this Agreement to the contrary, shares of Company Capital Stock held by a holder who has demanded and perfected such demand for appraisal of such holder’s shares of Company Capital Stock in accordance with Section 262 of the DGCL (or, if the Company is subject to Section 2115 of the California General Corporation Law (the “ CGCL ”), in accordance with Chapter 13 of the CGCL) and as of the Closing has neither effectively withdrawn nor lost such holder’s right to such appraisal (the “ Dissenting Shares ”) shall not be converted into the applicable Merger Consideration, but shall be entitled to only such rights as are granted by the DGCL (and, if the Company is subject to Section 2115 of the CGCL, by the CGCL). Parent shall be entitled to retain any Merger Consideration not paid on account of such Dissenting Shares pending resolution of the claims of such holders, and the Effective Time Holders shall not be entitled to any portion of such retained Merger Consideration.

(b) Loss of Dissenting Share Status . Notwithstanding the provisions of Section 1.9(a), if any holder of shares of Company Capital Stock who demands appraisal of such holder’s shares under the DGCL (or, if the Company is subject to Section 2115 of the CGCL, the CGCL) shall effectively withdraw or lose (through the failure to perfect or otherwise) such holder’s right to appraisal, then as of the Closing or the occurrence of such event, whichever later occurs, such holder’s shares of Company Capital Stock shall automatically be converted into the right to receive the applicable Merger Consideration, without interest thereon, promptly following the surrender of the certificate or certificates representing such shares of Company Capital Stock.

(c) Notice of Dissenting Shares . The Company shall give Parent: (i) prompt notice of any demands for appraisal of shares of Company Capital Stock received by the Company, withdrawals of any demands, and any other instruments or notices served or otherwise delivered pursuant to the DGCL or the CGCL and received by the Company; and (ii) the opportunity to direct all negotiations and proceedings with respect to any such demands for appraisal. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal of shares of

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Company Capital Stock or offer to settle any such demands other than by operation of law or pursuant to a final order of a court of competent jurisdiction.

1.10 Exchange of Certificates.

(a) Payment Agent . On or prior to the Closing Date, Parent shall select a reputable bank or trust company reasonably acceptable to the Company to act as payment agent in the Merger (the “ Payment Agent ”). On or promptly following the Closing Date, Parent shall deposit with the Payment Agent cash sufficient to pay the cash consideration payable pursuant to Sections 1.5(a)(ii)(A), 1.5(a)(iii)(A), 1.5(a)(v)(A) and 1.5(a)(vi)(A). The cash amount so deposited with the Payment Agent is referred to as the “ Payment Fund .” The Payment Agent will invest the funds included in the Payment Fund in the manner directed by Parent. Any interest or other income resulting from the investment of such funds shall be the property of, and will be paid to, Parent.

(b) Letter of Transmittal . Prior to the Effective Time, the Company shall mail to each Person who is a record holder of Company Capital Stock or Company Options immediately prior to the Effective Time: (i) a letter of transmittal (or similar document to be delivered to the holders of Company Options) containing such provisions as Parent or the Payment Agent may reasonably specify (including a provision confirming that delivery of Company Stock Certificates (as defined in 1.10(d)) shall be effected, and risk of loss and title to Company Stock Certificates shall pass, only upon delivery of such Company Stock Certificates to the Payment Agent, and a provision whereby such holder agrees to be bound by the provisions of Sections 1.10, 9 and 10.1) (a “ Letter of Transmittal ”); and (ii) instructions for use in effecting the exchange of Company Stock Certificates for the Merger Consideration, if any, payable with respect to such Company Capital Stock. Upon the surrender to the Payment Agent of a Company Stock Certificate (or an affidavit of lost stock certificate as described in Section 1.10(e)), together with a duly executed Letter of Transmittal and such other customary documents as Parent or the Payment Agent may reasonably request, the holder of such Company Stock Certificate shall be entitled to receive in exchange therefor the Merger Consideration, if any, which such holder has the right to receive pursuant to Section 1.5(a) at the time of such surrender, and the Company Stock Certificate so surrendered shall forthwith be canceled. From and after the Effective Time, each Company Stock Certificate which prior to the Effective Time represented shares of Company Capital Stock shall be deemed to represent only the right to receive the Merger Consideration payable with respect to such shares, and the holder of each such Company Stock Certificate shall cease to have any rights with respect to the shares of Company Capital Stock formerly represented thereby. Upon the delivery to the Payment Agent of a duly executed letter of transmittal and such other customary documents as Parent or the Payment Agent may reasonably request, a holder of Company Options that were outstanding immediately prior to the Closing shall be entitled to receive in exchange therefor the Merger Consideration payable in respect thereof, which amount Parent shall cause to be paid through the Surviving Corporation’s payroll agent. The Company shall deliver a copy of the Letter of Transmittal to the Stockholders’ Agent.

