-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TgCEA5ZH2G4ldcca4lIpyYnnfmoWEEJuQyOxAk03a5TZHRX4S8w3WbZyyGsWV3Wv ndWvgMTCQMUv1rgVKSiHVA== 0001047469-08-007032.txt : 20080529 0001047469-08-007032.hdr.sgml : 20080529 20080529133020 ACCESSION NUMBER: 0001047469-08-007032 CONFORMED SUBMISSION TYPE: SC TO-T PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 20080529 DATE AS OF CHANGE: 20080529 GROUP MEMBERS: KB ACQUISITION CORP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KOSAN BIOSCIENCES INC CENTRAL INDEX KEY: 0001110206 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 943217016 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T SEC ACT: 1934 Act SEC FILE NUMBER: 005-60269 FILM NUMBER: 08865787 BUSINESS ADDRESS: STREET 1: 3832 BAY CENTER PLACE CITY: HAYWARD STATE: CA ZIP: 94545 BUSINESS PHONE: 5107328400 MAIL ADDRESS: STREET 1: 3832 BAY CENTER PLACE CITY: HAYWARD STATE: CA ZIP: 94545 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BRISTOL MYERS SQUIBB CO CENTRAL INDEX KEY: 0000014272 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 220790350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T BUSINESS ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2125464000 MAIL ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL MYERS CO DATE OF NAME CHANGE: 19891012 SC TO-T 1 a2185989zscto-t.htm SC TO-T
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE TO

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934

KOSAN BIOSCIENCES INCORPORATED
(Name of Subject Company (Issuer))

KB ACQUISITION CORP.
(Offeror)
A Wholly-Owned Subsidiary of

BRISTOL-MYERS SQUIBB COMPANY
(Parent of Offeror)
(Names of Filing Persons (identifying status as offeror, issuer or other person))

COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)

50064W107
(CUSIP Number of Class of Securities)

Sandra Leung
Senior Vice President, General
Counsel & Corporate Secretary
Bristol-Myers Squibb Company
345 Park Avenue
New York, New York 10154
(212) 546-4000

(Name, address, and telephone numbers of person authorized to receive
notices and communications on behalf of filing persons)

Copies to:

Susan Webster
Ronald Cami
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
(212) 474-1000

CALCULATION OF FILING FEE

Transaction Valuation(1)		Amount of Filing Fee(2)


$246,148,958		$9,673.65

(1): Estimated for purposes of calculating the filing fee only. This amount is determined by multiplying 44,754,356 shares of Kosan Biosciences Incorporated common stock (which represents the number of shares, including outstanding, in-the-money options, warrants and restricted stock units, outstanding as of May 27, 2008, the most recent practicable date) by $5.50 per share, which is the offer price.
(2): The filing fee was calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934 and Fee Rate Advisory #6 for fiscal year 2008, issued December 27, 2007, by multiplying the transaction value by .0000393.
o: Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

Amount Previously Paid: N/A		Filing Party: N/A
Form of Registration No.: N/A		Date Filed: N/A

o: Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

ý: Third-party tender offer subject to Rule 14d-1.
o: Issuer tender offer subject to Rule 13e-4.
o: Going-private transaction subject to Rule 13e-3.
o: Amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer. o

This Tender Offer Statement on Schedule TO (together with any amendments and supplements hereto, this "Schedule TO") is filed by (i) KB Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Bristol-Myers Squibb Company, a Delaware corporation ("Parent"), and (ii) Parent. This Schedule TO relates to the offer (the "Offer") by the Purchaser to purchase all of the outstanding shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock (the "Shares"), of Kosan Biosciences Incorporated, a Delaware corporation (the "Company"), at a purchase price of $5.50 per Share, net to the seller in cash, without interest thereon, less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 29, 2008 (together with any amendments and supplements thereto, the "Offer to Purchase") and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)(A) and (a)(1)(B), respectively.

Item 1. Summary Term Sheet.

The information set forth in the section of the Offer to Purchase entitled "Summary Term Sheet" is incorporated herein by reference.

Item 2. Subject Company Information.

(a) The name of the subject company and the issuer of the securities to which this Schedule TO relates is Kosan Biosciences Incorporated, a Delaware corporation. The Company's principal executive offices are located at 3832 Bay Center Place, Hayward, CA 94545. The Company's telephone number at such address is (510) 732-8400.

(b) This Schedule TO relates to the outstanding shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock, of the Company. The Company has advised Parent that, on May 27, 2008, 42,656,290 Shares were issued and outstanding, 4,173,806 Shares were reserved for issuance upon the exercise of stock options and warrants outstanding on that date, 469,505 Shares were subject to outstanding restricted stock units outstanding on that date and 178,638 Shares were reserved for issuance pursuant to the Company's employee stock purchase plan.

(c) The information set forth in the section in the Offer to Purchase entitled "Price Range of Shares; Dividends" is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

(a) through (c) This Schedule TO is filed by Parent and the Purchaser. The information set forth in the section of the Offer to Purchase entitled "Certain Information Concerning Parent and the Purchaser" and in Schedule I to the Offer to Purchase is incorporated herein by reference.

Item 4. Terms of the Transaction.

The information set forth in the Offer to Purchase is incorporated herein by reference.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

The information set forth in the sections of the Offer to Purchase entitled "Summary Term Sheet," "Introduction," "Certain Information Concerning Parent and the Purchaser," "Background of the Offer; Past Contacts or Negotiations with the Company," "The Transaction Agreements," "The License Agreement" and "Purpose of the Offer; Plans for the Company" is incorporated herein by reference.

Item 6. Purposes of the Transaction and Plans or Proposals.

The information set forth in the sections of the Offer to Purchase entitled "Summary Term Sheet," "Introduction," "Price Range of Shares; Dividends," "Background of the Offer; Past Contacts or Negotiations with the Company," "The Transaction Agreements," "The License Agreement," "Purpose

of the Offer; Plans for Company" and "Certain Effects of the Offer" is incorporated herein by reference.

Item 7. Source and Amount of Funds or Other Consideration.

The information set forth in the section of the Offer to Purchase entitled "Source and Amount of Funds" is incorporated herein by reference.

Item 8. Interest in Securities of the Subject Company.

The information set forth in the sections of the Offer to Purchase entitled "Certain Information Concerning Parent and the Purchaser," "The Transaction Agreements" and "Purpose of the Offer; Plans for the Company" is incorporated herein by reference.

Item 9. Persons/Assets Retained, Employed, Compensated or Used.

The information set forth in the section of the Offer to Purchase entitled "Fees and Expenses" is incorporated herein by reference.

Item 10. Financial Statements.

Not applicable.

Item 11. Additional Information.

(a)(1) The information set forth in the sections of the Offer to Purchase entitled "Certain Information Concerning Parent and the Purchaser," "Background of the Offer; Past Contacts or Negotiations with the Company," "The Transaction Agreements" and "Purpose of the Offer; Plans for the Company" is incorporated herein by reference.

(a)(2) The information set forth in the sections of the Offer to Purchase entitled "Purpose of the Offer; Plans for the Company," "Certain Conditions of the Offer" and "Certain Legal Matters; Regulatory Approvals" is incorporated herein by reference.

(a)(3) The information set forth in the sections of the Offer to Purchase entitled "Certain Conditions of the Offer" and "Certain Legal Matters; Regulatory Approvals" is incorporated herein by reference.

(a)(4) The information set forth in the sections of the Offer to Purchase entitled "Source and Amount of Funds," "Certain Effects of the Offer" and "Certain Legal Matters; Regulatory Approvals" is incorporated herein by reference.

(a)(5) None.

(b) The information set forth in the Offer to Purchase is incorporated herein by reference.

Item 12. Exhibits.

Exhibit		Exhibit Name
(a)(1)(A)		Offer to Purchase, dated May 29, 2008.
(a)(1)(B)		Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number (TIN) on Substitute Form W-9).
(a)(1)(C)		Notice of Guaranteed Delivery.
(a)(1)(D)		Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(E)		Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5)(A)		Joint Press Release issued by Bristol-Myers Squibb Company and Kosan Biosciences Incorporated on May 29, 2008.
(a)(5)(B)		Summary Newspaper Advertisement as published in The Wall Street Journal on May 29, 2008.
(a)(5)(C)		Press Release issued by Bristol-Myers Squibb Company on May 29, 2008.
(b)		Not applicable.
(d)(A)		Agreement and Plan of Merger, dated as of May 28, 2008, by and among Bristol-Myers Squibb Company, KB Acquisition Corp. and Kosan Biosciences Incorporated.
(d)(B)		Stockholder Agreement, dated as of May 28, 2008, by and among Bristol-Myers Squibb Company, KB Acquisition Corp. and the executive officers and directors of Kosan Biosciences Incorporated.
(d)(C)		Standstill Agreement, dated as of May 15, 2008, by and between Bristol-Myers Squibb Company and Kosan Biosciences Incorporated.
(g)		Not applicable.
(h)		Not applicable.

Item 13. Information required by Schedule 13E-3.

Not applicable.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

KB ACQUISITION CORP.
By	/s/ Jeremy Levin
	Name:	Jeremy Levin
	Title:	President
	Date:	May 29, 2008
BRISTOL-MYERS SQUIBB COMPANY
By	/s/ James M. Cornelius
	Name:	James M. Cornelius
	Title:	Chairman of the Board and Chief Executive Officer
	Date:	May 29, 2008

Exhibit		Exhibit Name
(a)(1)(A)		Offer to Purchase, dated May 29, 2008.
(a)(1)(B)		Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number (TIN) on Substitute Form W-9).
(a)(1)(C)		Notice of Guaranteed Delivery.
(a)(1)(D)		Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(E)		Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5)(A)		Joint Press Release issued by Bristol-Myers Squibb Company and Kosan Biosciences Incorporated on May 29, 2008.
(a)(5)(B)		Summary Newspaper Advertisement as published in The Wall Street Journal on May 29, 2008.
(a)(5)(C)		Press Release issued by Bristol-Myers Squibb Company on May 29, 2008.
(b)		Not applicable.
(d)(A)		Agreement and Plan of Merger, dated as of May 28, 2008, by and among Bristol-Myers Squibb Company, KB Acquisition Corp. and Kosan Biosciences Incorporated.
(d)(B)		Stockholder Agreement, dated as of May 28, 2008, by and among Bristol-Myers Squibb Company, KB Acquisition Corp. and the executive officers and directors of Kosan Biosciences Incorporated.
(d)(C)		Standstill Agreement, dated as of May 15, 2008, by and between Bristol-Myers Squibb Company and Kosan Biosciences Incorporated.
(g)		Not applicable.
(h)		Not applicable.

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Item 1. Summary Term Sheet.

Item 2. Subject Company Information.

Item 3. Identity and Background of Filing Person.

Item 4. Terms of the Transaction.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

Item 6. Purposes of the Transaction and Plans or Proposals.

Item 7. Source and Amount of Funds or Other Consideration.

Item 8. Interest in Securities of the Subject Company.

Item 9. Persons/Assets Retained, Employed, Compensated or Used.

Item 10. Financial Statements.

Item 11. Additional Information.

Item 12. Exhibits.

Item 13. Information required by Schedule 13E-3.

SIGNATURE
EX-99.(A)(1)(A) 2 a2185989zex-99_a1a.htm EXHIBIT 99(A)(1)(A)
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Offer To Purchase For Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase Series A Junior Participating Preferred Stock)

KOSAN BIOSCIENCES INCORPORATED

$5.50 NET PER SHARE

KB ACQUISITION CORP.
a wholly-owned subsidiary of

BRISTOL-MYERS SQUIBB COMPANY

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JUNE 25, 2008, UNLESS THE OFFER IS EXTENDED.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of May 28, 2008 (the "Merger Agreement"), by and among Bristol-Myers Squibb Company ("Parent"), KB Acquisition Corp. (the "Purchaser") and Kosan Biosciences Incorporated (the "Company"). The Offer is conditioned upon (i) the satisfaction of the Minimum Tender Condition (as defined herein) and (ii) the expiration or termination of any waiting period (and any extension thereof) applicable to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The term "Minimum Tender Condition" is defined in Section 16—"Certain Conditions of the Offer" and generally requires that the number of outstanding shares of common stock, par value $0.001 per share, of the Company, including all rights to purchase Series A Junior Participating Preferred Stock issued pursuant to the Rights Agreement, dated as of October 5, 2001, between the Company and Mellon Investor Services LLC, as amended from time to time (the "Shares") which have been validly tendered and not validly withdrawn prior to the expiration of the Offer, when added to any Shares already owned by Parent or any of its controlled subsidiaries, if any, represent at least a majority of the outstanding Shares (determined on a fully diluted basis for all outstanding stock options, restricted stock units and any other rights to acquire Shares on the date of determination). The Offer is also subject to other conditions set forth in this Offer to Purchase. See Section 16—"Certain Conditions of the Offer."

The Board of Directors of the Company (the "Company Board") has (i) approved and declared advisable the Merger Agreement and the Stockholder Agreement (as defined herein), the Offer, the merger (the "Merger") of the Purchaser with and into the Company, with the Company as the surviving corporation, in accordance with the General Corporation Law of the State of Delaware, and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement, (ii) declared that it is in the best interests of the stockholders of the Company that the Company enter into the Merger Agreement and consummate the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement on the terms and subject to the conditions set forth therein, (iii) declared that the terms of the Offer and the Merger are fair to the Company's stockholders and (iv) recommended that the Company's stockholders accept the Offer, tender their Shares pursuant to the Offer and, if required by applicable law, adopt the Merger Agreement.

IMPORTANT

Any stockholder of the Company wishing to tender Shares in the Offer must (i) complete and sign the letter of transmittal (or a facsimile thereof) that accompanies this Offer to Purchase (the "Letter of Transmittal") in accordance with the instructions in the Letter of Transmittal and mail or deliver the Letter of Transmittal and all other required documents to the Depositary (as defined herein) together with certificates representing the Shares tendered or follow the procedure for book-entry transfer set forth in Section 3—"Procedures for Accepting the Offer and Tendering Shares" or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for the stockholder. A stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if such stockholder wishes to tender such Shares.

Any stockholder of the Company who wishes to tender Shares and cannot deliver certificates representing such Shares and all other required documents to the Depositary on or prior to the Expiration Date (as defined herein) or who cannot comply with the procedures for book-entry transfer on a timely basis may tender such Shares pursuant to the guaranteed delivery procedure set forth in Section 3—"Procedures for Accepting the Offer and Tendering Shares."

Questions and requests for assistance may be directed to the Information Agent (as defined herein) or the Dealer Manager (as defined herein) at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may also be obtained from the Information Agent or the Dealer Manager. Stockholders may also contact their broker, dealer, commercial bank, trust company or other nominee for copies of these documents.

The Dealer Manager for the Offer is:

May 29, 2008

SUMMARY TERM SHEET

KB Acquisition Corp, a wholly-owned subsidiary of Parent, is offering to purchase all of the outstanding Shares of the Company for $5.50 per Share net in cash. The following are answers to some of the questions you, as a stockholder of the Company, may have about the Offer. We urge you to read carefully the remainder of this Offer to Purchase and the Letter of Transmittal and the other documents to which we have referred you because this summary may not contain all of the information that is important to you. Additional important information is contained in the remainder of this Offer to Purchase and the Letter of Transmittal.

Who is offering to buy my securities?

We are KB Acquisition Corp., a Delaware corporation formed for the purpose of making this Offer. We are a wholly-owned subsidiary of Parent, a Delaware corporation. See the "Introduction" to this Offer to Purchase and Section 8—"Certain Information Concerning Parent and the Purchaser."

What are the classes and amounts of securities sought in the Offer?

We are seeking to purchase all of the outstanding Shares of the Company. See the "Introduction" to this Offer to Purchase and Section 1—"Terms of the Offer."

How much are you offering to pay? What is the form of payment? Will I have to pay any fees or commissions?

We are offering to pay $5.50 per Share net to you, in cash, without interest thereon and less any required withholding taxes. If you are the record owner of your Shares and you directly tender your Shares to us in the Offer, you will not have to pay brokerage fees or similar expenses. If you own your Shares through a broker, banker or other nominee, and your broker tenders your Shares on your behalf, your broker, banker or other nominee may charge you a fee for doing so. You should consult your broker, banker or other nominee to determine whether any charges will apply. See the "Introduction" to this Offer to Purchase.

Do you have the financial resources to make payment?

Parent, our parent company, will provide us with sufficient funds to purchase all Shares successfully tendered in the Offer and to provide funding for our Merger with the Company, which is expected to follow the successful completion of the Offer in accordance with the terms and conditions of the Merger Agreement. The Offer is not conditioned upon any financing arrangements. Parent intends to provide us with the necessary funds from cash on hand. See Section 9—"Source and Amount of Funds."

Is your financial condition relevant to my decision to tender my Shares in the Offer?

No. We do not think our financial condition is relevant to your decision whether to tender Shares and accept the Offer because:

•: the Offer is being made for all outstanding Shares solely for cash;
•: we, through our parent company, Bristol-Myers Squibb Company, will have sufficient funds available to purchase all Shares successfully tendered in the Offer in light of our financial capacity in relation to the amount of consideration payable;
•: the Offer is not subject to any financing condition; and
•: if we consummate the Offer, we expect to acquire any remaining Shares for the same cash price in the Merger.

See Section 9—"Source and Amount of Funds."

How long do I have to decide whether to tender my Shares in the Offer?

Unless we extend the Offer, you will have at least until 12:00 midnight, New York City time, on Wednesday, June 25, 2008 (which is the end of the day on June 25, 2008), to tender your Shares in the Offer. Furthermore, if you cannot deliver everything required to make a valid tender by that time, you may still participate in the Offer by using the guaranteed delivery procedure that is described later in this Offer to Purchase prior to that time. See Sections 1—"Terms of the Offer" and 3—"Procedures for Accepting the Offer and Tendering Shares."

Can the Offer be extended and under what circumstances?

Yes. We have agreed in the Merger Agreement that so long as neither the Company nor Parent terminates the Merger Agreement in accordance with its terms:

•: We may, in our discretion, without the consent of the Company, (i) extend the Offer on one or more occasions for any period ending no later than the Termination Date (as defined herein), if on any then-scheduled expiration date of the Offer any of the conditions to our obligation to accept for payment and pay for the Shares are not satisfied, until such time as such conditions are satisfied or waived and (ii) extend the Offer for any period ending no later than the Termination Date required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer.
•: We must extend the Offer beyond the initial expiration date or any subsequent expiration date, if on such date any of the conditions to our obligation to accept for payment and pay for the Shares are not satisfied or, in our sole discretion, waived and all such conditions are reasonably capable of being satisfied by the Termination Date, on one or more occasions, in consecutive increments of up to ten business days each, for an aggregate period of time that Parent reasonably believes is necessary (but ending no later than the Termination Date) for such conditions to be satisfied, until such time as such conditions are satisfied.

See Section 1—"Terms of the Offer" for more details on our obligation and ability to extend the Offer.

How will I be notified if the Offer is extended?

If we extend the Offer, we will inform Mellon Investor Services LLC, the depositary for the Offer (the "Depositary"), of any extension and will issue a press release announcing the extension not later than 9:00 a.m., New York City time, on the next business day after the day on which the Offer was scheduled to expire. See Section 1—"Terms of the Offer."

What are the most significant conditions to the Offer?

The Offer is conditioned upon

•: satisfaction of the Minimum Tender Condition, and
•: the expiration or termination of any waiting period (and any extension thereof) applicable to the Offer under the HSR Act.

The term "Minimum Tender Condition" is defined in Section 16—"Certain Conditions of the Offer" and generally requires that the number of outstanding Shares of the Company which have been validly tendered and not validly withdrawn prior to the expiration of the Offer, when added to any Shares already owned by Parent or any of its controlled subsidiaries, if any, represent at least a majority of the outstanding Shares (determined on a fully diluted basis on the date of determination).

The Offer is also subject to a number of other important conditions. We can waive some of these conditions without the Company's consent. We cannot, however, change, modify or waive the Minimum Tender Condition without the consent of the Company. See Section 16—"Certain Conditions of the Offer."

How do I tender my Shares?

To tender your Shares, you must deliver the certificates representing your Shares or confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, together with a completed Letter of Transmittal and any other documents required by the Letter of Transmittal, to the Depositary, prior to the expiration of the Offer. If your Shares are held in street name (that is, through a broker, dealer or other nominee), they can be tendered by your nominee through The Depository Trust Company. If you are unable to deliver any required document or instrument to the Depositary by the expiration of the Offer, you may still participate in the Offer by having a broker, a bank or other fiduciary that is an eligible institution guarantee on or prior to the expiration of the Offer that the missing items will be received by the Depositary within three Nasdaq Global Market ("Nasdaq") trading days after the expiration of the Offer. For the tender to be valid, however, the Depositary must receive the missing items within that three trading day period. See Section 3—"Procedures for Accepting the Offer and Tendering Shares."

Until what time may I withdraw previously tendered Shares?

You may withdraw your previously tendered Shares at any time until the Offer has expired and, if we have not accepted your Shares for payment by July 27, 2008, you may withdraw them at any time after that date until we accept Shares for payment. This right to withdraw will not apply to Shares tendered in any subsequent offering period, if one is provided. See Section 4—"Withdrawal Rights."

How do I withdraw previously tendered Shares?

To withdraw previously tendered Shares, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to the Depositary while you still have the right to withdraw Shares. If you tendered Shares by giving instructions to a broker, banker or other nominee, you must instruct the broker, banker or other nominee to arrange for the withdrawal of your Shares. See Section 4—"Withdrawal Rights."

What does the Company Board think of the Offer?

The Company Board has (i) approved and declared advisable the Merger Agreement and the Stockholder Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement, (ii) declared that it is in the best interests of the stockholders of the Company that the Company enter into the Merger Agreement and consummate the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement on the terms and subject to the conditions set forth therein, (iii) declared that the terms of the Offer and the Merger are fair to the Company's stockholders and (iv) recommended that the Company's stockholders accept the Offer, tender their Shares pursuant to the Offer and, if required by applicable law, adopt the Merger Agreement.

A description of the reasons of the Company Board's approval of the Offer and the Merger is set forth in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 that is being mailed to its stockholders together with this Offer to Purchase. See the "Introduction" to this Offer to Purchase.

iii

If the tender offer is completed, will the Company continue as a public company?

No. Following the purchase of Shares in the Offer, we expect to consummate the Merger. If the Merger takes place, the Company no longer will be publicly owned. Even if for some reason the Merger does not take place, if we purchase all of the tendered Shares, there may be so few remaining stockholders and publicly held Shares that the Company's common stock will no longer be eligible to be traded through Nasdaq or other securities exchanges, there may not be an active public trading market for the Company's common stock, and the Company may no longer be required to make filings with the SEC or otherwise comply with the SEC rules relating to publicly held companies. See Section 14—"Certain Effects of the Offer."

Will the tender offer be followed by a Merger if all of the Shares are not tendered in the Offer?

Yes. If we accept for payment and pay for at least a majority of the Shares on a fully diluted basis, we expect to effect our Merger with and into the Company. If that Merger takes place, all remaining stockholders of the Company (other than Parent) will receive $5.50 per Share net in cash without interest (or any higher price per Share that is paid in the Offer) and the Company will become a wholly-owned subsidiary of Parent. See the "Introduction" to this Offer to Purchase.

If I decide not to tender, how will the Offer affect my Shares?

If you decide not to tender your Shares in the Offer and the Merger occurs, you will subsequently receive the same amount of cash per Share that you would have received had you tendered your Shares in the Offer, without any interest being paid on such amount. Therefore, if the Merger takes place, and you do not validly exercise your appraisal rights under Section 262 of the General Corporation Law of the State of Delaware, the only difference to you between tendering your Shares and not tendering your Shares is that you will be paid earlier if you tender your Shares. If you do validly exercise your appraisal rights, then you may receive the judicially-determined fair value of your Shares in cash. If you decide not to tender your Shares in the Offer and we purchase the tendered Shares, but the Merger does not occur, you will remain a stockholder of the Company. However, there may be so few remaining stockholders and publicly traded Shares that the Company's common stock will no longer be eligible to be traded through Nasdaq or other securities exchanges and there may not be an active public trading market for the Company's common stock. Also, as described above, the Company may no longer be required to make filings with the SEC or otherwise comply with the SEC rules relating to publicly held companies. See the "Introduction" to this Offer to Purchase and Section 14—"Certain Effects of the Offer."

What is the market value of my Shares as of a recent date?

On May 28, 2008, the last trading day before we announced the Offer, the last sale price of the Company's common stock reported on Nasdaq was $1.65 per Share. We encourage you to obtain a recent quotation for Shares of the Company's common stock in deciding whether to tender your Shares. See Section 6—"Price Range of Shares; Dividends."

What are the United States federal income tax consequences of having my Shares accepted for payment in the Offer or receiving cash in the Merger?

each block of Shares (that is, Shares acquired at the same cost in a single transaction) tendered pursuant to the Offer or exchanged for cash pursuant to the Merger. Such gain or loss will be long-term capital gain or loss provided that a stockholder's holding period for such Shares is more than one year at the time of consummation of the Offer or the Merger, as the case may be. See Section 5—"Certain United States Federal Income Tax Consequences."

Stockholders are urged to consult their own tax advisors to determine the particular tax consequences to them (including the application and effect of any state, local or foreign income and other tax laws) of the Offer and the Merger.

Who should I call if I have questions about the Offer?

You may call D.F. King & Co., Inc. at (888) 605-1957 (toll free) or Credit Suisse Securities (USA) LLC at (888) 537-0427 (toll free). D.F. King & Co., Inc. is acting as the information agent and Credit Suisse Securities (USA) LLC is acting as the dealer manager for our tender offer. See the back cover of this Offer to Purchase.

TABLE OF CONTENTS

		Page
SUMMARY TERM SHEET		i
INTRODUCTION		1
THE TENDER OFFER		2
1.	Terms of the Offer.	3
2.	Acceptance for Payment and Payment for Shares.	5
3.	Procedures for Accepting the Offer and Tendering Shares.	6
4.	Withdrawal Rights.	9
5.	Certain United States Federal Income Tax Consequences.	10
6.	Price Range of Shares; Dividends.	11
7.	Certain Information Concerning the Company.	11
8.	Certain Information Concerning Parent and the Purchaser.	12
9.	Source and Amount of Funds.	13
10.	Background of the Offer; Past Contacts or Negotiations with the Company.	14
11.	The Transaction Agreements.	17
12.	The License Agreement.	28
13.	Purpose of the Offer; Plans for the Company.	29
14.	Certain Effects of the Offer.	31
15.	Dividends and Distributions.	32
16.	Certain Conditions of the Offer.	32
17.	Certain Legal Matters; Regulatory Approvals.	34
18.	Fees and Expenses.	36
19.	Miscellaneous.	37
SCHEDULE I		I-1

To the Holders of Shares of
Common Stock of Kosan Biosciences Incorporated:

INTRODUCTION

KB Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Bristol-Myers Squibb Company, a Delaware corporation (the "Parent"), hereby offers to purchase (the "Offer") all outstanding shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock issued pursuant to the Rights Agreement, dated as of October 5, 2001, between the Company and Mellon Investor Services LLC, as amended from time to time (the "Shares", and each, a "Share"), of Kosan Biosciences Incorporated, a Delaware corporation (the "Company"), at a price of $5.50 per Share net to the seller in cash (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal.

The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of May 28, 2008 (the "Merger Agreement"), by and among Parent, the Purchaser and the Company. The Offer is conditioned upon (i) the satisfaction of the Minimum Tender Condition (as defined in Section 16 below) and (ii) the expiration or termination of any waiting period (and any extension thereof) applicable to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The term "Minimum Tender Condition" is defined in Section 16—"Certain Conditions of the Offer" and generally requires that the number of outstanding Shares of the Company which have been validly tendered and not validly withdrawn prior to the expiration of the Offer, when added to any Shares already owned by Parent or any of its controlled subsidiaries, if any, represent at least a majority of the outstanding Shares (determined on a fully diluted basis on the date of determination). The Offer is also subject to other conditions set forth in this Offer to Purchase. See Section 16—"Certain Conditions of the Offer."

For purposes of the Offer, the words "fully diluted," when referring to Shares, mean all outstanding shares of common stock of the Company on a fully diluted basis, after giving effect to the exercise, settlement or conversion of all outstanding stock options, restricted stock units and any other rights to acquire such common stock on the date of determination. The Company has advised Parent that, as of May 27, 2008, 42,656,290 Shares were issued and outstanding, 4,173,806 Shares were reserved for issuance upon the exercise of stock options and warrants outstanding on that date, 469,505 Shares were subject to outstanding restricted stock units outstanding on that date and 178,638 Shares were reserved for issuance pursuant to the Company's employee stock purchase plan.

The Merger Agreement is more fully described in Section 11—"The Transaction Agreements."

Tendering stockholders who are record owners of their Shares and tender directly to Mellon Investor Services LLC, the depositary for the Offer (the "Depositary"), will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares by the Purchaser pursuant to the Offer. Stockholders who hold their Shares through a broker, banker or other nominee should consult such institution as to whether it charges any service fees or commissions.

The Board of Directors of the Company (the "Company Board") has (i) approved and declared advisable the Merger Agreement and the Stockholder Agreement (as defined in Section 11 below), the Offer, the merger (the "Merger") of the Purchaser with and into the Company, with the Company as the surviving corporation, in accordance with the General Corporation Law of the State of Delaware (the "DGCL"), and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement, (ii) declared that it is in the best interests of the stockholders of the Company that the

Company enter into the Merger Agreement and consummate the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement on the terms and subject to the conditions set forth therein, (iii) declared that the terms of the Offer and the Merger are fair to the Company's stockholders and (iv) recommended that the Company's stockholders accept the Offer, tender their Shares pursuant to the Offer and, if required by applicable law, adopt the Merger Agreement.

A complete description of the reasons for the Company Board's approval of the Offer and the Merger will be set forth in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") that is being mailed to you at the same time as or shortly after this Offer to Purchase.

The Merger Agreement provides that, subject to the conditions described in Section 11—"The Transaction Agreements—The Merger Agreement—Conditions to the Merger," the Purchaser will be merged with and into the Company with the Company continuing as the surviving corporation, wholly-owned by Parent. Pursuant to the Merger Agreement, at the Effective Time of the Merger (the "Effective Time"), each Share outstanding immediately prior to the Effective Time (other than (i) Shares held by the Company as treasury stock or owned by Parent or the Purchaser, all of which will be canceled and retired and shall cease to exist, and (ii) Shares owned by the Company's stockholders who perfect their appraisal rights under Section 262 of the DGCL) will be converted into the right to receive $5.50 (or any greater per Share price paid in the Offer) net in cash without interest.

The Merger is subject to the satisfaction or waiver of certain conditions, including, if required, the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding Shares. The Company has agreed, if required by applicable law, to establish a record date for, duly call, give notice of, convene and hold a special meeting of its stockholders to be held as promptly as reasonably possible following the Purchaser's acceptance for payment of, and payment for, the Shares tendered pursuant to the Offer for the purposes of considering and taking action upon the adoption of the Merger Agreement. Parent has agreed to vote its and any of its subsidiaries' Shares in favor of the adoption of the Merger Agreement. If the Minimum Tender Condition and the other conditions of the Offer are satisfied and the Offer is completed, Parent and the Purchaser will own a number of Shares sufficient to cause the Merger Agreement to be adopted without the affirmative vote of any other holder of Shares. See Section 11—"The Transaction Agreements."

This Offer to Purchase and the related Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer.

THE TENDER OFFER

1. Terms of the Offer.

Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not validly withdrawn as permitted under Section 4—"Withdrawal Rights." The term "Expiration Date" means 12:00 midnight, New York City time, on Wednesday, June 25, 2008 (which is the end of the day on June 25, 2008), unless the Purchaser, in accordance with the Merger Agreement, extends the period during which the Offer is open, in which event the term "Expiration Date" means the latest time and date at which the Offer, as so extended, expires.

The Offer is conditioned upon (i) the satisfaction of the Minimum Tender Condition and (ii) the expiration or termination of any waiting period (and any extension thereof) applicable to the Offer under the HSR Act. The term "Minimum Tender Condition" is defined in Section 16—"Certain Conditions of the Offer" and generally requires that the number of outstanding Shares of the Company which have been validly tendered and not validly withdrawn prior to the expiration of the Offer, when added to any Shares already owned by Parent or any of its controlled subsidiaries, if any, represent at least a majority of the outstanding Shares (determined on a fully diluted basis on the date of determination). The Offer is also subject to other conditions set forth in this Offer to Purchase. See Section 16—"Certain Conditions of the Offer."

The Merger Agreement provides that, so long as neither the Company nor Parent terminates the Merger Agreement in accordance with its terms, the Purchaser may, in its discretion, without the consent of the Company, (i) extend the Offer on one or more occasions for any period ending no later than the Termination Date (as defined in Section 11 below), if on any then-scheduled expiration date of the Offer any of the conditions to the Purchaser's obligation to accept for payment and pay for the Shares shall not be satisfied, until such time as such conditions are satisfied or waived and (ii) extend the Offer for any period ending no later than the Termination Date required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer. The Merger Agreement further provides that if not all of the conditions to the Purchaser's obligation to accept for payment and pay for the Shares are satisfied or, in the Purchaser's sole discretion, waived on any then-scheduled expiration date of the Offer, then, provided that all such conditions are reasonably capable of being satisfied by the Termination Date and subject to the rights of Parent under the termination provisions of the Merger Agreement, the Purchaser shall extend the Offer on one or more occasions, in consecutive increments of up to ten business days each, for an aggregate period of time ending no later than the Termination Date that Parent reasonably believes is necessary for such conditions to be satisfied, until such time as such conditions are satisfied; provided, however, that the Purchaser shall not be required to extend the Offer beyond the Termination Date. Following the Purchaser's acceptance of and payment for the Shares tendered in the Offer, the Purchaser may, without the consent of the Company, elect to provide for a "subsequent offering period" (a "Subsequent Offering Period") in accordance with Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

withdrawn. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share Certificates (as defined in Section 2 below) evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 below), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 2 below, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility (as defined in Section 2 below) to be credited with the withdrawn Shares. All questions as to validity, form, eligibility (including time of receipt) and acceptance for payment of any tendered Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties.

Subject to the applicable rules and regulations of the SEC and the provisions of the Merger Agreement, the Purchaser expressly reserves the right to, in its sole discretion, waive, in whole or in part, any condition of the Offer or modify or amend the terms of the Offer, except that, without the consent of the Company, the Purchaser shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) change, modify or waive the Minimum Tender Condition, (iv) add to the conditions to the Offer or change any such condition in a manner materially adverse to any holder of Shares, (v) except as summarized above, extend or otherwise change the expiration date of the Offer, (vi) change the form of consideration payable in the Offer or (vii) otherwise amend, modify or supplement any of the terms of the Offer in any manner materially adverse to the holders of the Shares.

The rights reserved by the Purchaser by the preceding paragraph are in addition to the Purchaser's rights pursuant to Section 16—"Certain Conditions of the Offer." Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement if required. Such announcement, in the case of an extension, will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require that material changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to a national news service.

If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described herein under Section 4—"Withdrawal Rights." However, the ability of the Purchaser to delay the payment for Shares that the Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of stockholders promptly after the termination or withdrawal of such bidder's offer.

If, subject to the terms of the Merger Agreement, the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials and extend the Offer if and to

the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the consideration offered, a change in the percentage of securities sought or inclusion of or changes to a dealer's soliciting fee, will depend upon the facts and circumstances, including the relative materiality of the changes to the terms or information. With respect to a change in the consideration offered, a change in the percentage of securities sought or inclusion of or changes to a dealer's soliciting fee, the Offer generally must remain open for a minimum of ten business days following the dissemination of such information to stockholders.

The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal, together with the Schedule 14D-9, will be mailed to record holders of Shares whose names appear on the Company's stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to banks, brokers, dealers and other nominees whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing.

2. Acceptance for Payment and Payment for Shares.

Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment) and the satisfaction or waiver of all the conditions to the Offer set forth in Section 16—"Certain Conditions of the Offer," the Purchaser will accept for payment, and pay for, all Shares validly tendered prior to the Expiration Date and not validly withdrawn prior to the Expiration Date. Subject to the terms of the Merger Agreement and compliance with Rule 14e-1(c) under the Exchange Act, the Purchaser expressly reserves the right to delay payment for Shares in order to comply in whole or in part with any applicable law, including, without limitation, the HSR Act. See Section 17—"Certain Legal Matters; Regulatory Approvals." If the Purchaser decides to provide for a Subsequent Offering Period, the Purchaser will accept for payment, and pay for, all validly tendered Shares as they are received during a Subsequent Offering Period. See Section 1—"Terms of the Offer."

In all cases (including during any Subsequent Offering Period), payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or confirmation of a book-entry transfer of such Shares (a "Book-Entry Confirmation") into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3—"Procedures for Accepting the Offer and Tendering Shares," (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message (as defined in this Section 2 below) in lieu of the Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when Share Certificates or Book-Entry Confirmations with respect to Shares are actually received by the Depositary.

The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to and received by the Depositary and forming a part of a Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant.

For purposes of the Offer (including during any Subsequent Offering Period), the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not

validly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Offer Price for such Shares with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described herein under Section 4—"Withdrawal Rights" and as otherwise required by Rule 14e-1(c) under the Exchange Act.

If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer, or if Share Certificates are submitted evidencing more Shares than are tendered, Share Certificates evidencing unpurchased Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3—"Procedures for Accepting the Offer and Tendering Shares," such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as promptly as practicable following the expiration or termination of the Offer.

3. Procedures for Accepting the Offer and Tendering Shares.

Valid Tenders. In order for a stockholder validly to tender Shares pursuant to the Offer, either (i) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal) and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (A) the Share Certificates evidencing tendered Shares must be received by the Depositary at such address or (B) such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date (except with respect to any Subsequent Offering Period, if one is provided), or (ii) the tendering stockholder must comply with the guaranteed delivery procedures described below under "Guaranteed Delivery."

Book-Entry Transfer. The Depositary will establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make a book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, either the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date (except with respect to any Subsequent Offering Period, if one is provided), or the tendering stockholder must comply with the guaranteed delivery procedure described below. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary.

For Shares to be validly tendered during any Subsequent Offering Period, the tendering stockholder must comply with the foregoing procedures, except that required documents and certificates must be received during a Subsequent Offering Period.