(c) Payments to Others . If payment of Merger Consideration in respect of shares of Company Capital Stock converted pursuant to Section 1.5 is to be made to a Person other than the Person in whose name a surrendered Company Stock Certificate is registered, it shall be a condition to such payment that the Company Stock Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the Person requesting such payment shall have paid any transfer and other Taxes required by reason of such payment in a name other than that of the registered holder of the Company Stock Certificate surrendered or shall have established to the satisfaction of Parent that such Tax either has been paid or is not payable.

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(d) Stock Transfer Books . As of the Effective Time, the stock transfer books of the Company shall be closed and there shall not be any further registration of transfers of shares of Company Capital Stock thereafter on the records of the Company. If, after the Effective Time, certificates for shares of Company Capital Stock (“ Company Stock Certificates ”) are presented to the Surviving Corporation, they shall be canceled and exchanged for the Merger Consideration, if any, payable with respect to such shares as provided for in Section 1.5. No interest shall accrue or be paid on any Merger Consideration payable upon the surrender of a Company Stock Certificate which immediately before the Effective Time represented outstanding shares of Company Capital Stock.

(e) Lost Certificates . In the event any Company Stock Certificate representing shares of Company Capital Stock converted in connection with the Merger pursuant to Section 1.5 shall have been lost, stolen or destroyed, Parent may, in its discretion and as a condition precedent to the payment of any Merger Consideration with respect to the shares of Company Capital Stock previously represented by such Company Stock Certificate, require the owner of such lost, stolen or destroyed Company Stock Certificate to provide an appropriate affidavit and an indemnity agreement in form and substance reasonably satisfactory to Parent as indemnity against any claim that may be made against the Payment Agent, Parent, the Surviving Corporation or any affiliated party with respect to such Company Stock Certificate.

(f) Undistributed Payment Funds . Any portion of the Payment Fund that remains undistributed to Effective Time Holders as of the date that is 180 days after the Closing Date shall be delivered to Parent upon demand, and Effective Time Holders who have not theretofore surrendered their Company Stock Certificates or Company Warrants in accordance with this Section 1.10 shall thereafter look only to Parent for satisfaction of their claims for the Merger Consideration payable with respect to the shares of Company Capital Stock previously represented by such Company Stock Certificates or the shares of Company Capital Stock subject to such Company Warrants, as applicable, without any interest thereon.

(g) Escheat . Notwithstanding anything in this Agreement to the contrary, neither Parent nor any other Person shall be liable to any holder of shares of Company Capital Stock or Company Warrants or to any other Person for any amount paid to a public official pursuant to applicable abandoned property law, escheat law or similar Legal Requirement. Any amounts remaining unclaimed by holders of shares of Company Capital Stock or Company Options immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Body shall, to the extent permitted by applicable Legal Requirements, become the property of Parent free and clear of any Encumbrance.

(h) Withholding . Each of the Payment Agent, Parent and the Surviving Corporation shall be entitled to deduct and withhold from any consideration payable pursuant to this Agreement to any security holder or former security holder of the Company such amounts as Parent reasonably determines in good faith are required to be deducted or withheld therefrom or in connection therewith under the Code or any provision of state, local or foreign Tax law or under any other applicable Legal Requirement. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

1.11 Further Action. If, at any time after the Effective Time, any further action is reasonably determined by Parent to be necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation or Parent with full right, title and possession of and to all rights and property of

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Merger Sub and the Company, the officers and directors of the Surviving Corporation and Parent shall be fully authorized (in the name of Merger Sub, in the name of the Company and otherwise) to take such action.