Signature Guarantees. No signature guarantee is required on the Letter of Transmittal (i) if the Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section 3, includes any participant in the Book-Entry Transfer Facility's systems whose name appears on a security position listing as the owner of the Shares) of the Shares tendered therewith, unless such holder has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) if the Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or any other "eligible guarantor institution," as such term is defined in Rule 17Ad-15 of the Exchange Act (each an "Eligible Institution" and collectively "Eligible Institutions"). In all other cases, all signatures on a Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a Share Certificate is registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made or delivered to, or a Share Certificate not accepted for payment or not tendered is to be issued in, the name(s) of a person other than the registered holder(s), then the Share Certificate must be endorsed or accompanied by appropriate duly executed stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate, with the signature(s) on such Share Certificate or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.

Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and the Share Certificates evidencing such stockholder's Shares are not immediately available or such stockholder cannot deliver the Share Certificates and all other required documents to the Depositary prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied:

•: such tender is made by or through an Eligible Institution;
•: a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, is received prior to the Expiration Date by the Depositary as provided below; and
•: the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal are received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted by manually signed facsimile transmission or mailed to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the form of Notice of Guaranteed Delivery made available by the Purchaser.

Notwithstanding any other provision of this Offer, payment for Shares accepted pursuant to the Offer will in all cases only be made after timely receipt by the Depositary of (i) certificates evidencing such Shares or a Book-Entry Confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedures set forth in this Section 3, (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an

Agent's Message in lieu of the Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when Share Certificates or Book-Entry Confirmations with respect to Shares are actually received by the Depositary.

The method of delivery of Share Certificates, the Letter of Transmittal and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the option and risk of the tendering stockholder, and the delivery will be deemed made only when actually received by the Depositary (including, in the case of a book-entry transfer, receipt of a Book-Entry Confirmation). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

The tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder's acceptance of the Offer, as well as the tendering stockholder's representation and warranty that such stockholder has the full power and authority to tender and assign the Shares tendered, as specified in the Letter of Transmittal. The Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer.

Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of the Purchaser, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived to the satisfaction of the Purchaser. None of the Purchaser, the Depositary, the Dealer Manager (as defined in Section 18 below), the Information Agent (as defined in Section 18 below) or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding.

Appointment. By executing the Letter of Transmittal, the tendering stockholder will irrevocably appoint designees of the Purchaser as such stockholder's proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser and with respect to any and all other Shares or other securities or rights issued or issuable in respect of such Shares. All such powers of attorney and proxies will be considered irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts for payment Shares tendered by such stockholder as provided herein. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares or other securities or rights will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given by such stockholder (and, if given, will not be deemed effective). The designees of the Purchaser will thereby be empowered to exercise all voting and other rights with respect to such Shares and other securities or rights, including, without limitation, in respect of any annual, special or adjourned meeting of the Company's stockholders, actions by written consent in lieu of any such meeting or otherwise, as they in their sole discretion deem proper. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares and other related securities or rights, including voting at any meeting of stockholders.

Backup Withholding. Under the "backup withholding" provisions of United States federal income tax law, the Depositary may be required to withhold and pay over to the Internal Revenue Service a portion of the amount of any payments pursuant to the Offer. In order to prevent backup federal income tax withholding with respect to payments to certain stockholders of the Offer Price for Shares purchased pursuant to the Offer, each such stockholder must provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") and certify that such stockholder is not subject to backup withholding by completing the Substitute Form W-9 in the Letter of Transmittal. Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) may not be subject to backup withholding. If a stockholder does not provide its correct TIN or fails to provide the certifications described above, the Internal Revenue Service may impose a penalty on the stockholder and payment to the stockholder pursuant to the Offer may be subject to backup withholding. All stockholders surrendering Shares pursuant to the Offer who are U.S. persons (as defined for U.S. federal income tax purposes) should complete and sign the Substitute Form W-9 included in the Letter of Transmittal to provide the information necessary to avoid backup withholding. Foreign stockholders should complete and sign the appropriate Form W-8 (a copy of which may be obtained from the Depositary) in order to avoid backup withholding. Such stockholders should consult a tax advisor to determine which Form W-8 is appropriate. See Instruction 8 of the Letter of Transmittal.

4. Withdrawal Rights.

Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after July 27, 2008.

For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3—"Procedures for Accepting the Offer and Tendering Shares," any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares.

Withdrawals of Shares may not be rescinded. Any Shares validly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in Section 3—"Procedures for Accepting the Offer and Tendering Shares" at any time prior to the Expiration Date or during a Subsequent Offering Period, if any.

No withdrawal rights will apply to Shares tendered into a Subsequent Offering Period and no withdrawal rights apply during a Subsequent Offering Period with respect to Shares tendered in the Offer and accepted for payment. See Section 1—"Terms of the Offer."

All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. None of the Purchaser, the Depositary, the Dealer Manager, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.

5. Certain United States Federal Income Tax Consequences.

The following is a summary of certain United States federal income tax consequences of the Offer and the Merger to stockholders of the Company whose Shares are tendered and accepted for payment pursuant to the Offer or whose Shares are converted into the right to receive cash in the Merger. The discussion is for general information only and does not purport to consider all aspects of United States federal income taxation that might be relevant to stockholders of the Company. The discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing, proposed and temporary regulations thereunder and administrative and judicial interpretations thereof, all of which are subject to change, possibly with a retroactive effect. The discussion applies only to stockholders of the Company in whose hands Shares are capital assets within the meaning of Section 1221 of the Code. This discussion does not apply to Shares received pursuant to the exercise of employee stock options or otherwise as compensation, or to certain types of stockholders (such as insurance companies, tax-exempt organizations, financial institutions and broker-dealers) who may be subject to special rules. This discussion does not discuss the United States federal income tax consequences to any stockholder of the Company who, for United States federal income tax purposes, is a nonresident alien individual, a foreign corporation, a foreign partnership or a foreign estate or trust, nor does it consider the effect of any foreign, state or local tax laws.

Because individual circumstances may differ, each stockholder should consult its, his or her own tax advisor to determine the applicability of the rules discussed below and the particular tax effects of the Offer and the Merger on a beneficial holder of Shares, including the application and effect of the alternative minimum tax and any state, local and foreign tax laws and of changes in such laws.

The exchange of Shares for cash pursuant to the Offer or the Merger will be a taxable transaction for United States federal income tax purposes. In general, a stockholder who sells Shares pursuant to the Offer or receives cash in exchange for Shares pursuant to the Merger will recognize gain or loss for United States federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received and the stockholder's adjusted tax basis in the Shares sold pursuant to the Offer or exchanged for cash pursuant to the Merger. Gain or loss will be determined separately for each block of Shares (that is, Shares acquired at the same cost in a single transaction) tendered pursuant to the Offer or exchanged for cash pursuant to the Merger. Such gain or loss will be long-term capital gain or loss provided that a stockholder's holding period for such Shares is more than one year at the time of consummation of the Offer or the Merger, as the case may be. Capital gains recognized by an individual upon a disposition of a Share that has been held for more than one year generally will be subject to a maximum United States federal income tax rate of 15%. In the case of a Share that has been held for one year or less, such capital gains generally will be subject to tax at ordinary income tax rates. Certain limitations apply to the use of a stockholder's capital losses.

A stockholder whose Shares are purchased in the Offer or exchanged for cash pursuant to the Merger may be subject to backup withholding unless certain information is provided to the Depositary or an exemption applies. See Section 3—"Procedures for Accepting the Offer and Tendering Shares."

6. Price Range of Shares; Dividends.

The Shares trade on the Nasdaq Global Market ("Nasdaq") under the symbol "KOSN." The following table sets forth, for the periods indicated, the high and low sale prices per Share for the periods indicated. Share prices are as reported on Nasdaq based on published financial sources.

	High		Low
Year Ended December 31, 2006
First Quarter	$	6.19	$	4.43
Second Quarter		5.93		3.65
Third Quarter		5.00		2.88
Fourth Quarter		5.68		3.70
Year Ended December 31, 2007
First Quarter	$	7.35	$	4.90
Second Quarter		6.58		4.83
Third Quarter		6.40		4.00
Fourth Quarter		6.29		3.20
Year Ending December 31, 2008
First Quarter	$	3.75	$	1.28
Second Quarter (through May 28, 2008)		2.08		1.42

On May 28, 2008, the last full day of trading before the public announcement of the execution of the Merger Agreement and the commencement of the Offer, the closing price of the Shares on Nasdaq was $1.65 per Share. The Company has never declared nor paid any cash dividends on the Shares.

Stockholders are urged to obtain a current market quotation for the Shares.

7. Certain Information Concerning the Company.

General. The Company is a Delaware corporation with its principal executive offices located at 3832 Bay Center Place, Hayward, CA 94545. The telephone number for the Company is (510) 732-8400. The following description of the Company and its business is qualified in its entirety by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The Company is a cancer therapeutics company focused on advancing two new classes of anticancer agents through clinical development: heat shock protein 90 ("Hsp90") inhibitors and epothilones. Hsp90 inhibitors have a novel mechanism of action targeting multiple pathways involved in cancer cell growth and survival. Epothilones inhibit cell division with a mechanism of action similar to taxanes, one of the most successful classes of anti-tumor agents. The Company also has a motilin receptor agonist program for the stimulation of gastrointestinal movement, which the Company has licensed to Pfizer Inc., as well as a next-generation Hsp90 inhibitor, next-generation epothilone and nuclear export inhibitor programs for cancer that are undergoing preclinical evaluation.

Available Information. The Shares are registered under the Exchange Act. Accordingly, the Company is subject to the information reporting requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. Such reports, proxy statements and other information can be inspected and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549-0213. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. The Company's filings are also available to the public on the SEC's internet site (http://www.sec.gov). Copies of such materials may also be obtained by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549-0213 at prescribed rates.

Although the Purchaser has no knowledge that any such information is untrue, the Purchaser takes no responsibility for the accuracy or completeness of information contained in this Offer to Purchase with respect to the Company or any of its subsidiaries or affiliates or for any failure by the Company to disclose any events which may have occurred or may affect the significance or accuracy of any such information.

Summary Financial Information. Set forth below is certain summary financial information for the Company and its consolidated subsidiaries excerpted from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2008 and March 31, 2007. More comprehensive financial information is included in such reports and other documents filed by the Company with the SEC, and the following summary is qualified in its entirety by reference to such reports and other documents and all of the financial information and notes contained therein. Copies of such reports and other documents may be examined at or obtained from the SEC in the manner set forth above.

	Three Months Ended March 31,					Year Ended December 31,
	2008			2007		2007			2006
	(in thousands, except per share data)
Operating Data
Total revenues	$	4,649		$	12,918	$	22,707		$	13,506
Income (loss) from operations		(9,072	)		1,777		(32,738	)		(31,496	)
Net income (loss)		(8,544	)		2,744		(28,658	)		(29,469	)
Basic and diluted net income (loss) per share		(0.20	)		0.07		(0.69	)		(0.88	)

	March 31,				December 31,
	2008		2007		2007		2006
	(in thousands)
Balance Sheet Data
Total assets	$	66,178	$	106,232	$	77,867	$	71,187
Total liabilities		14,609		17,666		18,307		29,433
Stockholders' equity		51,569		88,566		59,560		41,754

8. Certain Information Concerning Parent and the Purchaser.

General. Parent is a Delaware corporation with its principal offices located at 345 Park Avenue, New York, New York 10154. The telephone number of Parent is (212) 546-4000. Parent is a global biopharmaceutical and related health care products company whose mission is to extend and enhance human life. Parent is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of pharmaceuticals and related health care products.

The Purchaser is a Delaware corporation with its principal offices located at 345 Park Avenue, New York, New York 10154. The telephone number of the Purchaser is (212) 546-4000. The Purchaser is a wholly-owned subsidiary of Parent. The Purchaser was formed for the purpose of making a tender offer for all of the Shares of the Company and has not engaged, and does not expect to engage, in any business other than in connection with the Offer and the Merger.

The name, citizenship, business address, business phone number, present principal occupation or employment and past material occupation, positions, offices or employment for at least the last five years for each director and the name, citizenship, business address, business phone number, present principal occupation or employment and past material occupation, positions, offices or employment for at least the past five years of each of the executive officers of Parent and the Purchaser and certain other information are set forth in Schedule I hereto.

Except as described in this Offer to Purchase, Schedule I hereto and the Stockholder Agreement, (i) none of Parent, the Purchaser or, to the best knowledge of Parent and the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase or any associate or majority-owned subsidiary of Parent or the Purchaser or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares and (ii) none of Parent, the Purchaser or, to the best knowledge of Parent and the Purchaser, any of the persons or entities referred to above nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in the Shares during the past 60 days.

Except as provided in the Merger Agreement or the Stockholder Agreement or as otherwise described in this Offer to Purchase, none of Parent, the Purchaser or, to the best knowledge of Parent and the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, guarantees of profits, division of profits or loss or the giving or withholding of proxies.

Except as set forth in this Offer to Purchase, none of Parent, the Purchaser or, to the best knowledge of Parent and the Purchaser, any of the persons listed on Schedule I hereto, has had any business relationship or transaction with the Company or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the SEC applicable to the Offer. Except as set forth in this Offer to Purchase, there have been no contacts, negotiations or transactions between Parent or any of its subsidiaries or, to the best knowledge of Parent, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets during the past two years. None of the persons listed in Schedule I has, during the past five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). None of the persons listed in Schedule I has, during the past five years, been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

Available Information. Pursuant to Rule 14d-3 under the Exchange Act, Parent and the Purchaser filed with the SEC a Tender Offer Statement on Schedule TO (the "Schedule TO"), of which this Offer to Purchase forms a part, and exhibits to the Schedule TO. Additionally, Parent is subject to the information reporting requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. The Schedule TO and the exhibits thereto, and such reports, proxy statements and other information, can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549-0213. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. Parent filings are also available to the public on the SEC's internet site (http://www.sec.gov). Copies of such materials may also be obtained by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549-0213 at prescribed rates.

9. Source and Amount of Funds.

The Offer is not conditioned upon Parent's or the Purchaser's ability to finance the purchase of Shares pursuant to the Offer. Parent and the Purchaser estimate that the total amount of funds required to purchase all of the Shares pursuant to the Offer and consummate the Merger is

approximately $244.6 million, including related transaction fees and expenses. Parent will have sufficient funds to consummate the purchase of Shares in the Offer and the Merger and the other transactions described above, and will cause the Purchaser to have sufficient funds available to consummate such transactions. Parent expects to obtain the necessary funds from existing cash balances.

The Purchaser does not think its financial condition is relevant to the decision of holders of Shares whether to tender Shares and accept the Offer because:

•: the Offer is being made for all outstanding Shares solely for cash;
•: the Purchaser, through its parent company, Bristol-Myers Squibb Company, will have sufficient funds available to purchase all Shares successfully tendered in the Offer in light of Parent's financial capacity in relation to the amount of consideration payable;
•: the Offer is not subject to any financing condition; and
•: if the Purchaser consummates the Offer, it expects to acquire any remaining Shares for the same cash price in the Merger.

10. Background of the Offer; Past Contacts or Negotiations with the Company.

On March 14, 2007, Parent and the Company entered into a mutual confidential disclosure agreement in connection with a preliminary review by the companies regarding the feasibility of a business arrangement between the Company and Parent relating to the Company's Hsp90 program. Due diligence meetings between the companies were conducted at the offices of the Company on April 12 and 13, 2007, and, based on the clinical data and other information available at that time with respect to the Company's Hsp90 program and taking into account other competing priorities in Parent's research and development portfolio, Parent determined that it was not appropriate at that time to pursue a business arrangement with the Company relating to its Hsp90 program.

In the fourth quarter of 2007, Parent announced its intent to transform into a next generation biopharma leader by implementing a strategy that is referred to as the "String of Pearls" initiative. Pursuant to this initiative, Parent is focused on entering into a series of transactions, including acquisitions, licensing agreements, joint ventures and other business arrangements, that are intended to enrich Parent's pipeline, technology, capabilities and talent. Therefore, Parent continues to look for opportunities to complement its internal capabilities with external innovation.

The Company and Parent entered into a mutual confidential disclosure agreement on January 24, 2008, regarding the possibility of a business arrangement between the companies relating to the Company's research, development and commercialization programs directed to epothilones. On February 20, 2008, executive officers of the Company met with representatives of Parent at Parent's offices in Princeton, New Jersey. The executive officers of the Company made a presentation regarding the Company's epothilone program, and the parties discussed a possible partnering relationship or strategic transaction.

In March 2008, Parent identified the Company as a company to be considered for purposes of a strategic transaction and undertook further evaluation of the Company on a scientific, commercial and financial basis based on publicly available information. Following this evaluation, Parent determined that an acquisition of the Company should be pursued as a component of the its "String of Pearls" initiative.

On April 2, 2008, a representative of Parent contacted the Company's chief executive officer requesting a meeting for the purpose of discussing a potential strategic transaction between the Company and Parent. A meeting in San Francisco, California, between representatives of the two companies was scheduled for April 14, 2008. In anticipation of the meeting between representatives of

the companies, on April 7, 2008, Parent and the Company executed and delivered a mutual nondisclosure agreement.

On April 14, 2008, representatives of each of the Company, including representatives of the Company Board, and Parent met in San Francisco. During this meeting, representatives of Parent expressed Parent's interest in acquiring the Company, and requested that a team of Parent's representatives, including representatives of its external advisers, be permitted access to the Company's management and due diligence materials for purposes of conducting a detailed due diligence review of the Company and its business and operations. It was agreed at the conclusion of this meeting that such access would be provided and thereafter due diligence meetings, including a management presentation, were scheduled.

On April 21, 2008, the Company's chief executive officer spoke with a representative of Parent regarding next steps, including preparations for Parent's anticipated due diligence visit to the Company's offices.

On April 30 and May 1, 2008, members of Parent's transaction team met with representatives of the Company to discuss the Company's Hsp90 and epothilone compounds, intellectual property, development programs, clinical trial data and related matters. During this same period, Parent's representatives commenced business, financial, scientific, technical, regulatory, environmental and legal due diligence investigations of the Company and its business and operations. In addition to the customary aspects of the due diligence process, Parent held numerous discussions with members of the Company's senior management and scientific and technical team.

At the conclusion of the May 1, 2008 meetings, a representative of Parent's management confirmed Parent's continuing interest in acquiring the Company.

Parent's due diligence investigation continued following the May 1, 2008 meetings with requests for additional information and for responses to specific questions being made primarily by representatives of Parent to representatives of the Company.

On May 5, 2008, representatives of Parent met with the chief executive officer, chief financial officer and general counsel of the Company. During this meeting, a management presentation was made by the Company's executive team, and discussions between the participants ensued regarding the Company's business and operations. At the conclusion of the May 5, 2008 meeting, Parent delivered to the Company's chief executive officer a non-binding proposal letter confirming its interest in acquiring the Company and indicating a price range of $4.50-$5.00 per share of the Company's shares of common stock, subject to, among other things, Parent's successful completion of its ongoing due diligence and the approval of the proposed transaction by its Board of Directors.

On May 8, 2008, the Company's chief executive officer contacted a representative of Parent's management and informed him that the Company's executive management team and the Company Board had considered the non-binding proposal letter delivered by Parent and, based on the terms and conditions set forth therein, determined that the Company would permit Parent and its representatives to complete their due diligence investigation with the expectation that Parent would continue to work toward acquiring all of the issued and outstanding shares of common stock of the Company.

During the period May 6, 2008 through May 23, 2008, Parent, with the assistance of its legal and financial advisers and other consultants, reviewed the results of the due diligence investigation. In addition, on May 9, 2008, Cravath, Swaine & Moore LLP, Parent's legal counsel ("Cravath"), on behalf of Parent, delivered to representatives of the Company, including Cooley Godward Kronish LLP, the Company's outside legal counsel ("Cooley"), an initial draft of the proposed Merger Agreement for their review and the companies' legal advisers began negotiation of the Merger Agreement. Also on May 9, 2008, Parent and the Company entered into a Community of Legal Interest Agreement regarding the sharing of certain information relating to certain third party patent rights.

On May 15, 2008, representatives of Parent and Credit Suisse Securities (USA) LLC ("Credit Suisse") met with representatives of the Company and Lazard Frères & Co. LLC, the Company's financial adviser, to discuss certain of the principal terms and conditions of the proposed transaction including the price per share to be paid by Parent for the outstanding shares of common stock of the Company and the principal terms of a License Agreement (as defined in Section 12 below) regarding the Company's epothilone program. Following lengthy negotiations, the respective chief executive officers of Parent and the Company preliminarily agreed on an offer price of $5.50 per share, subject to, among other things, successful completion by Parent of its ongoing due diligence investigation, the negotiation of the definitive terms and conditions of the Merger Agreement and of the License Agreement and the approval of the proposed transaction by the respective boards of directors of the Company and Parent.

On May 15, 2008, Parent and the Company executed a standstill agreement, and on May 22, 2008, the Company delivered to Parent a letter consenting to the preceding and ongoing discussions between the Company and Parent, which would otherwise be restricted by the standstill agreement.

On May 16, 2008, Cravath, on behalf of Parent, delivered to representatives of the Company, including Cooley, an initial draft of the proposed Stockholder Agreement.

From May 16, 2008 through May 28, 2008, the management teams and legal and financial advisers of the Company and Parent had several negotiations regarding the terms of the Merger Agreement and the related documents. During that period, a number of drafts of the Merger Agreement and related documentation were negotiated and exchanged between the parties. The parties also discussed the material terms of a possible License Agreement.

In addition, on May 23, 2008, Cravath, on behalf of Parent, delivered to representatives of the Company an initial draft of the License Agreement for their review and the companies' legal advisers began negotiation of the License Agreement. From May 23, 2008 through May 28, 2008, the management teams and legal advisers of the Company and Parent had several negotiations regarding the terms of the License Agreement. During that period, a number of drafts of the License Agreement were negotiated and exchanged between the parties.

On May 28, 2008, the Board of Directors of Parent convened and held a special telephonic meeting of the board. During the meeting, members of Parent's management provided Parent's Board of Directors with an update on the terms of the proposed transaction. Following a discussion of the terms of the proposed acquisition and the License Agreement, the Board of Directors of Parent unanimously approved the execution, delivery and performance of the Merger Agreement and the License Agreement and the completion of the transactions contemplated by the Merger Agreement, including the Offer and the Merger, and the License Agreement.

On May 28, 2008, the Company Board unanimously (i) approved and declared advisable the Merger Agreement and the Stockholder Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement, (ii) declared that it is in the best interests of the stockholders of the Company that the Company enter into the Merger Agreement and consummate the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement on the terms and subject to the conditions set forth therein, (iii) declared that the terms of the Offer and the Merger are fair to the Company's stockholders and (iv) recommended that the Company's stockholders accept the Offer, tender their Shares pursuant to the Offer and, if required by applicable law, adopt the Merger Agreement.

During the evening of May 28, 2008, representatives of the Company, including certain members of the Company Board, met with representatives of Parent to discuss the remaining issues in the Merger Agreement and the anticipated signing of the Merger Agreement and the License Agreement. Later on May 28, 2008, the Purchaser, Parent and the Company exchanged execution copies of the agreements and executed and delivered the definitive Merger Agreement as of May 28, 2008. In addition, Parent and the Company executed and delivered the License Agreement as of May 28, 2008. Executive officers, members of the Company Board and certain stockholders affiliated with one of the directors also executed and delivered the Stockholder Agreement.

On the morning of May 29, 2008, Parent and the Company issued a joint press release announcing the execution of the Merger Agreement and the License Agreement. A copy of the joint press release is attached as an exhibit to the Schedule TO and is incorporated herein by reference.

11. The Transaction Agreements.

The Merger Agreement

The following is a summary of the material provisions of the Merger Agreement. The following description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached as an exhibit to the Schedule TO and is incorporated herein by reference. For a complete understanding of the Merger Agreement, you are encouraged to read the full text of the Merger Agreement.

The Offer. The Merger Agreement provides for the commencement of the Offer as promptly as practicable, but in no event later than ten business days after the date of the Merger Agreement. The obligations of the Purchaser to (and the obligations of Parent to cause the Purchaser to) accept for payment, and pay for, Shares tendered pursuant to the Offer are subject to the satisfaction of conditions that are described in Section 16—"Certain Conditions of the Offer." The Purchaser expressly reserves the right to, in its sole discretion, waive, in whole or in part, any condition to the Offer or modify or amend the terms of the Offer, except that, without the consent of the Company (unless the Company takes any action prohibited by the no solicitation provisions of the Merger Agreement), the Purchaser shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) change, modify or waive the Minimum Tender Condition, (iv) add to the conditions of the Offer or modify or change any condition of the Offer in a manner materially adverse to any holders of the Company's common stock, (v) except as otherwise summarized below, extend or otherwise change the expiration date of the Offer, (vi) change the form of consideration payable in the Offer or (vii) otherwise amend, modify or supplement any of the terms of the Offer in any manner materially adverse to any holders of the Company's common stock.

Notwithstanding the foregoing, the Purchaser may, in its discretion, without the consent of the Company, (a) extend the Offer on one or more occasions for any period ending no later than the Termination Date, if on any then-scheduled Expiration Date of the Offer any of the conditions to the Purchaser's obligation to accept for payment and pay for Shares shall not be satisfied, until such time as such conditions are satisfied or waived and (b) extend the Offer for any period ending no later than the Termination Date required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer. The Purchaser expressly reserves the right to, in its sole discretion, extend the Offer for a Subsequent Offering Period in accordance with Rule 14d-11 under the Exchange Act following the Offer Closing (as defined in this Section 11 below) and the Offer documents may, in the Purchaser's sole discretion, provide for the Purchaser's right to provide such a Subsequent Offering Period in the Purchaser's sole discretion. In addition, if not all of the conditions to the Purchaser's obligation to accept for payment and pay for Shares are not satisfied or, in the Purchaser's sole discretion, waived on any then-scheduled Expiration Date of the Offer, then, provided that all such conditions are reasonably capable of being satisfied by the Termination Date and subject to the rights of Parent under the termination provisions of the Merger Agreement, the Purchaser shall, and Parent shall cause the Purchaser to, extend the Offer on one or more occasions, in consecutive increments of up to ten business days each, for an aggregate period of time ending no later than the Termination Date that Parent reasonably believes is necessary for such conditions to be satisfied, until such time as such conditions are satisfied; provided, however, that the Purchaser shall not be required to extend the Offer beyond the Termination Date. In any event, the Offer may not be terminated prior to its Expiration Date (as such Expiration Date may be extended and re-extended in accordance with the Merger Agreement), unless the Merger Agreement is validly terminated in accordance with the termination provisions thereof.

Top-Up Option. The Company granted the Purchaser an irrevocable option, exercisable only on the terms and conditions set forth in the Merger Agreement, to purchase, at a price per Share equal to the Offer Price, newly issued Shares of the Company's common stock in an amount up to the lowest number of Shares of the Company's common stock that, when added to the number of Shares of the Company's common stock that is then directly or indirectly owned by Parent, constitutes one Share more than 90% of the Shares outstanding immediately after the issuance of the new Shares sold to the Purchaser (determined on a fully diluted basis for all outstanding stock options, restricted stock units and any other rights to acquire Shares outstanding on the date of determination), provided that (i) this option shall not be exercisable for a number of Shares in excess of the Shares authorized and unissued at the time of the exercise of the option (giving effect to the Shares issuable pursuant to all then-outstanding stock options, restricted stock units and any other rights to acquire Shares as if such Shares were outstanding) and (ii) the issuance of the new Shares shall not require approval of the stockholders of the Company under applicable law (including the rules of Nasdaq). This option is exercisable at any one time following the Offer Closing and prior to the earlier to occur of (a) the Effective Time and (b) the termination of the Merger Agreement in accordance with its terms. The Company's obligation to issue and deliver the newly issued Shares upon the exercise of this option is subject only to the condition that no Legal Restraint (as defined in this Section 11 below) that has the effect of preventing the exercise of the option or the issuance and delivery of the newly issued Shares in respect of such exercise shall be in effect.

The Merger. The Merger Agreement provides that, at the Effective Time, the Purchaser will be merged with and into the Company with the Company being the surviving corporation (the "Surviving Corporation"). Following the Merger, the separate existence of the Purchaser will cease, and the Company will continue as the Surviving Corporation, wholly-owned by Parent. The directors and officers of the Purchaser immediately prior to the Effective Time will be the directors and officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

Pursuant to the Merger Agreement, each Share outstanding at the Effective Time (other than (i) Shares held by the Company as treasury stock or owned by Parent or the Purchaser, all of which will automatically be canceled and will cease to exist, and (ii) Shares owned by stockholders of the Company who perfect their appraisal rights under the DGCL) will be converted into the right to receive the Offer Price paid in the Offer (the "Merger Consideration").

Equity Awards. The Merger Agreement provides that, prior to the Effective Time, each unexercised stock option with respect to Shares, whether vested or unvested, that is outstanding will be adjusted to provide that such stock option will become fully vested and exercisable before the Effective Time, and, at the Effective Time, stock options and restricted stock units with respect to Shares will be treated as follows:

•: Each unexercised stock option that is outstanding immediately prior to the Effective Time will be canceled and the holder of such stock option will be entitled to receive an amount in cash equal to (A) the excess, if any, of (1) the Merger Consideration over (2) the exercise price per Share subject to such stock option multiplied by (B) the number of Shares subject to such stock option immediately prior to the Effective Time; and
•: Each restricted stock unit that is outstanding immediately prior to the Effective Time will be canceled and the holder of such restricted stock unit will be entitled to receive an amount in cash equal to the Merger Consideration multiplied by the maximum number of Shares subject to such restricted stock unit immediately prior to the Effective Time.

The Merger Agreement provides that, with respect to the Company's employee stock purchase plan, (A) participation will be limited to those employees who are participants on the date of the Merger Agreement; (B) except to the extent necessary to maintain the status of the employee stock

purchase plan as an "employee stock purchase plan" with in the meaning of Section 423(b) of the code and the Treasury regulations thereunder, such participants shall not be permitted to increase the rate of their payroll deductions or purchase elections from those in effect on the date of the Merger Agreement; (C) no offering period will be commenced after the date of the Merger Agreement; (D) if the day immediately prior to the Effective Time occurs prior to the first exercise date following the date of the Merger Agreement, each purchase right under the employee stock purchase plan outstanding on such date will be automatically exercised by applying the payroll deductions of each then-current participant in the employee stock purchase plan for the then-current offering period in effect under the employee stock purchase plan to the purchase of whole Shares (subject to the provisions of the employee stock purchase plan regarding the maximum number and value of shares purchasable per participant) at a purchase price per Share equal to 85% of the lower of (i) the fair market value per Share on the enrollment date and (ii) the fair market value per Share on the day immediately prior to the Effective Time; and (E) the employee stock purchase plan will terminate on the earlier of the first exercise date following the date of the Merger Agreement and the day immediately prior to the Effective Time, but subsequent to the exercise of purchase rights pursuant to clause (D) above.

The Merger Agreement provides that all amounts payable with respect to the above equity will be subject to any required withholding and will be paid without interest.

The Merger Agreement provides that the Company will ensure, prior to the Effective Time, that, following the Effective Time, there will be no rights to acquire Shares, equity awards or any other interests in respect of any capital stock of the Company, the Surviving Corporation or their subsidiaries.

The Merger Agreement also provides that the Company will take all reasonable steps as may be required to cause the dispositions of the Company's equity securities (including derivative securities) in connection with the Merger Agreement by each individual who is a director or officer of the Company subject to Section 16 of the Exchange Act to be exempt under Rule 16b-3 under the Exchange Act.

Representations and Warranties. In the Merger Agreement, the Company has made customary representations and warranties to Parent and the Purchaser, including representations relating to: organization, standing and corporate power; subsidiaries; capital structure; authority and noncontravention; the Company's SEC documents; information supplied; absence of certain changes or events; litigation; contracts; permits and compliance with laws; environmental matters; labor relations; employee benefits; taxes; title to properties; intellectual property; Rule 14d-10 matters; state takeover statutes; brokers and other advisors; opinion of financial advisor; research, development, distribution, marketing and manufacturing agreements; regulatory compliance; and insurance.

In the Merger Agreement, Parent and the Purchaser have made customary representations and warranties to the Company, including representations relating to: organization; authority and noncontravention; information supplied; interim operations of the Purchaser; sufficiency of funds, and Company's stock.

Operating Covenants. The Merger Agreement provides that, from the date of the Merger Agreement to the Effective Time, except with Parent's prior written consent or as specifically contemplated by the Merger Agreement (including in the Company's disclosure schedule), the business of the Company and its subsidiaries will be conducted in the ordinary course consistent with past practice and the Company shall, and shall cause each of its subsidiaries to, use commercially reasonable efforts to comply with all applicable laws and, to the extent consistent therewith, use commercially reasonable efforts to keep available the services of their present officers and other employees and to preserve their assets and preserve their relationships with licensors, licensees, partners, customers, suppliers, distributors and others having business dealings with them and maintain their franchises, rights and permits. In addition, between the date of the Merger Agreement and the Effective Time, the Company and its subsidiaries are subject to customary operating covenants and restrictions, including,

but not limited to, declaration or payment of dividends; issuance, sale, pledge, redemption or repurchase of stock; amendment of certificate of incorporation or bylaws; acquisitions; sales, leases or other dispositions of assets or properties; incurrence or prepayment of indebtedness and making loans or investments; capital expenditures; satisfaction, settlement or waiver of claims or rights, including under confidentiality and standstill agreements; entry into or amendment, waiver or termination of material contracts; modification of benefit plans or agreements; actions to fund or secure payment of compensation or benefits; acceleration of payments or vesting of compensation or benefits under benefit plans or agreements; material determinations under benefit plans or agreements; employment and termination of employees, officers or directors; formation of subsidiaries; entry into contracts that contain anti-assignment provisions; entry into collective bargaining agreements; writing down of any material assets; material changes to financial or tax accounting principles or methods and changes to material tax elections; actions intended to accelerate or postpone any payments; actions which would result in the material reduction of the value of intellectual property; entry into any contract with any stockholder of the Company relating to the Offer; and amendment or redemption of, or taking any action or determination with respect to, the Company's Rights Agreement with Mellon Investor Services LLC dated as of October 5, 2001.

Benefit Plan Matters. The Merger Agreement provides that the Company will terminate its 401(k) retirement plan effective prior to the closing date of the Merger.

Rule 14d-10. The Merger Agreement also provides for certain covenants on the part of the Company relating to Rule 14d-10 under the Exchange Act and approvals that are to be made by the Company's compensation committee with respect to employment-related arrangements entered into after the date of the Merger Agreement.

Stockholders Meeting. The Merger Agreement provides that the Company will, if the adoption of the Merger Agreement by the Company's stockholders is required by law, hold a meeting of its stockholders for the purpose of approving the Merger Agreement. Subject to the no solicitation provisions of the Merger Agreement, the Company Board shall recommend to the stockholders of the Company that they adopt the Merger Agreement, and shall include such recommendation in the proxy statement. Without limiting the generality of the foregoing, the Company agrees that its obligations to hold a stockholders meeting shall not be affected by (i) the commencement, public proposal, public disclosure or communication to the Company of any Takeover Proposal (as defined in this Section 11 below) or (ii) any Adverse Recommendation Change (as defined in this Section 11 below) effected by the Company Board.

No Solicitation Provisions. The Merger Agreement contains provisions prohibiting each of the Company and its subsidiaries, as well as their respective directors, officers, employees, advisors and representatives, from:

•: directly or indirectly, soliciting, initiating or knowingly encouraging or knowingly facilitating any Takeover Proposal or any inquiry or proposal that could reasonably be expected to lead to a Takeover Proposal; or
•: directly or indirectly, entering into, continuing or otherwise participating in any discussions or negotiations regarding, or furnishing to any person any information with respect to, or otherwise cooperating in any way with any person with respect to, a Takeover Proposal.

The Company shall, and shall cause its subsidiaries and direct its representatives to, immediately cease and cause to be terminated all existing discussions and negotiations with any person conducted prior to the date of the Merger Agreement with respect to any Takeover Proposal and, as promptly as practicable after the date of the Merger Agreement, request the prompt return or destruction of all confidential information previously furnished to such person within the last 12 months for the purpose of evaluating a possible Takeover Proposal. Notwithstanding anything in the Merger Agreement to the

contrary, at any time prior to the Purchaser accepting for payment, and paying for, all Shares validly tendered prior to the Expiration Date (the "Offer Closing"), the Company may, and may permit and authorize its subsidiaries and its and its subsidiaries' advisors and representatives to, in response to a bona fide written Takeover Proposal that the Company Board determines in good faith constitutes or is reasonably likely to lead to a Superior Proposal (as defined in this Section 11 below), and which Takeover Proposal was not solicited after the date of the Merger Agreement and was made after the date of the Merger Agreement and did not otherwise result from a material breach of the no solicitation provisions of the Merger Agreement, (1) furnish information with respect to the Company and its subsidiaries to the person making such Takeover Proposal (and its advisors and representatives) pursuant to a confidentiality agreement that is not materially less restrictive than the confidentiality agreement and the standstill agreement between Parent and the Company and which need not restrict such person from making an unsolicited Takeover Proposal, so long as all such information had been provided, or is concurrently provided, to Parent and (2) participate in discussions or negotiations with the person making such Takeover Proposal (and its advisors and representatives) regarding such Takeover Proposal.

The Merger Agreement also provides that the Company shall, as promptly as possible and in any event within one business day after the receipt thereof, advise Parent orally and in writing of (i) any Takeover Proposal or any request for information or inquiry that expressly contemplates a Takeover Proposal or that the Company believes could reasonably be expected to lead to a Takeover Proposal and (ii) the material terms and conditions of such Takeover Proposal, request or inquiry (including any subsequent amendment or other modification to such terms and conditions) and the identity of the person making any such Takeover Proposal, request or inquiry. In addition, after the Company has provided the notice described above, the Company (or its outside counsel) shall, once, and not more than once, each day at mutually reasonably agreeable times (A) advise and confer with Parent (or its outside counsel) regarding the progress of negotiations concerning any Takeover Proposal (to the extent such negotiations are permitted under the no solicitation provisions), the material resolved and unresolved issues related thereto and any other matters identified with reasonable specificity by Parent (or its outside counsel) and the material details (including material amendments as to price and other material terms) of any such Takeover Proposal, request or inquiry and (B) promptly upon receipt or delivery thereof, provide Parent (or its outside counsel) with copies of all documents and written communications relating to any such Takeover Proposal, request or inquiry exchanged between the Company or any of its representatives, on the one hand, and the person making a Takeover Proposal or any of its representatives, on the other hand.