2. Representations and Warranties of the Company

The Company represents and warrants, to and for the benefit of the Indemnitees, as follows:

2.1 Due Organization; Subsidiaries; Etc.

(a) Organization . The Company has been duly organized, and is validly existing and in good standing, under the laws of the State of Delaware. The Company has full power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own and use its assets in the manner in which its assets are currently owned and used; and (iii) to perform its obligations under all Contracts to which it is a party or by which it is bound.

(b) Qualification . The Company is qualified, licensed or admitted to do business as a foreign corporation, and is in good standing (to the extent that the applicable jurisdiction recognizes the concept of good standing), under the laws of all jurisdictions where the property owned, leased or operated by it or the nature of its business requires such qualification, license or admission and where the failure to be so qualified, licensed or admitted would have a Material Adverse Effect. Part 2.1(b) of the Disclosure Schedule accurately sets forth each jurisdiction where the Company is qualified, licensed or admitted to do business.

(c) Directors and Officers . Part 2.1(c) of the Disclosure Schedule accurately sets forth: (i) the names of the members of the board of directors (or similar body) of the Company; (ii) the names of the members of each committee of the board of directors (or similar body) of the Company; and (iii) the names and titles of the officers of the Company.

(d) No Subsidiaries . The Company does not own any shares or other securities of any other Entity. There are no Entities that the Company is required or permitted to consolidate for financial reporting purposes under GAAP. There are no Entities that have been merged into or that otherwise are predecessors to the Company. The Company has not agreed nor is obligated to make any future investment in or capital contribution to any Entity.

2.2 Charter Documents; Records. The Company has made available to Parent accurate and complete copies of: (a) the Charter Documents; and (b) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the stockholders, the board of directors and all committees of the board of directors of the Company since January 1, 2004. All actions taken and all transactions entered into by the Company have been duly approved by all necessary action of the board of directors and stockholders of the Company. There has been no violation of any of the provisions of the Charter Documents, and the Company has not taken any action that is inconsistent in any material respect with any resolution adopted by the Company’s stockholders, board of directors or any committee of the board of directors. The stock records and minute books of the Company are accurate, up-to-date and complete in all material respects, and have been maintained in accordance with prudent business practices and all applicable Legal Requirements.

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2.3 Capitalization.

(a) Outstanding Securities . The authorized capital stock of the Company consists of: (i) 170,945,000 shares of Company Common Stock, of which 4,503,569 shares are issued and outstanding as of the date of this Agreement; and (ii) 149,890,000 shares of Company Preferred Stock, of which: (A) 18,345,000 shares are designated as Series A Preferred Stock, 17,800,000 shares of which are issued and outstanding as of the date of this Agreement; (B) 18,345,000 shares are designated as Series A-1 Preferred Stock, 500,000 of which are issued and outstanding as of the date of this Agreement (however, at no time is the Company authorized to issue and have outstanding more than a total of 18,345,000 shares of Series A Preferred Stock and Series A-1 Preferred Stock together); (C) 26,600,000 shares are designated as Series B Preferred Stock, 20,425,364 of which are issued and outstanding as of the date of this Agreement; (D) 26,600,000 shares are designated as Series B-1 Preferred Stock, none of which are issued and outstanding as of the date of this Agreement (however, at no time is the Company authorized to issue and have outstanding more than a total of 26,600,000 shares of Series B Preferred Stock and Series B-1 Preferred Stock together); (E) 30,000,000 shares are designated as Series C Preferred Stock, 29,614,654 of which are issued and outstanding as of the date of this Agreement; and (F) 30,000,000 shares are designated as Series C-1 Preferred Stock, none of which are issued and outstanding as of the date of this Agreement (however, at no time is the Company authorized to issue and have outstanding more than a total of 30,000,000 shares of Series C Preferred Stock and Series C-1 Preferred Stock together). There are 94,905 shares of Common Stock and no shares of Preferred Stock held in the Company’s treasury as of the date of this Agreement. Part 2.3(a) of the Disclosure Schedule sets forth the names of the Company’s stockholders and the class, series and number of shares of Company Capital Stock owned of record by each of such stockholders as of the date of this Agreement.