The Merger Agreement prohibits the Company Board or any committee thereof from (i) withdrawing or modifying in a manner adverse to Parent or the Purchaser, or proposing publicly to withdraw or modify in a manner adverse to Parent or the Purchaser, the recommendation or declaration of advisability by the Company Board or any committee thereof regarding the Offer or the Merger, or recommending, or proposing publicly to recommend, the approval or adoption of any Takeover Proposal, or resolving or agreeing to take any such action (an "Adverse Recommendation Change"), (ii) adopting or approving any Takeover Proposal, or proposing the approval or adoption of any Takeover Proposal, or resolving or agreeing to take any such action, or (iii) causing or permitting the Company to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement (the "Acquisition Agreement") constituting or related to, or which is intended to or would reasonably be expected to lead to, any Takeover Proposal (other than a confidentiality agreement entered into in accordance with the no solicitation provisions). Notwithstanding anything in the Merger Agreement to the contrary, at any time prior to the Offer Closing, the Company Board may (A) effect an Adverse Recommendation Change, so long as the Company Board determines in good faith, after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation, that the failure to do so would result in a breach

of its fiduciary duties to the stockholders of the Company under applicable law and (B) in response to a Superior Proposal, cause the Company to terminate the Merger Agreement and concurrently with such termination, cause the Company to enter into an Acquisition Agreement, provided that (1) the Company Board may not effect such an Adverse Recommendation Change and (2) no termination of the Merger Agreement pursuant to the no solicitation provisions may be made, in each case unless (x) the Company Board shall have first provided prior written notice to Parent that it is prepared to effect an Adverse Recommendation Change (an "Adverse Recommendation Change Notice") or terminate the Merger Agreement pursuant to the no solicitation provisions of the Merger Agreement in response to a Superior Proposal (a "Superior Proposal Notice"), which notice shall, if the basis for the proposed action by the Company Board is not related to a Superior Proposal, contain a description of the events, facts and circumstances giving rise to such proposed action or, if the basis for the proposed action by the Company Board is a Superior Proposal, contain a description of the material terms and conditions of such Superior Proposal and (y) Parent does not make, within five business days after the receipt of such notice, a proposal that would, in the reasonable good faith judgment of the Company Board (after consultation with its outside legal counsel and a financial advisor of national reputation), cause such events, facts and circumstances to no longer require the Company Board to effect an Adverse Recommendation Change to comply with its fiduciary duties or cause the offer previously constituting a Superior Proposal to no longer constitute a Superior Proposal, as the case may be. The Company agrees that, during the five business day period prior to its effecting an Adverse Recommendation Change or terminating the Merger Agreement, the Company and its representatives shall negotiate in good faith with Parent and its representatives regarding any revisions to the terms of the transaction contemplated by the Merger Agreement proposed by Parent. Any material changes with respect to such events, facts or circumstances mentioned above or material changes to the financial terms or any material change to other material terms of such Superior Proposal, as the case may be, occurring prior to the Company's effecting an Adverse Recommendation Change or terminating the Merger Agreement, as the case may be, shall require the Company to provide to Parent a new Adverse Recommendation Change Notice or Superior Proposal Notice and a five business day period and, in determining whether to effect an Adverse Recommendation Change or whether to terminate the Merger Agreement, the Company Board shall take into account any such changes.

The Merger Agreement does not prohibit the Company from (i) taking and disclosing to its stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act or complying with Item 1012(a) of Regulation M-A under the Exchange Act or (ii) making any disclosure to its stockholders if, in the good faith judgment of the Company Board (after consultation with outside legal counsel), failure so to disclose is reasonably likely to result in a breach of applicable law, provided that these actions will not affect the obligations of the Company and the Company Board or any committee thereof under the other no solicitation provisions of the Merger Agreement (it being understood that any accurate disclosure of factual information to the stockholders of the Company that is required to be made to such stockholders under applicable federal securities laws or other laws shall not be considered an action prohibited by the no solicitation provisions of the Merger Agreement).

As used in the Merger Agreement, a "Takeover Proposal" means any inquiry, proposal or offer from any person (other than Parent or the Purchaser or any of their affiliates) relating to, or that could reasonably be expected to lead to, any direct or indirect acquisition, in one transaction or a series of transactions, including by way of any merger, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution, joint venture, license agreement or similar transaction, of (i) assets or businesses that constitute or represent 15% or more of the total revenue or assets of the Company and its subsidiaries, taken as a whole, or (ii) 15% or more of the outstanding shares of the Company common stock or of any class of capital stock of, or other equity or voting interests in, one or more of

the subsidiaries of the Company which, in the aggregate, directly or indirectly, hold the assets or businesses referred to in clause (i) above.

As used in the Merger Agreement, a "Superior Proposal" means any bona fide written offer, which was not solicited after the date of the Merger Agreement and did not result from a material breach of the no solicitation provisions of the Merger Agreement, made by any person (other than Parent or the Purchaser or any of their affiliates) that, if consummated, would result in such person (or in the case of a direct merger between such person and the Company, the stockholders of such person) acquiring, directly or indirectly, more than 50% of the voting power of the Company's common stock or all or substantially all the assets of the Company and its subsidiaries, taken as a whole, and which offer, the Company Board determines in good faith, after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation, (i) provides a higher value to the stockholders of the Company than the consideration payable in the Offer and the Merger (taking into account all of the terms and conditions of such proposal and the Merger Agreement (including any changes to the terms of the Offer or the Merger Agreement proposed by Parent in response to such Superior Proposal or otherwise)), (ii) is not subject to any financing condition or financing contingency and (iii) is reasonably capable of being completed in a timely fashion, taking into account all financial, legal, regulatory and other aspects of such proposal.

Insurance, Exculpation and Indemnification. The Merger Agreement provides that Parent and the Purchaser agree that all rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time existing on the date of the Merger Agreement in favor of the current or former directors or officers of the Company and its subsidiaries as provided in their respective certificates of incorporation or bylaws (or comparable organizational documents) and any indemnification or other agreements of the Company (in each case as in effect on the date of the Merger Agreement or as amended or entered into prior to the Effective Time with the consent of Parent) shall be assumed by the Surviving Corporation in the Merger, without further action, at the Effective Time, and shall survive the Merger and shall continue in full force and effect in accordance with their terms.

Parent agreed pursuant to the Merger Agreement that it shall, from the Offer Closing through the sixth anniversary of the Effective Time (such period, the "Tail Period"), maintain in effect the Company's directors' and officers' liability insurance as in effect on the date of the Merger Agreement for acts or omissions occurring prior to the Effective Time on terms no less favorable than those of such policy in effect on the date of the Merger Agreement. Parent shall not be required to pay, in any one year during the Tail Period, premiums for insurance that in the aggregate exceed 150% of the aggregate premiums paid by the Company in 2007 for such purpose. Parent may (i) substitute therefor policies of any reputable insurance company or (ii) satisfy the foregoing obligation by causing the Company to obtain, on or prior to the closing date of the Merger, prepaid (or "tail") directors' and officers' liability insurance policy, in each case, the material terms of which, including coverage and amount, are no less favorable to such directors and officers than the insurance coverage otherwise required under the insurance provisions of the Merger Agreement.

Obligations to Cause Merger to Occur. The Merger Agreement requires each of the parties to use its reasonable best efforts to take, or cause to be taken, all actions that are necessary, proper or advisable to consummate and make effective the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement (the "Stockholder Agreement" and, together with the Merger Agreement, the "Transaction Agreements") among Parent, the Purchaser and the current executive officers and directors of the Company, as described in this Section 11 below, including using its reasonable best efforts to accomplish the following: (i) the satisfaction of the conditions precedent set forth in the Merger Agreement, (ii) the obtaining of all necessary actions or nonactions, waivers, consents, approvals, orders and authorizations from, and the giving of any necessary notices to, governmental entities and other persons and the making of all

necessary registrations, declarations and filings (including filings under the HSR Act and other registrations, declarations and filings with, or notices to, governmental entities, if any), (iii) the taking of all reasonable steps to provide any supplemental information requested by a governmental entity, including participating in meetings with officials of such entity in the course of its review of the Transaction Agreements, the Offer, the Merger or the other transactions contemplated by the Transaction Agreements, (iv) coordinating with the other party in preparing and exchanging such information and promptly providing the other party with copies of all presentations, submissions or other supplemental information drafted by a party in connection with a request by a governmental entity, (v) the taking of all reasonable steps as may be necessary to avoid any suit, claim, action, investigation or proceeding by any governmental entity or other person and (vi) to the extent commercially reasonable in light of the circumstances, the defending of any suits, claims, actions, investigations or proceedings, whether judicial or administrative, challenging the Transaction Agreements, the Offer, the Merger or the other transactions contemplated by the Transaction Agreements, including seeking to have any stay or temporary restraining order entered by any court or other governmental entity vacated or reversed.

The Merger Agreement also requires each of the Company and the Company Board to, if any state takeover statute or similar statute or regulation is or becomes applicable to the Transaction Agreements, the Offer, the Merger or any of the other transactions contemplated by the Transaction Agreements, use its reasonable best efforts to ensure that the Offer, the Merger and the other transactions contemplated by the Transaction Agreements may be consummated as promptly as practicable on the terms contemplated by the Transaction Agreements and otherwise to minimize the effect of such statute or regulation on the Transaction Agreements, the Offer, the Merger and the other transactions contemplated by the Transaction Agreements. Notwithstanding anything to the contrary in the Merger Agreement, in no event shall Parent or the Purchaser be obligated to, and the Company and its subsidiaries shall not, without the prior written consent of Parent, agree or proffer to divest or hold separate, or enter into any licensing or similar arrangement with respect to, any assets (whether tangible or intangible) or any portion of any business of Parent, the Company or any of their respective subsidiaries. Notwithstanding anything to the contrary in the Merger Agreement, in no event shall Parent or any of its subsidiaries be obligated to litigate or participate in the litigation of any suit, claim, action, investigation or proceeding, whether judicial or administrative, brought by any governmental entity (i) challenging or seeking to restrain, prohibit or place conditions on the consummation of the Offer, the Merger or any of the other transactions contemplated by the Transaction Agreements or the ownership or operation by the Company, Parent or any of their respective affiliates of all or any portion of their respective businesses as presently conducted and as currently proposed to be conducted. The Company and Parent are required to provide each other such assistance, information and cooperation as is reasonably required to obtain any such actions, nonactions, waivers, consents, approvals, orders and authorizations and, in connection therewith, shall notify the other person promptly following the receipt of any comments from any governmental entity and of any request by any governmental entity for amendments, supplements or additional information in respect of any registration, declaration or filing with, or notice to, such governmental entity and shall supply the other person with copies of all correspondence between such person or any of its representatives, on the one hand, and any governmental entity, on the other hand.

Directors. The Merger Agreement provides that, following the Offer Closing, Parent or the Purchaser shall be entitled to designate, from time to time, such number of directors of the Company Board as will give the Purchaser, subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, representation equal to at least that number of directors, rounded up to the next whole number, that is the product of (i) the total number of directors (giving effect to the directors elected or appointed pursuant to this sentence) multiplied by (ii) the percentage that (A) the number of Shares owned by Parent, the Purchaser or any other subsidiary of Parent (including Shares accepted for payment and paid for pursuant to the Offer) bears to (B) the number of Shares then

outstanding; provided, however, that in no event will Parent or the Purchaser be entitled to designate any directors to serve on the Company Board unless the number of Shares owned by Parent, the Purchaser or any other subsidiary of Parent shall equal at least a majority of the voting power of the then-outstanding Shares. The Company is obligated pursuant to the Merger Agreement to take all action reasonably requested by Parent necessary to effect any such election or appointment, including (i) increasing the size of the Company Board and (ii) obtaining the resignation of such number of its current directors as is, in each case, necessary to enable such designees to be so elected or appointed to the Company Board in compliance with applicable law (including, to the extent applicable prior to the Effective Time, Rule 10A-3 under the Exchange Act and Nasdaq Rules 4350(c) and 4350(d)(2)). Following the election or appointment of the designees of Parent or the Purchaser to the Company Board and prior to the Effective Time, the affirmative vote of a majority of the Parent Independent Directors (as defined in this paragraph below) then in office shall be required for (I) the Company to consent to amend or terminate the Merger Agreement, to waive any of the Company's rights or remedies under the Merger Agreement or to extend the time for the performance of any of the obligations or other acts of Parent or the Purchaser or (II) any withdrawal, modification, amendment or qualification by the Company Board of its recommendation. A "Parent Independent Director" shall mean a member of the Company Board that (x) would be an "independent director" of Parent within the meaning of Nasdaq Rule 4200(a)(15) if such director were then serving as a member of Parent's Board of Directors and (y) does not otherwise have a relationship which, in the opinion of the Company Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Conditions to the Merger. The Merger Agreement provides that the respective obligations of each party to effect the Merger are subject to the satisfaction or (to the extent permitted by law) waiver on or prior to the closing date of the Merger of the following conditions:

•: if required by law, the Merger Agreement shall have been adopted by the affirmative vote of the holders of a majority of the outstanding Shares;
•: any waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired, and any other approval or waiting period under any other applicable competition, merger control, antitrust or similar law shall have been obtained or terminated or shall have expired;
•: no temporary restraining order, preliminary or permanent injunction or other judgment issued by any court of competent jurisdiction or other legal restraint or prohibition (collectively, "Legal Restraints") that has the effect of preventing the consummation of the Merger shall be in effect; and
•: the Purchaser shall have previously accepted for payment and paid for Shares validly tendered and not withdrawn pursuant to the Offer.

Termination. The Merger Agreement may be terminated, and the transactions contemplated by the Transaction Agreements may be abandoned, at any time prior to the Effective Time, notwithstanding the approval of the holders of the Company's common stock, upon written notice (other than in the case of termination by mutual written consent) from the terminating party to the non-terminating party specifying the provision of the Merger Agreement pursuant to which such termination is effected:

•: by mutual written consent of Parent, the Purchaser and the Company, provided that following the election or appointment of Parent's or the Purchaser's designees to the Company's Board and prior to the Effective Time, the affirmative vote of a majority of the Parent Independent Directors then in office shall be required for the Company to consent to terminate the Merger Agreement;

•: by Parent or the Company if (i) the Offer Closing shall not have occurred prior to August 28, 2008 (the "Termination Date") for any reason; provided, however, that the right to terminate the Merger Agreement for this reason shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Offer Closing to occur prior to such date and such action or failure to act constitutes a breach of the Merger Agreement and, provided further that, if on the Termination Date, certain conditions of the Offer pertaining to (A) the termination or expiration of any applicable HSR Act waiting period (and any extension thereof), (B) the existence of Legal Restraints having the effect of preventing or restraining the consummation of the Offer or the Merger, (C) the existence of a pending suit, claim, action, investigation or proceeding brought or threatened by any governmental entity challenging the acceptance for payment of Shares tendered pursuant to the Offer or the Merger or the other transactions contemplated by the Merger Agreement or seeking to prohibit or materially limit Parent's or the Purchaser's ownership or operation of the Company or any material portion of its business or assets and/or (D) the existence of any Legal Restraint that would be reasonably expected to result, directly or indirectly, in any of the effects referred to in clause (C) above shall not have been fulfilled but all other conditions of the Offer shall have been fulfilled or shall be capable of being fulfilled, then the Termination Date shall be extended to November 28, 2008, or (ii) any Legal Restraint that has the effect of preventing the consummation of the Offer or the Merger shall be in effect and shall have become final and nonappealable;
•: prior to the Offer Closing, by Parent, in the event the Company has delivered an Adverse Recommendation Change Notice or an Adverse Recommendation Change has occurred;
•: prior to the Offer Closing, by Parent, in the event the Company Board fails to publicly reaffirm its recommendation of the Offer within five business days of a written request by Parent for such reaffirmation;
•: prior to the Offer Closing, by Parent, if (i) (a) there shall be (x) any uncured inaccuracy in one or more of the representations and warranties of the Company contained in certain specified provisions of the capital structure representation and the authority and noncontravention representation, as well as the representations on intellectual property, Rule 14d-10 matters and state takeover statutes (collectively, the "Company Specified Representations") that are qualified as to materiality or Material Adverse Effect (as defined in Section 16 below) or any material uncured inaccuracy in any other Company Specified Representation or (y) any uncured inaccuracy in one or more of the representations and warranties of the Company contained in the Merger Agreement other than the Company Specified Representations (as such other representations and warranties would read, solely for purpose of this clause (y), without any qualifications as to materiality or Material Adverse Effect included therein) that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect, or the Company shall have failed to perform in all material respects all obligations required to be performed by it under the Merger Agreement at or prior to the expiration of the Offer, and (b) such inaccuracy or failure is incapable of being cured by the Company by the Termination Date or, if capable of being cured by the Company by the Termination Date, the Company does not commence to cure such inaccuracy or failure within ten business days after its receipt of written notice thereof from Parent and use its commercially reasonable efforts to pursue such cure thereafter, or (ii) if any Legal Restraint (A) challenging or seeking to restrain or prohibit the acceptance for payment of Shares tendered pursuant to the Offer, the Merger or any of the other transactions contemplated by the Merger Agreement or (B) seeking to prohibit or impose any material limitations on Parent's or the Purchaser's ownership or operation of the Company or any material portion of its business or assets shall be in effect and shall have become final and nonappealable;

•: prior to the Offer Closing, by the Company, if (i) the representations and warranties of Parent and the Purchaser contained in the Merger Agreement that are qualified as to materiality are not true and correct (as so qualified), and the representations and warranties of Parent and the Purchaser contained in the Merger Agreement that are not so qualified are not true and correct in all material respects, in each case as of the date of the Merger Agreement and as of the Offer Closing, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date, or (ii) Parent or the Purchaser shall have failed to perform in all material respects all obligations required to be performed by them under the Merger Agreement at or prior to the Offer Closing, in each case, which breach or failure to perform is incapable of being cured by Parent or the Purchaser by the Termination Date or, if capable of being cured by Parent by the Termination Date, Parent and the Purchaser do not commence to cure such breach or failure within ten business days after their receipt of written notice thereof from the Company and use its commercially reasonable efforts to pursue such cure thereafter; or
•: by the Company in accordance with the terms and subject to the conditions specified in the no solicitation provisions of the Merger Agreement.

Termination Fee. The Merger Agreement contemplates that a termination fee of $7.2 million (the "Termination Fee") will be payable by the Company to Parent under any of the following circumstances:

•: a Takeover Proposal has been made directly to the stockholders of the Company generally or shall have otherwise become publicly known or any person shall have publicly announced an intention (whether or not conditional and whether or not withdrawn) to make a Takeover Proposal and thereafter (A) the Merger Agreement is terminated by either Parent or the Company pursuant to the provision of the Merger Agreement providing for termination, subject to certain restrictions, as a result of the Offer Closing not taking place prior to the Termination Date and (B) prior to the date that is 18 months after such termination, the Company or any of its subsidiaries enters into any Acquisition Agreement with respect to any Takeover Proposal or any Takeover Proposal is consummated (solely for purposes of this provision, references to 15% in the definition of "Takeover Proposal" shall be deemed references to 35%); or
•: the Merger Agreement is terminated (i) by Parent in the event that an Adverse Recommendation Change Notice has been delivered or an Adverse Recommendation Change has occurred, or if, prior to the Offer Closing, the Company Board fails to publicly reaffirm its recommendation of the Offer within five business days of a written request by Parent for such reaffirmation or (ii) by the Company pursuant to the no solicitation provisions of the Merger Agreement.

Amendment. The Merger Agreement may be amended by the parties to the agreement at any time, whether before or after the Offer Closing shall have occurred or the adoption of the Merger Agreement by the holders of a majority of the outstanding Shares, if required by applicable law, shall have been obtained; however, (i) after the Offer Closing, there shall be no amendment that decreases the Merger Consideration and (ii) after the adoption of the Merger Agreement by the stockholders of the Company, there may not be made any amendment that by law requires further approval by such stockholders without the further approval of such stockholders. The Merger Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties to the Merger Agreement. Following the election or appointment of the designees of Parent or the Purchaser to the Company Board and prior to the Effective Time, the affirmative vote of a majority of the Parent Independent Directors then in office shall be required for (I) the Company to consent to amend or terminate the Merger Agreement, to waive any of the Company's rights or remedies under the Merger Agreement or to extend the time for the performance of any of the obligations or other acts of Parent

or the Purchaser or (II) any withdrawal, modification, amendment or qualification by the Company Board of its recommendation.

The Stockholder Agreement

Executive officers, members of the Company Board and certain stockholders affiliated with one of the directors have entered into the Stockholder Agreement under which they, among other things, (i) agreed to tender all their Shares pursuant to the Offer, (ii) agreed to vote their Shares in favor of the adoption of the Merger Agreement and each of the other transactions contemplated by the Merger Agreement and against any proposal made in opposition to, or in competition with, the consummation of the Offer, the Merger or any other transactions contemplated by the Merger Agreement, (iii) appointed Parent's designees as proxies to vote their Shares in favor of the Merger and other matters as set forth in the Stockholder Agreement, (iv) granted Parent an option to purchase their Shares for an exercise price equal to the Offer Price, less any required withholding taxes, and (v) agreed to certain restrictions on the transfer of their Shares. This summary is qualified in its entirety by reference to the Stockholder Agreement, a copy of which is attached as an exhibit to the Schedule TO and is incorporated herein by reference.

12. The License Agreement.

License Agreement

Simultaneously with the execution of the Merger Agreement, the Company and Parent have entered into an exclusive license agreement as of May 28, 2008 (the "License Agreement"), pursuant to which the Company has granted to Parent an exclusive license to manufacture, develop, and commercialize epothilone compounds and any pharmaceutical product containing an epothilone compound for any and all human or animal conditions. The Company will transfer epothilone-related technology to Parent and will provide technical assistance for a limited time period following the effectiveness of the License Agreement. The Company will retain primary control over the prosecution and maintenance of the licensed patents, but will allow Parent to manage such prosecution and maintenance, subject to the Company's approval of all patent filings and related correspondence.

Parent will pay the Company a $25 million upfront fee, which fee must be paid on or before August 21, 2008, unless the effectiveness of the License Agreement is delayed beyond such date as a result of any required regulatory filings or regulatory consents, in which case such fee will be payable upon the effectiveness of the License Agreement. The Company may also receive up to $300 million in milestone payments in the event certain regulatory milestones are achieved with respect to the Company's two clinical-stage epothilone compounds, KOS-862 and KOS-1584, consisting of the following one-time payments:

•: $50 million upon filing for regulatory approval of KOS-862 for an oncology indication in the United States or Europe
•: $100 million upon regulatory approval of KOS-862 for an oncology indication in the United States or Europe
•: $25 million upon filing for regulatory approval of KOS-1584 for an oncology indication in the United States or Europe
•: $75 million upon regulatory approval of KOS-1584 for an oncology indication in the United States or Europe
•: $20 million upon filing for regulatory approval of KOS-1584 for a non-oncology indication in the United States or Europe
•: $30 million upon regulatory approval of KOS-1584 for a non-oncology indication in the United States or Europe

In addition, the Company may receive up to $100 million in milestone payments in the event certain development milestones are achieved by any other epothilone compounds whose sale or use is covered by the Company's issued patents, consisting of the following one-time payments:

•: $5 million upon the start of Phase II clinical trial for such an epothilone compound
•: $10 million upon the start of a Phase III clinical trial for such an epothilone compound
•: $15 million upon filing for regulatory approval of such an epothilone compound for an oncology indication in the United States or Europe
•: $20 million upon regulatory approval of such an epothilone compound for an oncology indication in the United States or Europe
•: $20 million upon filing for regulatory approval of such an epothilone compound for a non-oncology indication in the United States or Europe
•: $30 million upon regulatory approval of such an epothilone compound for a non-oncology indication in the United States or Europe

Parent will also pay to the Company royalties based on net sales of epothilone compounds whose sale, use, manufacture or importation is covered by the Company's issued patents, subject to certain reductions. Parent has agreed to use commercially reasonable efforts to develop and commercialize in certain specified territories at least one epothilone compound whose sale or use is covered by the Company's issued patents, subject to certain exceptions after the third anniversary of the License Agreement.

Either party is permitted to terminate the License Agreement for an uncured breach by the other party, and Parent has the right to terminate the License Agreement in its entirety at any time with advance written notice to the Company. If Parent terminates the License Agreement for the Company's uncured material breach, the licenses granted to Parent will continue, and Parent will continue to owe milestones and royalties based on exploitation of the licenses. If Parent terminates the License Agreement at will or following any other termination of the License Agreement, except as provided below, the primary licenses to Parent will terminate, and rights to certain epothilone compounds will revert to the Company, subject to a royalty obligation to Parent. Following any termination of the License Agreement, except as provided below, Parent will retain a non-exclusive license under the Company's know-how to manufacture, develop, and commercialize epothilone compounds and any pharmaceutical product containing an epothilone compound for any and all human or animal conditions, a non-exclusive license to use the Company's patent rights for research purposes and a non-exclusive, royalty-bearing license under the Company's patent rights to manufacture epothilone compounds. The Company also has the right to terminate the License Agreement if the Company terminates the Merger Agreement as a result of certain intentional material breaches of the Merger Agreement by Parent or the Purchaser. Upon such a termination, the Company will refund any payments made by Parent under the License Agreement, all licenses granted under the License Agreement will terminate and the License Agreement will become void and have no effect.

13. Purpose of the Offer; Plans for the Company.

Purpose of the Offer. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer or otherwise. If the Offer is successful, the Purchaser intends to consummate the Merger as promptly as practicable.

Statutory Requirements. In general, under the DGCL, a merger of two Delaware corporations requires the adoption of a resolution by the board of directors of each of the corporations desiring to merge approving an agreement and plan of merger containing provisions with respect to certain

statutorily specified matters and the approval of such agreement by the stockholders of each corporation by the affirmative vote of the holders of at least a majority of all of the outstanding shares of stock entitled to vote on such matter, unless otherwise provided for in that corporation's certificate of incorporation or in the case of a short-form merger as described in the next paragraph. Accordingly, except in the case of a short-form merger, the affirmative vote of Company stockholders representing at least a majority of all outstanding Shares is required in order to adopt the Merger Agreement. Assuming that the Minimum Tender Condition is satisfied, upon consummation of the Offer, the Purchaser would own Shares sufficient to enable it to satisfy the stockholder approval requirement to approve the Merger.

The DGCL also provides that if a parent corporation owns at least 90% of each class of the stock of a subsidiary, that corporation can effect a short-form merger with that subsidiary without the action of the other stockholders of the subsidiary. Accordingly, if, as a result of the Offer or otherwise, the Purchaser acquires or controls at least 90% of the outstanding Shares, the Purchaser could, and intends to, effect the Merger without prior notice to, or any action by, any other Company stockholder.

Plans for the Company. Except as disclosed in this Offer to Purchase, Parent and the Purchaser do not have any present plan or proposal that would result in the acquisition by any person of additional securities of the Company, the disposition of securities of the Company, an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or its subsidiaries or the sale or transfer of a material amount of assets of the Company or its subsidiaries. After the purchase of the Shares in the Offer, Parent and the Purchaser will be entitled to appoint its designees to the Company Board in proportion to its ownership of the outstanding Shares, as described above in Section 11—"The Transaction Agreements—Directors." After completion of the Offer and the Merger, the Company will be a wholly-owned subsidiary of Parent. After completion of the Offer and the Merger, the reconstituted Company Board expects to work with the Company's management to evaluate and review the Company and its business, assets, corporate structure, operations, properties and strategic alternatives, to integrate the Company into Parent's business units, and to ensure that the Company's business will be conducted in a manner consistent with Parent's overall business strategy. As a result of this review and integration, it is possible that Parent, the Purchaser and, after completion of the Offer and the Merger, the reconstituted Company Board would implement changes to the Company's business or capitalization that could involve consolidating and streamlining certain operations and reorganizing or disposing of other businesses and operations. Parent, the Purchaser and, after completion of the Offer and the Merger, the reconstituted Company Board reserve the right to change their plans and intentions at any time, as deemed appropriate.

Appraisal Rights. No appraisal rights are available in connection with the Offer. However, if the Merger is consummated, the Company's stockholders would have rights under Section 262 of the DGCL to dissent and demand appraisal of, and payment in cash of the fair value of, their Shares. Such rights, if the statutory procedures were complied with, could lead to a judicial determination of the fair value (excluding any element of value arising from the accomplishment or expectation of the Merger) required to be paid in cash to such dissenting holders for their Shares. Any such judicial determination of the fair value of Shares could be based upon considerations other than, or in addition to, the price paid in the Offer and the market value of the Shares, including asset values and the investment of the Shares.

The value so determined could be more or less than the purchase price per Share pursuant to the Offer or the consideration per Share to be paid in the Merger. If any Company stockholder who demands appraisal under Section 262 of the DGCL fails to perfect, or effectively withdraws or loses his or her right to appraisal, as provided in the DGCL, each of the Shares of such holder will be converted into the Merger Consideration in accordance with the Merger Agreement. A Company stockholder may withdraw his or her demand for appraisal by delivery to the Purchaser of a written withdrawal of his or

her demand for appraisal. Failure to follow the steps required by Section 262 of the DGCL for perfecting appraisal rights may result in the loss of such rights.

The foregoing summary of the rights of dissenting stockholders under the DGCL does not purport to be a statement of the procedures to be followed by stockholders desiring to exercise any appraisal rights under the DGCL. The exercise of appraisal rights requires strict adherence to the applicable provisions of the DGCL which will be set forth in their entirety in the information statement for the Merger, unless the Merger is effected as a short-form merger, in which case they will be set forth in the notice of merger.

Going Private Transactions. The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger or another business combination following the purchase of Shares pursuant to the Offer in which the Purchaser seeks to acquire the remaining Shares not held by it. The Purchaser believes that Rule 13e-3 will not be applicable to the Merger because it is anticipated that the Merger will be effected within one year following the consummation of the Offer and, in the Merger, stockholders will receive the same price per Share as paid in the Offer.

14. Certain Effects of the Offer.

Market for the Shares. The purchase of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly, which could adversely affect the liquidity and market value of the remaining Shares held by stockholders other than the Purchaser. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether such reduction would cause future market prices to be greater or less than the Offer Price.

Stock Quotation. The Shares are listed on Nasdaq. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements of Nasdaq for continued listing on Nasdaq. The rules of Nasdaq establish certain criteria that, if not met, could lead to the delisting of the Shares from Nasdaq. Among such criteria are the number of stockholders, the number of shares publicly held and the aggregate market value of the shares publicly held. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of Nasdaq for continued listing and the listing of the Shares is discontinued, the market for the Shares could be adversely affected.

It is possible that the Shares would be traded on other securities exchanges (with trades published by such exchanges), the Nasdaq SmallCap Market, the OTC Bulletin Board or in a local or regional over-the-counter market. The extent of the public market for the Shares would, however, depend upon the number of holders of Shares and the aggregate market value of the Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act, as described below, and other factors.

Margin Regulations. The Shares are currently "margin securities" under the Regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those described above regarding the market for the Shares and stock quotations, it is possible that, following the Offer, the Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and, therefore, could no longer be used as collateral for loans made by brokers.

Exchange Act Registration. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the SEC if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to the Company, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with stockholders' meetings and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or be eligible for listing on Nasdaq. Parent and the Purchaser currently intend to seek to cause the Company to terminate the registration of the Shares under the Exchange Act as soon after consummation of the Offer as the requirements for termination of registration are met.

15. Dividends and Distributions.

The Merger Agreement provides that from the date of the Merger Agreement to the Effective Time, without the prior written consent of Parent, the Company will not, and will not permit its subsidiaries to, declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any of its capital stock or other equity or voting interests, except for dividends by a direct or indirect wholly-owned subsidiary of the Company to such subsidiary's parent.

16. Certain Conditions of the Offer.

For the purposes of this Section 16, capitalized terms used but not defined herein have the meanings set forth in the Merger Agreement. Notwithstanding any other term of the Offer or the Merger Agreement, the Purchaser shall not be required to, and Parent shall not be required to cause the Purchaser to, accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer unless (i) there shall have been validly tendered and not validly withdrawn prior to the expiration of the Offer (as it may have been extended pursuant to the Merger Agreement) that number of Shares that, considered together with all other Shares (if any) beneficially owned by Parent and its affiliates, would represent at least a majority of the outstanding Shares (determined on a fully diluted basis for all outstanding stock options, restricted stock units and any other rights to acquire Shares on the date of determination) (the "Minimum Tender Condition"), (ii) any waiting period (and any extension thereof) applicable to the Offer under the HSR Act shall have been terminated or shall have expired and (iii) Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and chief financial officer of the Company to the effect that none of the matters set forth in paragraphs (b) and (e) below shall have occurred.

In addition, notwithstanding any other term of the Offer or the Merger Agreement, the Purchaser shall not be required to, and Parent shall not be required to cause the Purchaser to, accept for payment or, subject as aforesaid, pay for any Shares tendered pursuant to the Offer if, upon the expiration of the Offer (as it may have been extended pursuant to the Merger Agreement) and before acceptance of such Shares for payment, any of the following conditions exists and is continuing and has

not resulted directly or indirectly from any breach of the Merger Agreement by Parent or the Purchaser:

(a): there shall be in effect any Legal Restraint that has the effect of preventing the consummation of the Offer or the Merger; provided, however, that prior to invoking this provision, each party shall use its commercially reasonable efforts to have any such Legal Restraint lifted;
(b): (i) there shall be (A) any Uncured Inaccuracy in one or more of the representations and warranties of the Company contained in the Company Specified Representations that are qualified as to materiality or Material Adverse Effect or any material Uncured Inaccuracy in any other Company Specified Representation or (B) any Uncured Inaccuracy in one or more of the representations and warranties of the Company contained in the Merger Agreement other than the Company Specified Representations (as such other representations and warranties would read, solely for purpose of this clause (B), without any qualifications as to materiality or Material Adverse Effect included therein) that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect; or (ii) the Company shall have failed to perform in all material respects all obligations required to be performed by it under the Merger Agreement at or prior to the expiration of the Offer;
(c): there shall be pending any suit, claim, action, investigation or proceeding brought or threatened by any Governmental Entity (i) challenging or seeking to restrain or prohibit the acceptance for payment of Shares tendered pursuant to the Offer, the Merger or any of the other transactions contemplated by the Merger Agreement or (ii) seeking to prohibit or impose any material limitations on Parent's or the Purchaser's ownership or operation of the Company or any material portion of its business or assets;
(d): there shall be in effect any Legal Restraint that would reasonably be expected to result, directly or indirectly, in any of the effects referred to in clauses (i) or (ii) of paragraph (c) above;
(e): since the date of the Merger Agreement, a Material Adverse Effect on or with respect to the Company shall have occurred; or
(f): the Merger Agreement shall have been validly terminated in accordance with its terms.

The foregoing conditions are in addition to, and not a limitation of, the rights of Parent and the Purchaser to extend, terminate and/or modify the Offer pursuant to the terms of the Merger Agreement.

The foregoing conditions are for the sole benefit of Parent and the Purchaser and may be asserted by Parent or the Purchaser regardless of the circumstances giving rise to such condition or may be waived by the Purchaser and Parent in whole or in part at any time and from time to time, in their sole discretion. The failure by Parent, the Purchaser or any other affiliate of Parent at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

As used in the Merger Agreement, a "Material Adverse Effect" on or with respect to the Company means any state of facts, change, development, event, effect, condition, occurrence, action or omission (each, an "Event") that, individually or in the aggregate, (i) would reasonably be expected to result in a material adverse effect on the business (including on the development of any of the Company's or its subsidiaries' product candidates, including clinical and/or regulatory Events), financial condition or results of operations of the Company and its subsidiaries, taken as a whole, or (ii) would prevent, materially impede or materially delay the consummation by the Company of the Offer, the

Merger or the other transactions contemplated by the Transaction Agreements; provided, however, that none of the following shall be deemed, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect on the Company: (A) any Events generally affecting (1) the industry in which the Company primarily operates to the extent they do not materially disproportionately affect the Company and its subsidiaries, taken as a whole, in relation to other companies in the industry in which the Company primarily operates or (2) the economy, or financial or capital markets, in the United States or elsewhere in the world to the extent they do not disproportionately affect the Company and its subsidiaries, taken as a whole, in relation to other companies in the industry in which the Company primarily operates; (B) any Events arising from or otherwise relating to any act of terrorism, war, national or international calamity or any other similar event to the extent they do not disproportionately affect the Company and its subsidiaries, taken as a whole; (C) any failure, in and of itself, by the Company to meet any internal or published projections or predictions (whether such projections or predictions were made by the Company or independent third parties) for any period ending on or after the date of the Merger Agreement (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect on the Company); (D) any Events readily apparent from any matters or circumstances disclosed in or incorporated by reference into the Company Disclosure Schedule to the Merger Agreement (excluding, in the case of documents filed by the Company with the SEC and incorporated by reference into the Company Disclosure Schedule, any disclosures set forth in any risk factor section or in any section relating to forward looking statements and any other disclosures included therein to the extent that they are cautionary, predictive or forward looking in nature); (E) any Events resulting from or arising out of any change in GAAP or changes in applicable law (including the rules of Nasdaq); (F) any Events (including any loss of employees or any loss of, or any disruption in, supplier, licensor, licensee, partner or similar relationships) directly attributable to the announcement or pendency of the Offer, the Merger or any of the other transactions contemplated by the Transaction Agreements; and (G) any Events arising from or otherwise relating to any action taken by the Company with Parent's consent or that is required by the Merger Agreement.

17. Certain Legal Matters; Regulatory Approvals.

General. The Purchaser is not aware of any pending legal proceeding relating to the Offer. Except as described in this Section 17, based on its examination of publicly available information filed by the Company with the SEC and other publicly available information concerning the Company, the Purchaser is not aware of any governmental license or regulatory permit that appears to be material to the Company's business that might be adversely affected by the Purchaser's acquisition of Shares as contemplated herein or of any approval or other action by any governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by the Purchaser or Parent as contemplated herein. Should any such approval or other action be required, the Purchaser currently contemplates that, except as described below under "State Takeover Statutes," such approval or other action will be sought. While the Purchaser does not currently intend to delay acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken, adverse consequences might not result to the Company's business, any of which under certain conditions specified in the Merger Agreement, could cause the Purchaser to elect to terminate the Offer without the purchase of Shares thereunder under certain conditions. See Section 16—"Certain Conditions of the Offer."