(b) Dividends, Authorization, Etc. The Company has not declared or paid any dividends on any shares of Company Capital Stock. All of the outstanding shares of Company Capital Stock have been duly authorized and validly issued, and are fully paid and nonassessable. Except as set forth in Part 2.3(b) of the Disclosure Schedule, no shares of Company Capital Stock are subject to forfeiture, restriction on transfer (other than restrictions on transfer imposed by virtue of applicable federal and state securities laws) or a right of repurchase by the Company (“ Restricted Company Shares ”). Each share of Company Preferred Stock is convertible into shares of Company Common Stock on a one-for-one basis.

(c) Stock Options . The Company has reserved 17,712,287 shares of Company Common Stock for issuance under the Company Option Plan, of which options with respect to 13,896,080 shares are outstanding as of the date of this Agreement. Part 2.3(c) of the Disclosure Schedule accurately sets forth, with respect to each Company Option that is outstanding as of the date of this Agreement: (i) the name of the holder of such Company Option; (ii) the total number of shares of Company Common Stock that are subject to such Company Option; (iii) the exercise price per share of Company Common Stock purchasable under such Company Option; and (iv) the expiration date of such Company Option. Each grant of a Company Option was duly authorized no later than the date on which the grant of such Company Option was by its terms to be effective (the “ Grant Date ”) by all necessary corporate action, including, as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, each such grant was made in accordance with the terms of the applicable compensation plan or arrangement of the Company and all other applicable Legal Requirements, the per share exercise price of each Company Option was equal to or greater than the fair

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market value of a share of Company Common Stock on the applicable Grant Date and each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company. The cancellation of Company Options at the Effective Time and payment of cash in exchange therefor in accordance with Section 1.6 will comply with the terms of the Company Option Plan, all Contracts applicable to such Company Options and all Legal Requirements and, as of the Closing, no former holder of a Company Option will have any rights with respect to such Company Option other than the right to receive cash in respect thereof as contemplated by this Agreement.

(d) Warrants . Part 2.3(d) of the Disclosure Schedule accurately sets forth, with respect to each Company Warrant that is outstanding as of the date of this Agreement: (i) the name of the holder of such Company Warrant; (ii) the class, series and total number of shares of Company Capital Stock that are subject to such Company Warrant and the class, series and number of shares of Company Capital Stock with respect to which such Company Warrant is immediately exercisable; (iii) the date on which such Company Warrant was issued and the term of such Company Warrant; and (iv) the exercise price per share of Company Capital Stock purchasable under such Company Warrant. The Company has made available to Parent accurate and complete copies of each Contract pursuant to which any Company Warrant is outstanding.

(e) No Other Securities . Except for the Company Preferred Stock and except as set forth in Part 2.3(c) or 2.3(d) of the Disclosure Schedule, there is no: (i) outstanding subscription, option, call, convertible note, warrant or right (whether or not currently exercisable) granted or issued by the Company to acquire any shares of Company Capital Stock or other securities of the Company; (ii) outstanding security, instrument or obligation granted or issued by the Company that is or may become convertible into or exchangeable for any shares of Company Capital Stock (or cash based on the value of such shares) or other securities of the Company; (iii) Contract under which the Company is or may become obligated to sell or otherwise issue any shares of Company Capital Stock or any other securities, including any promise or commitment to grant Company Options or other securities of the Company to an employee of or other service provider to the Company; or (iv) condition or circumstance that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of Company Capital Stock or other securities of the Company from the Company. As of immediately following the Effective Time, there will be no outstanding options, warrants or other rights to purchase shares of Company Capital Stock.

(f) Legal Issuance . All outstanding shares of Company Capital Stock, all outstanding Company Options and Company Warrants and all other securities that have ever been issued or granted by the Company have been issued and granted in compliance with: (i) all applicable securities laws and other applicable Legal Requirements; and (ii) all requirements set forth in all applicable Contracts. None of the outstanding shares of Company Capital Stock were issued in violation of any preemptive rights or other rights to subscribe for or purchase securities of the Company. Part 2.3(f) of the Disclosure Schedule accurately identifies each Company Contract relating to any securities of the Company that contains any information rights, registration rights, financial statement requirements or other terms that would survive the Closing unless terminated or amended prior to the Closing.

(g) Repurchased Shares . All shares of capital stock of the Company ever repurchased or redeemed by the Company were repurchased or redeemed in compliance with: (A) all applicable securities laws and other applicable Legal Requirements; and (B) all requirements set forth in all applicable Contracts.

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2.4 Financial Statements and Related Information.

(a) Delivery of Financial Statements . The Company has made available to Parent the following financial statements and notes thereto (collectively, the “ Company Financial Statements ”): (i) the audited balance sheets of the Company as of December 31, 2006, December 31, 2007 and December 31, 2008, and the related audited statements of income, statements of stockholders’ equity and statements of cash flows for the years ended December 31, 2006, December 31, 2007 and December 31, 2008, together with the notes thereto and the unqualified report and opinion of Ernst & Young relating thereto; (ii) the unaudited balance sheet of the Company as of March 31, 2009, and the related unaudited statement of income, statement of stockholders’ equity and statement of cash flows for the three months ended March 31, 2009; and (iii) the unaudited balance sheet of the Company as of June 30, 2009 (the “ Unaudited Interim Balance Sheet ”), and the related unaudited statement of income, statement of stockholders’ equity and statement of cash flows for the six months ended June 30, 2009.

(b) Fair Presentation . The Company Financial Statements present fairly the financial position of the Company as of the respective dates thereof and the results of operations and cash flows of the Company for the periods covered thereby. The Company Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered, except that the financial statements referred to in Sections 2.4(a)(ii) and 2.4(a)(iii) do not contain footnotes. The financial statements delivered to Parent pursuant to Section 4.10: (i) will present fairly the financial position of the Company as of September 30, 2009 and the balance sheet, results of operations and cash flows of the Company for the nine months ended September 30, 2009; and (ii) will be prepared in accordance with GAAP applied on a basis consistent with the basis on which the Company Financial Statements were prepared, except that the September 30 ^th Financial Statements (as defined in Section 4.10) will not contain footnotes.

(c) Internal Controls . The books, records and accounts of the Company accurately and fairly reflect, in reasonable detail, the transactions in and dispositions of the assets of the Company. The systems of internal accounting controls maintained by the Company are sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Part 2.4(c) of the Disclosure Schedule lists, and the Company has made available to Parent copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such internal accounting controls.

(d) Insider Receivables . Part 2.4(d) of the Disclosure Schedule provides an accurate and complete breakdown of all amounts (including any Indebtedness) owed to the Company by any Company Employee or stockholder of the Company (“ Insider Receivables ”) as of the date of this Agreement. There will be no outstanding Insider Receivables as of the Effective Time.

2.5 Liabilities.

(a) No Liabilities . The Company has no accrued, contingent or other Liabilities of any nature, either matured or unmatured (whether or not required to be reflected in financial statements in accordance with GAAP, and whether due or to become due), except for: (i) Liabilities identified as such

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in the “liabilities” column of the Unaudited Interim Balance Sheet; (ii) Liabilities that have been incurred by the Company since the date of the Unaudited Interim Balance Sheet in the ordinary course of business consistent with the Company’s past practices; (iii) Liabilities incurred in connection with this Agreement and the transactions contemplated by this Agreement; and (iv) the Liabilities identified in Part 2.5(a) of the Disclosure Schedule.

(b) Accounts Payable . Part 2.5(b) of the Disclosure Schedule provides an accurate and complete breakdown and aging of: (i) all accounts payable of the Company as of the date of this Agreement; and (ii) all notes payable of the Company and all other indebtedness of the Company for borrowed money as of the date of this Agreement.