State Takeover Statutes. A number of states (including Delaware, where the Company is incorporated) have adopted laws that purport, to varying degrees, to apply to attempts to acquire

corporations that are incorporated in, or that have substantial assets, stockholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, such states. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted such laws. To the extent that these state takeover statutes purport to apply to the Offer or the Merger, we believe that those laws conflict with U.S. federal law and are an unconstitutional burden on interstate commerce. In Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana could, as a matter of corporate law, constitutionally disqualify a potential acquirer from voting shares of a target corporation without the prior approval of the remaining stockholders where, among other things, the corporation is incorporated in, and has a substantial number of stockholders in, the state. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they apply to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal District Court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision was affirmed by the United States Court of Appeals for the Sixth Circuit.

Section 203 of the DGCL prevents certain "business combinations" with an "interested stockholder" (generally, any person who owns or has the right to acquire 15% or more of a corporation's outstanding voting stock) for a period of three years following the time such person became an interested stockholder, unless, among other things, prior to the time the interested stockholder became such, the board of directors of the corporation approved either the business combination or the transaction in which the interested stockholder became such. The Company Board has irrevocably taken all necessary steps to render the restrictions of Section 203 of the DGCL inapplicable to the Offer, the Merger, the Transaction Agreements and the transactions contemplated thereby.

The Purchaser is not aware of any other state takeover laws or regulations which are applicable to the Offer or the Merger and has not attempted to comply with any state takeover laws or regulations. If any government official or third party should seek to apply any state takeover law to the Offer or the Merger or other business combination between the Purchaser or any of its affiliates and the Company, the Purchaser will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, the Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Shares, and the Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer or the Merger. In that case, we may not be obligated to accept for purchase, or pay for, any Shares tendered. See Section 16—"Certain Conditions of the Offer."

United States Antitrust Compliance. Under the HSR Act, and the related rules and regulations that have been issued by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated until certain information and documentary material has been furnished for review by the FTC and the Antitrust Division of the Department of Justice (the "Antitrust Division") and certain waiting period requirements have been satisfied. These requirements apply to the Purchaser's acquisition of the Shares in the Offer and the Merger.

Under the HSR Act, the purchase of Shares in the Offer may not be completed until the expiration of a 15-calendar day waiting period following the filing of certain required information and documentary material concerning the Offer with the FTC and the Antitrust Division, unless the waiting period is earlier terminated by the FTC and the Antitrust Division. Parent expects to file a Premerger Notification and Report Form under the HSR Act with the FTC and the Antitrust Division in connection with the purchase of Shares in the Offer and the Merger on June 2, 2008, and, if so filed, the required waiting period with respect to the Offer and the Merger will expire at 11:59 p.m., New York City time, on or about June 17, 2008, unless earlier terminated by the FTC and the Antitrust Division, or Parent receives a request for additional information or documentary material prior to that time. If within the 15-calendar day waiting period either the FTC or the Antitrust Division requests additional information or documentary material from Parent, the waiting period with respect to the Offer and the Merger would be extended for an additional period of 10-calendar days following the date of Parent's substantial compliance with that request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act rules. After that time, the waiting period may be extended only by court order. The FTC or the Antitrust Division may terminate the additional 10-calendar day waiting period before its expiration. In practice, complying with a request for additional information and documentary material can take a significant period of time.

The FTC and the Antitrust Division may scrutinize the legality under the antitrust laws of proposed transactions such as the Purchaser's acquisition of Shares in the Offer and the Merger. At any time before or after the purchase of Shares by the Purchaser, the FTC or the Antitrust Division could take any action under the antitrust laws that it either considers necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares in the Offer and the Merger, the divestiture of Shares purchased in the Offer or the divestiture of substantial assets of Parent, the Company or any of their respective subsidiaries or affiliates. Private parties as well as state attorneys general also may bring legal actions under the antitrust laws under certain circumstances.

Other Foreign Laws. The Company and Parent and certain of their respective subsidiaries conduct business in several foreign countries where regulatory filings or approvals may be required or desirable in connection with the consummation of the Offer or the Merger. Parent and the Company are analyzing the applicability of any such laws and currently intend to take such action as may be required or desirable. If any such laws are applicable or any foreign governmental entity takes an action prior to the completion of the Offer, the Purchaser may not be obligated to accept for payment or pay for any Shares tendered. See Section 16—"Certain Conditions of the Offer."

18. Fees and Expenses.

Credit Suisse Securities (USA) LLC is acting as Dealer Manager (in such capacity, the "Dealer Manager") in connection with the Offer and has provided certain financial advisory services to Parent in connection with the proposed acquisition of the Company, for which services Credit Suisse will receive customary fees. Parent and the Purchaser have agreed to reimburse Credit Suisse for its reasonable fees and expenses, including reasonable fees and disbursements of Credit Suisse's legal counsel, and to indemnify Credit Suisse and related parties against certain liabilities and other items, including liabilities under the federal securities laws, arising out of Credit Suisse's engagement. In the ordinary course of business, Credit Suisse and its affiliates may acquire, hold or sell for their own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and obligations of Parent and the Company).

Parent and the Purchaser have retained D.F. King & Co., Inc. to be the Information Agent (the "Information Agent") and Mellon Investor Services LLC to be the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telecopy, telegraph

and personal interview and may request banks, brokers, dealers and other nominees to forward materials relating to the Offer to beneficial owners of Shares.

The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services in connection with the Offer, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under federal securities laws.

Neither Parent nor the Purchaser will pay any fees or commissions to any broker or dealer or to any other person (other than to the Depositary and the Information Agent) in connection with the solicitation of tenders of Shares pursuant to the Offer. Banks, brokers, dealers and other nominees will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers.

19. Miscellaneous.

The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In those jurisdictions where applicable laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by the Purchaser.

No person has been authorized to give any information or to make any representation on behalf of Parent or the Purchaser not contained herein or in the Letter of Transmittal, and, if given or made, such information or representation must not be relied upon as having been authorized. No broker, dealer, bank, trust company, fiduciary or other person shall be deemed to be the agent of the Purchaser, the Depositary, the Dealer Manager or the Information Agent for the purpose of the Offer.

The Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 under the Exchange Act, together with exhibits furnishing certain additional information with respect to the Offer, and may file amendments thereto. In addition, the Company has filed with the SEC a Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the recommendation of the Company Board with respect to the Offer and the reasons for such recommendation and furnishing certain additional related information. A copy of such documents, and any amendments thereto, may be examined at, and copies may be obtained from, the SEC in the manner set forth under Section 7—"Certain Information Concerning the Company" above.

KB Acquisition Corp.

May 29, 2008

SCHEDULE I

DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER

1. Directors and Executive Officers of Parent. The following table sets forth the name, present principal occupation or employment and past material occupations, positions, offices or employment for at least the past five years for each director and the name, present principal occupation or employment and past material occupations, positions, offices or employment for at least the past five years for each executive officer of Parent. The current business address of each person is 345 Park Avenue, New York, New York 10154 and the current phone number is (212) 546-4000. Unless otherwise indicated, each such person is a citizen of the United States of America.

Name		Present Principal Occupation or Employment; Material Positions Held During the Past Five Years
Lewis B. Campbell		Director of Parent since 1998. Chairman, President and Chief Executive Officer since February 1999 of Textron Inc., a multi-industry company serving the aircraft, industrial products and components and financial industries. Mr. Campbell is a member of The Business Council and The Business Roundtable where he serves on the Security Task Force and the International Trade and Investment Task Force.
James M. Cornelius		Director of Parent since 2005. Chairman and Chief Executive Officer of Parent since February 11, 2008 and a member of the Management Council. Mr. Cornelius served as Parent's Chief Executive Officer since September 12, 2006. From November 2005 through April 2006, Mr. Cornelius served as the Chairman of the Board and Chief Executive Officer (interim) of Guidant Corporation. He served as Guidant's Non-Executive Chairman of the Board from 2000 until 2005. Mr. Cornelius is a Director of The DIRECTV Group and Given Imaging Ltd.
Louis J. Freeh		Director of Parent since 2005. President, Freeh Group International Solutions, LLC, a consulting firm, and Managing Partner, Freeh Sullivan Sporkin, LLP, a law firm, since 2007. Mr. Freeh served as Vice Chairman, General Counsel, Corporate Secretary and Ethics Officer to MBNA Corporation, a bank holding company, from 2001 until its acquisition by Bank of America in January 2006. He served as FBI Director from 1993 to 2001 and previously as U.S. District Judge, Assistant U.S. Attorney and FBI Special Agent. Mr. Freeh is a Director of Fannie Mae, a shareholder-owned company that operates in the secondary mortgage market. Mr. Freeh serves as a Consultant for Daimler AG, formerly DaimlerChrysler AG, and E.I. du Pont de Nemours and Company.

I-1

Laurie H. Glimcher, M.D.		Director of Parent since 1997. Irene Heinz Given Professor of Immunology at the Harvard School of Public Health and Professor of Medicine at Harvard Medical School since 1991. Dr. Glimcher is a Director of Waters Corporation. She is a Fellow of the American Academy of Arts and Sciences and a member of the National Academy of Sciences, the Institutes of Medicine of the National Academy of Sciences and the Irvington Institute Fellowship Committee. She sits on the Memorial Sloan-Kettering Cancer Center Board of Scientific Consultants and on the Scientific Advisory Boards of the Burroughs-Wellcome Fund, Center for Blood Research, Health Care Ventures, Inc., and Sandler Foundation Fund.
Michael Grobstein		Director of Parent since 2007. Retired Vice Chairman of Ernst & Young LLP, an independent registered public accounting firm. Mr. Grobstein worked with Ernst & Young from 1964 to 1998, and was admitted as a partner in 1975. He served as a Vice Chairman-International Operations from 1993 to 1998, as Vice Chairman-Planning, Marketing and Industry Services from 1987 to 1993, and Vice Chairman-Accounting and Auditing Services from 1984 to 1987. He is a Director of Given Imaging Ltd. He serves on the Board of Trustees and Executive Committee of the Central Park Conservancy and on the Board of Directors of New Yorkers for Parks.
Leif Johansson		Director of Parent since 1998. President of AB Volvo and Chief Executive Officer of the Volvo Group, a global commercial transport equipment group, since 1997. Between 1979 and 1997, Mr. Johansson held various executive positions in AB Electrolux, a world leader in appliances, including serving as CEO between 1994 and 1997. He is a Director of Svenska Cellulosa Aktiebolaget SCA, The Confederation of Swedish Enterprise, Royal Swedish Academy of Engineering Sciences, the Association of Swedish Engineering Industries, ACEA and ACEA Commercial Vehicles. He is also a member of the European Business Roundtable of Industrialists.
Alan J. Lacy		Director of Parent since 2008. Senior Advisor to Oak Hill Capital Partners, L.P., a private equity investment firm, since 2007. From 1994 to 2006, he was employed by Sears, Roebuck and Co., a department store, and following its acquisition, Sears Holdings Corporation, a large broadline retailer. Mr. Lacy held executive level positions of increasing responsibility in finance and operations, including his service as Chief Executive Officer from 2000 to 2005. He also serves as Vice Chairman from 2005 to 2006. He is a Director of The Western Union Company and serves on the Advisory Board of Fidelity Investments. He is also a Director of The Economic Club of Chicago and serves on the Board of Trustees of The Field Museum of Natural History and The National Parks Conservation Association.

I-2

Vicki L. Sato, Ph.D.		Director of Parent since 2006. Professor of management practice at the Harvard Business School and Professor of molecular and cell biology at Harvard University since July 2005. In 2006, Dr. Sato became Special Advisor to Atlas Venture, a global venture capital firm. Dr. Sato retired as President of Vertex Pharmaceuticals Incorporated, a global biotechnology company, where she was responsible for research and development, business and corporate development, commercial operations, legal, and finance in 2005. Dr. Sato also served as Chief Scientific Officer, Senior Vice President of Research and Development, and Chair of the Scientific Advisory Board at Vertex before being named President in 2000. She is a Director of PerkinElmer Corporation, Infinity Pharmaceuticals and Alnylam Pharmaceuticals.
Togo D. West, Jr.		Director of Parent since 2008. Chairman of TLI Leadership Group, a strategic consulting firm, since 2006 and Chairman of Noblis, Inc., a nonprofit science, technology and strategy organization, since 2001. From 2004 to 2006, Secretary West was the Chief Executive Officer of, and then consultant to, the Joint Center for Political and Economic Studies, a nonprofit research and public policy institution. He served as Of Counsel to the Washington, D.C.-based law firm of Covington & Burling from 2000 to 2004. Secretary West served as Secretary of the United States Department of Veteran Affairs from 1998 to 2000 and Secretary to the United States Army from 1993 to 1998. He is a Director of FuelCell Energy, Inc., Krispy Kreme Doughnuts and AbitibiBowater Inc.
R. Sanders Williams, M.D.		Director of Parent since 2006. Senior Vice Chancellor for Academic Affairs at Duke University Medical Center since 2007 and Dean of Duke University School of Medicine from 2001 to 2007. Dr. Williams joined the Duke faculty in 1980 as an assistant professor of medicine, physiology and cell biology. Dr. Williams is a Director of Laboratory Corporation of America, and is a Consultant to Phrixus, Inc. He has served recently on the Director's Advisory Committee of the National Institutes of Health and the Board of External Advisors to the National Heart, Lung and Blood Institute. He is also a member of the Institute of Medicine of the National Academy of Sciences and a fellow of the American Association for the Advancement of Science.
Lamberto Andreotti		Executive Vice President and President, Worldwide Pharmaceuticals, a division of Parent, since 2005 and a member of the Management Council. From 2002 to 2005, served as Senior Vice President and President International, Worldwide Medicines Group, a division of Parent.

I-3

Anthony McBride, PhD		Senior Vice President, Human Resources, Corporate Staff of Parent, since 2008. From 2005 to 2008, served as Vice President, Human Resources, Pharmaceutical Commercial Operations of Worldwide Pharmaceuticals, a division of Parent. From 2002 to 2005, served as Vice President, Human Resources, International & Global Marketing of Worldwide Medicines Pharmaceuticals Group Staff, a division of Parent.
Brian Daniels, M.D.		Senior Vice President, Global Development, Research and Development, a division of Parent, since 2008. From 2004 to 2008, served as Senior Vice President, Global Clinical Development, Worldwide Medicines Group Research and Development, a division of Parent. From 2003 to 2004, served as Vice President, Global Development Operations, Worldwide Medicines Group Pharmaceutical Research Institute, a division of Parent. From 2002 to 2003, served as Vice President, Full Development Teams, Worldwide Medicines Group Pharmaceutical Research Institute, a division of Parent.
Jean-Marc Huet		Senior Vice President and Chief Financial Officer of Parent since March 31, 2008. Mr. Huet served as Chief Financial Officer of Royal Numico N.V. from 2003 until the company was acquired by Groupe Danone in 2007. Prior to joining Royal Numico, N.V., he was an Executive Director, Investment Banking Services, at Goldman Sachs International based in London.
Joseph C. Caldarella		Vice President and Corporate Controller, Corporate Staff of Parent, since 2005. From 1998 to 2005, served as Vice President, Finance, Pharmaceutical Research Institute, a division of Parent.
John E. Celentano		President, Health Care Group, a division of Parent, since 2005 and a member of the Management Council. From 2002 to 2005, served as President, Latin America and Canada, Worldwide Medicines Group, a division of Parent.
Anthony C. Hooper		President, U.S. Pharmaceuticals, Worldwide Medicines Group, a division of Parent, since 2004 and a member of the Management Council. From 2002 to 2004, served as President, Europe, Middle East & Africa, Worldwide Medicines Group, a division of Parent.
Sandra Leung		Senior Vice President and General Counsel, Corporate Staff of Parent, since 2007 and a member of the Management Council. From 2002 to 2006, served as Vice President and Corporate Secretary, Corporate Staff of Parent. From 2006 to 2007, served as Vice President, Corporate Secretary and Acting General Counsel, Corporate Staff of Parent.

I-4

Elliott Sigal, M.D., Ph.D.		Executive Vice President, Chief Scientific Officer and President, Pharmaceutical Research and Development, a division of Parent, since 2004 and a member of the Management Council. From 2002 to 2004, served as Senior Vice President, Global Clinical and Pharmaceutical Development, Pharmaceutical Research Institute, a division of Parent.
Robert T. Zito		Senior Vice President, Corporate and Business Communications and Chief Communications Officer of Parent, since 2004 and a member of the Management Council. From 1999 to 2004, served as Executive Vice President, Communications, New York Stock Exchange.

2. Directors and Executive Officers of the Purchaser. The following table sets forth the name, present principal occupation or employment and past material occupations, positions, offices or employment for at least the past five years for each director and the name, citizenship, business address, business phone number, present principal occupation or employment and past material occupations, positions, offices or employment for at least the past five years for each executive officer of the Purchaser. The current business address of each person is 345 Park Avenue, New York, New York 10154 and the current phone number is (212) 546-4000. Unless otherwise indicated, each such person is a citizen of the United States of America.

Name		Present Principal Occupation or Employment; Material Positions Held During the Past Five Years
Dr. Jeremy Levin		Director of the Purchaser. President of the Purchaser. Senior Vice President, External Science, of Parent since September 2007. From 2003 to September 2007, served as Global Head of Business Development and Strategic Alliances, Novartis Institutes of Biomedical Research.
David T. Bonk		Director of the Purchaser. Vice President of the Purchaser. Vice President and Associate General Counsel of Parent.
Jeffrey Galik		Director of the Purchaser. Treasurer of the Purchaser. Vice President and Assistant Treasurer of Parent.
P. Joseph Campisi, Jr.		Vice President of the Purchaser. Vice President and Senior Counsel, Corporate Development, of Parent since August 2003. Partner, Pillsbury Winthrop Shaw Pittman LLP, from January 1998 through July 2003.
Sonia Vora		Secretary of the Purchaser. Senior Counsel and Assistant Corporate Secretary of Parent.

I-5

Manually signed facsimiles of the Letter of Transmittal, properly completed, will be accepted. The Letter of Transmittal and certificates evidencing Shares and any other required documents should be sent or delivered by each stockholder or its, his or her broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below:

The Depositary for the Tender Offer is:
Mellon Investor Services LLC

*If delivering by mail:*		*If delivering by hand or courier:*

Mellon Investor Services LLC Attn: Corporate Action Dept., 27th Floor P.O. Box 3301 South Hackensack, NJ 07606		Mellon Investor Services LLC Attn: Corporate Action Dept., 27th Floor 480 Washington Boulevard Jersey City, NJ 07310

Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and addresses set forth below. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer.