(c) No “Off-Balance Sheet” Arrangements . The Company has not effected or otherwise been involved in any “off-balance sheet arrangements” (as defined in Item 303(a)(4)(ii) of Regulation S-K under the Securities Exchange Act of 1934, as amended). Without limiting the generality of the foregoing, the Company has not guaranteed any Indebtedness or other obligation of any other Person.

(d) Director and Officer Indemnification . No event has occurred, and no circumstance or condition exists, that has resulted in, or that will or would reasonably be expected to result in, any claim for indemnification, reimbursement, contribution or the advancement of expenses by any Company Employee (other than a claim for reimbursement by the Company, in the ordinary course of business, of travel expenses or other out-of-pocket expenses of a routine nature incurred by such Company Employee in the course of performing such Company Employee’s duties for the Company) pursuant to: (i) the terms of the Charter Documents; (ii) any indemnification agreement or other Contract between the Company and any such Company Employee; or (iii) any applicable Legal Requirement.

(e) Claims by Securityholders . No event has occurred, and no circumstance or condition exists, that has resulted in, or that will or would reasonably be expected to result in, any Liability of the Company to any current, former or alleged holder of Company Capital Stock, Company Options or Company Warrants in such holder’s capacity (or alleged capacity) as a securityholder of the Company.

2.6 Absence of Changes. Except as set forth in Part 2.6 of the Disclosure Schedule, between June 30, 2009 and the date of this Agreement:

(a) there has not been any Material Adverse Effect, and no event has occurred or circumstance has arisen that, in combination with any other events or circumstances, will or would reasonably be expected to have or result in a Material Adverse Effect;

(b) there has not been any material loss, damage or destruction to, or any material interruption in the use of, any of the Company’s material assets (whether or not covered by insurance);

(c) the Company has not declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of its capital stock or other securities, and the Company has not repurchased, redeemed or otherwise reacquired any of its shares of capital stock or other securities, other than from former employees, directors and consultants pursuant to restricted stock purchase agreements or stock option agreements providing for the repurchase of such securities in connection with their termination of service to the Company;

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(d) the Company has not sold, issued, granted or authorized the sale, issuance or grant of: (i) any capital stock or other security (except for Company Common Stock issued upon the exercise of outstanding Company Options); (ii) any option, call, warrant or right to acquire any capital stock or other security (except for Company Options described in Part 2.3(c) of the Disclosure Schedule); or (iii) any instrument convertible into or exchangeable for any capital stock (or cash based on the value of such capital stock) or other security;

(e) the Company has not amended or waived any of its rights under, or permitted the acceleration of vesting under: (i) any provision of the Company Option Plan; (ii) any provision of any agreement evidencing any outstanding Company Option; or (iii) any restricted stock agreement;

(f) there has been no amendment to any of the Charter Documents (other than the Certificate Amendment), and the Company has not effected or been a party to any Acquisition Transaction, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;

(g) the Company has not made any individual capital expenditure that exceeds $100,000;

(h) the Company has not amended or prematurely terminated, or waived any material right or remedy under, any Contract that is or would constitute a Material Contract (as defined in Section 2.11(a));

(i) the Company has not: (i) acquired, leased or licensed any material right or other material asset from any other Person; (ii) sold or otherwise disposed of, or leased or licensed, any material right or other material asset to any other Person; or (iii) waived or relinquished any material right;

(j) the Company has not written off as uncollectible, or established any extraordinary reserve with respect to, any account receivable or other indebtedness in excess of $10,000 with respect to a single matter;

(k) the Company has not made any pledge of any of its assets or otherwise permitted any of its assets to become subject to any Encumbrance, except for pledges of immaterial assets made in the ordinary course of business and consistent with past practices;

(l) the Company has not: (i) lent money to any Person (other than pursuant to routine and reasonable travel advances made to current employees of the Company in the ordinary course of business); or (ii) incurred or guaranteed any indebtedness for borrowed money;

(m) the Company has not: (i) established, adopted or amended any Company Employee Plan; (ii) made any bonus, profit-sharing or similar payment to, or increased the amount of wages, salary, commissions, fringe benefits or other compensation (including equity-based compensation, whether payable in cash or otherwise) or remuneration payabl

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