The Information Agent for the Tender Offer is:
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005

Banks and Brokerage Firms, Please Call:
(212) 269-5550
Stockholders and All Others Call Toll-Free
(888) 605-1957

The Dealer Manager for the Tender Offer is:
Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, NY 10010-3629

(888) 537-0427 (Call Toll-Free)

QuickLinks

IMPORTANT
SUMMARY TERM SHEET
TABLE OF CONTENTS
INTRODUCTION
THE TENDER OFFER

18. Fees and Expenses.

19. Miscellaneous.

SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
EX-99.(A)(1)(B) 3 a2185989zex-99_a1b.htm EXHIBIT 99(A)(1)(B)
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LETTER OF TRANSMITTAL

To Tender Shares of Common Stock
(Including the Associated Rights to Purchase
Series A Junior Participating Preferred Stock)

KOSAN BIOSCIENCES INCORPORATED

$5.50 NET PER SHARE

Pursuant to the Offer to Purchase dated May 29, 2008

KB ACQUISITION CORP.

a wholly-owned subsidiary of

BRISTOL-MYERS SQUIBB COMPANY

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 25, 2008, UNLESS THE OFFER IS EXTENDED.

The Depositary for the Tender Offer is:

Mellon Investor Services LLC

*If delivering by mail:*		*If delivering by hand or courier:*
Mellon Investor Services LLC Attn: Corporate Action Dept., 27th Floor P.O. Box 3301 South Hackensack, NJ 07606		Mellon Investor Services LLC Attn: Corporate Action Dept., 27th Floor 480 Washington Boulevard Jersey City, NJ 07310


DESCRIPTION OF SHARES TENDERED

	Shares Tendered (Attach additional signed list, if necessary)

Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank, exactly as name(s) appear(s) on certificate(s))	Certificate Number(s)(1)		Total Number of Shares Represented by Certificate(s)(1)	Total Number of Shares Tendered(2)





	Total Shares

	(1)	Need not be completed by stockholders tendering by book-entry transfer.
	(2)	Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction 4.

Delivery of this Letter of Transmittal to an address other than as set forth above will not constitute a valid delivery to the Depositary. You must sign this Letter of Transmittal in the appropriate space provided therefor below, with signature guarantee if required, and complete the Substitute Form W-9 set forth below, if required. The instructions set forth in this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed.

The tender offer is not being made to (nor will tender of Shares be accepted from or on behalf of) stockholders in any jurisdiction where it would be illegal to do so.

This Letter of Transmittal is to be used by stockholders of Kosan Biosciences Incorporated (the "Company"), if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase) is utilized, if delivery of Shares is to be made by book-entry transfer to an account maintained by the Depositary at the Book-Entry Transfer Facility (as defined in Section 2 of the Offer to Purchase and pursuant to the procedures set forth in Section 3 thereof).

Stockholders whose certificates for Shares ("Share Certificates") are not immediately available, or who cannot complete the procedure for book-entry transfer on a timely basis, or who cannot deliver all other required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), must tender their Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase in order to participate in the Offer. See Instruction 2. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary.

Additional Information if Shares Have Been Lost, Are Being Delivered By Book-Entry Transfer or Are Being Delivered Pursuant to a Previous Notice of Guaranteed Delivery

If any Share Certificate you are tendering with this Letter of Transmittal has been lost, stolen, destroyed or mutilated you should contact Mellon Investor Services LLC, as Transfer Agent, at 480 Washington Boulevard, Jersey City, NJ 07310, Attention: Shareholder Services (Telephone No. (800) 522-6645), regarding the requirements for replacement. You may be required to post a bond to secure against the risk that the Share Certificates may be subsequently recirculated. You are urged to contact the Transfer Agent immediately in order to receive further instructions, for a determination of whether you will need to post a bond and to permit timely processing of this documentation. See Instruction 11.

o: Check here if tendered Shares are being delivered by book-entry transfer made to an account maintained by the Depositary with the Book-Entry Transfer Facility and complete the following (only financial institutions that are participants in the system of any Book-Entry Transfer Facility may deliver Shares by book-entry transfer):

	Name of Tendering Institution

	DTC Account Number

	Transaction Code Number

o: Check here if tendered Shares are being delivered pursuant to a Notice of Guaranteed Delivery previously sent to the Depositary and complete the following:

	Name(s) of Tendering Stockholder(s)

	Date of Execution of Notice of Guaranteed Delivery

	Name of Eligible Institution that Guaranteed Delivery

	If Delivery is by Book-Entry Transfer, Provide the Following:

	Account Number

	Transaction Code Number

NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

The undersigned hereby tenders to KB Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Bristol-Myers Squibb Company, a Delaware corporation ("Parent"), the above described shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock (the "Shares"), of Kosan Biosciences Incorporated, a Delaware corporation (the "Company"), pursuant to the Purchaser's offer to purchase (the "Offer") all outstanding Shares, at a purchase price of $5.50 per Share, net to the seller in cash, less any required withholding taxes (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 29, 2008 (the "Offer to Purchase"), and in this Letter of Transmittal.

Upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms of any such extension or amendment), and effective upon acceptance for payment of the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to or upon the order of the Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby (and any and all dividends, distributions, rights, other Shares or other securities issued or issuable in respect thereof on or after the date hereof (collectively, "Distributions")) and irrevocably constitutes and appoints Mellon Investor Services LLC (the "Depositary") the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any and all Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates for such Shares (and any and all Distributions) or transfer ownership of such Shares (and any and all Distributions) on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, (ii) present such Shares (and any and all Distributions) for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any and all Distributions), all in accordance with the terms of the Offer.

By executing this Letter of Transmittal, the undersigned hereby irrevocably appoints Dr. Jeremy Levin and Sandra Leung, and each of them, and any other designees of the Purchaser, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, (i) to vote at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof or otherwise in such manner as each such attorney-in-fact and proxy or its, his or her substitute shall in its, his or her sole discretion deem proper with respect to, (ii) to execute any written consent concerning any matter as each such attorney-in-fact and proxy or its, his or her substitute shall in its, his or her sole discretion deem proper with respect to, and (iii) to otherwise act as each such attorney-in-fact and proxy or its, his or her substitute shall in its, his or her sole discretion deem proper with respect to, all of the Shares (and any and all Distributions) tendered hereby and accepted for payment by the Purchaser. This appointment will be effective if and when, and only to the extent that, the Purchaser accepts such Shares for payment pursuant to the Offer. This power of attorney and proxy are irrevocable and are granted in consideration of the acceptance for payment of such Shares in accordance with the terms of the Offer. Such acceptance for payment shall, without further action, revoke any prior powers of attorney and proxies granted by the undersigned at any time with respect to such Shares (and any and all Distributions), and no subsequent powers of attorney, proxies, consents or revocations may be given by the undersigned with respect thereto (and, if given, will not be deemed effective). The Purchaser reserves the right to require that, in order for the Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares (and any and all Distributions), including voting at any meeting of the Company's stockholders.

The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all Distributions) and that,

when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title to such Shares (and any and all Distributions), free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any and all Distributions). In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of the Purchaser all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, the Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may deduct from the purchase price of the Shares tendered hereby the amount or value of such Distribution as determined by the Purchaser in its sole discretion.

All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable.

The undersigned understands that the valid tender of Shares pursuant to any of the procedures described in the Offer to Purchase and in the Instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms of and subject to the conditions to the Offer (and if the Offer is extended or amended, the terms of or the conditions to any such extension or amendment).

Unless otherwise indicated under "Special Payment Instructions," please issue the check for the purchase price of all of the Shares purchased and, if appropriate, return any certificates for the Shares not tendered or accepted for payment in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price of all of the Shares purchased and, if appropriate, return any certificates for the Shares not tendered or not accepted for payment (and any accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and, if appropriate, return any certificates evidencing Shares not tendered or not accepted for payment (and any accompanying documents, as appropriate) in the name(s) of, and deliver such check and, if appropriate, return any such certificates (and any accompanying documents, as appropriate) to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please credit any Shares tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that the Purchaser has no obligation, pursuant to the "Special Payment Instructions," to transfer any Shares from the name of the registered holder thereof if the Purchaser does not accept for payment any of the Shares so tendered.

SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)

To be completed ONLY if the check for the purchase price of Shares accepted for payment and/or certificates for Shares not tendered or not accepted are to be issued in the name of someone other than the undersigned.

Issue check and/or certificates to:

Name		(Please Print)
Address
		(Include Zip Code)
(Taxpayer Identification or Social Security No.) (Also Complete Substitute Form W-9 Below)

SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)

To be completed ONLY if the check for the purchase price of Shares accepted for payment and/or certificates for Shares not tendered or not accepted are to be mailed to someone other than the undersigned or to the undersigned at an address other than that shown above.

Mail check and/or certificates to:

Name		(Please Print)
Address
		(Include Zip Code)
(Taxpayer Identification or Social Security No.) (Also Complete Substitute Form W-9 Below)

IMPORTANT

STOCKHOLDER: SIGN HERE
(Please complete and return the attached Substitute Form W-9 below)


Signature(s) of Holder(s) of Shares
Dated: , 2008

(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.)

Name(s)

(Please Print)


Capacity (full title) (See Instruction 5)

Address
		(Include Zip Code)

Area Code and Telephone No.

Tax Identification or Social Security No. (See Substitute Form W-9 enclosed herewith)

Guarantee of Signature(s)
(If Required—See Instructions 1 and 5)

Authorized Signature

Name

Name of Firm

Address
(Include Zip Code)

Area Code and Telephone No.
Dated: , 2008

INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. Guarantee of Signatures. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in the Book-Entry Transfer Facility's systems whose name(s) appear(s) on a security position listing as the owner(s) of the Shares) of Shares tendered herewith, unless such registered holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or by any other "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each, an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.

2. Requirements of Tender. This Letter of Transmittal is to be completed if Share Certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing tendered Shares, or timely confirmation of a book-entry transfer of Shares (a "Book-Entry Confirmation") into the Depositary's account at the Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a manually signed facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Stockholders whose Share Certificates are not immediately available, or who cannot complete the procedure for delivery by book-entry transfer on a timely basis or who cannot deliver all other required documents to the Depositary prior to the Expiration Date, may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date and (iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, in each case together with this Letter of Transmittal (or a manually signed facsimile hereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. If Share Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal must accompany each such delivery.

The method of delivery of this Letter of Transmittal, Share Certificates and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the option and the risk of the tendering stockholder and the delivery will be deemed made only when actually received by the Depositary (including, in the case of Book-Entry Transfer, by Book-Entry Confirmation). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

The Purchaser will not accept any alternative, conditional or contingent tenders, and no fractional Shares will be purchased. By executing this Letter of Transmittal (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares.

3. Inadequate Space. If the space provided herein is inadequate, the Share Certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto.

4. Partial Tenders. If fewer than all the Shares represented by any Share Certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Total Number of Shares Tendered." In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated.

5. Signatures on Letter of Transmittal; Stock Powers and Endorsements.

(a) Exact Signatures. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificates without alteration, enlargement or any change whatsoever.

(b) Joint Holders. If any of the Shares tendered hereby are held of record by two or more persons, all such persons must sign this Letter of Transmittal.

(c) Different Names on Certificates. If any of the Shares tendered hereby are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates.

(d) Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made, or Shares not tendered or not purchased are to be returned, in the name of any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1.

If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Depositary of the authority of such person so to act must be submitted.

6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6, the Purchaser or any successor entity thereto will pay all stock transfer taxes with respect to the transfer and sale of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if Share Certificate(s) for Shares not tendered or not accepted for payment are to be registered in the name of, any person(s) other than the registered holder(s), or if tendered Share Certificate(s) are registered in the name of any person(s) other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such other person(s)) payable on account of the transfer to such other person(s) will be deducted from the purchase price of such Shares purchased unless evidence satisfactory to the Purchaser of the payment of such taxes, or exemption therefrom, is submitted.

Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Share Certificate(s) evidencing the Shares tendered hereby.

7. Special Payment and Delivery Instructions. If a check is to be issued in the name of, and, if appropriate, Share Certificates for Shares not tendered or not accepted for payment are to be issued or returned to, any person(s) other than the signer of this Letter of Transmittal or if a check and, if appropriate, such Share Certificates are to be returned to any person(s) other than the person(s) signing this Letter of Transmittal or to an address other than that shown in this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed.

8. Substitute Form W-9. To avoid backup withholding, a tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below, and to certify, under penalties of perjury, that such number is correct and that such stockholder is not subject to backup withholding of federal income tax, and that such stockholder is a U.S. person (as defined for U.S. federal income tax purposes). If a tendering stockholder has been notified by the Internal Revenue Service ("IRS") that such stockholder is subject to backup withholding, such stockholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such stockholder has since been notified by the IRS that such stockholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering stockholder to federal income tax withholding on the payment of the purchase price of all Shares purchased from such stockholder. If the tendering stockholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such stockholder should check the box in Part 3 of the Substitute Form W-9, and sign and date the Substitute Form W-9. If the box in Part 3 is checked and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold a portion of all payments of the purchase price to such stockholder until a TIN is provided to the Depositary.

Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) may not be subject to backup withholding. Foreign stockholders should submit an appropriate and properly completed IRS Form W-8, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. Such stockholders should consult a tax advisor to determine which Form W-8 is appropriate. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions.

9. Irregularities. All questions as to purchase price, the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser in its sole discretion, which determinations shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any or all tenders of Shares it determines not to be in proper form or the acceptance of which or payment for which may, in the opinion of the Purchaser, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer (other than the Minimum Tender Condition (as defined in the Offer to Purchase) which may only be waived with the consent of the Company) and any defect or irregularity in the tender of any particular Shares, and the Purchaser's interpretation of the terms of the Offer (including these instructions) will be final and binding on all parties. No tender of Shares will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Purchaser shall determine. None of the Purchaser, the Depositary, the Dealer Manager, the Information Agent (as the foregoing are defined in the Offer to Purchase) or any other person is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give any such notice.

10. Requests for Additional Copies. Questions and requests for assistance or additional copies of the Offer to Purchase and this Letter of Transmittal should be directed to the Information Agent at the address and telephone numbers set forth below.

11. Lost, Destroyed or Stolen Certificates. If any certificate representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify Mellon Investor Services LLC, as Transfer Agent, at 480 Washington Boulevard, Jersey City, NJ 07310, Attention: Shareholder Services (Telephone No. (800) 522-6645). The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed.

This Letter of Transmittal, properly completed and duly executed, together with certificates representing Shares being tendered (or confirmation of book-entry transfer) and all other required documents, must be received before 12:00 midnight, New York City time, on the Expiration Date, or the tendering stockholder must comply with the procedures for guaranteed delivery.

IMPORTANT TAX INFORMATION

Under federal income tax law, a stockholder who is a U.S. person (as defined for U.S. federal income tax purposes) surrendering Shares must, unless an exemption applies, provide the Depositary (as payer) with the stockholder's correct TIN on IRS Form W-9 or on the Substitute Form W-9 included in this Letter of Transmittal. If the stockholder is an individual, the stockholder's TIN is such stockholder's Social Security number. If the correct TIN is not provided, the stockholder may be subject to a $50 penalty imposed by the IRS and payments of cash to the stockholder (or other payee) pursuant to the Offer may be subject to backup withholding of a portion of all payments of the purchase price.

Certain stockholders (including, among others, corporations and certain foreign individuals and entities) may not be subject to backup withholding and reporting requirements. In order for an exempt foreign stockholder to avoid backup withholding, such person should complete, sign and submit an appropriate Form W-8 signed under penalties of perjury, attesting to his or her exempt status. A Form W-8 can be obtained from the Depositary. Such stockholders should consult a tax advisor to determine which Form W-8 is appropriate. Exempt stockholders, other than foreign stockholders, should furnish their TIN, check the box in Part 4 of the Substitute Form W-9 and sign, date and return the Substitute Form W-9 to the Depositary in order to avoid erroneous backup withholding. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions.

If backup withholding applies, the Depositary is required to withhold and pay over to the IRS a portion of any payment made to a stockholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained from the IRS.

Purpose of Substitute Form W-9

To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of the stockholder's correct TIN by completing the Substitute Form W-9 included in this Letter of Transmittal certifying (1) that the TIN provided on the Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN), (2) that the stockholder is not subject to backup withholding because (i) the stockholder is exempt from backup withholding, (ii) the stockholder has not been notified by the IRS that the stockholder is subject to backup withholding as a result of a failure to report all interest and dividends or (iii) the IRS has notified the stockholder that the stockholder is no longer subject to backup withholding and (3) the stockholder is a U.S. person (as defined for U.S. federal income tax purposes).

What Number to Give the Depositary

The tendering stockholder is required to give the Depositary the TIN, generally the Social Security number or employer identification number, of the record holder of the Shares tendered hereby. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such stockholder should check the box in Part 3 of the Substitute Form W-9, sign and date the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer Identification Number, which appears in a separate box below the Substitute Form W-9. If the box in Part 3 of the Substitute Form W-9 is checked and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold a portion of all payments of the purchase price, which will be refunded if a TIN is provided to the Depositary within sixty (60) days of the Depositary's receipt of the Certificate of Awaiting Taxpayer Identification Number. If the Depositary is provided with an incorrect TIN in connection with such payments, the stockholder may be subject to a $50.00 penalty imposed by the IRS.


PAYER'S NAME: [ ]

SUBSTITUTE FORM W-9 Department of the Treasury Internal Revenue Service		Part 1—PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. CHECK APPROPRIATE BOX:	Social Security Number or Employer Identification Number Part 3— Awaiting TIN o
	o	Individual/Sole Proprietor
	o	Corporation
	o	Partnership
	o	Other
			Part 4— Exempt o

Payer's Request for Taxpayer Identification Number ("TIN")	Part 2—Certification—Under penalties of perjury, I certify that:
Please fill in your name and address below.	(1)	The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me);
Name	(2)	I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or (c) the IRS has notified me that I am no longer subject to backup withholding; and
Address (Number and Street)	(3)	I am a U.S. Person (including a U.S. resident alien).
		Certification Instructions—You must cross out Item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (2). If you are exempt from backup withholding, check the box in Part 4 above.
City, State and Zip Code	SIGNATURE DATE , 2008

NOTE:		FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF A PORTION OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
		YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either: (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office; or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, a portion of all reportable payments made to me will be withheld, but that such amounts will be refunded to me if I then provide a Taxpayer Identification Number within sixty (60) days.

Signature

Date

, 2008

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payor.—Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.

WHAT NAME AND NUMBER TO GIVE THE PAYER



For this type of account:			Give name and SSN of:

1.	Individual		The Individual
2.	Two or more individuals (joint account)		The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)		The minor(2)
4.	a.	The usual revocable savings trust (grantor is also trustee)	The grantor-trustee(1)
	b.	So-called trust account that is not a legal or valid trust under state law	The actual owner(1)
5.	Sole proprietorship or single-owner LLC		The owner(3)

For this type of account:			Give name and EIN of:


6.	Sole proprietorship or single-owner LLC		The owner(3)
7.	A valid trust, estate, or pension trust		Legal Entity(4)
8.	Corporation or LLC electing corporate status on Form 8832		The corporation
9.	Association, club, religious, charitable, educational, or other tax-exempt organization account		The organization
10.	Partnership or multi-member LLC		The partnership
11.	A broker or registered nominee		The broker or nominee
12.	Account with the Department of Agriculture in the name of a public entity (such as state or local government, school district, or prison) that receives agricultural program payments		The public entity

(1): List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person's number must be furnished.
(2): Circle the minor's name and furnish the minor's SSN.
(3): You must show your individual name and you may also enter your business or "DBA" name on the second name line. You may use either your SSN or EIN (if you have one). If you are a sole proprietor, IRS encourages you to use your SSN.
(4): List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

Note:

If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2

OBTAINING A NUMBER

If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number.

PAYEES EXEMPT FROM BACKUP WITHHOLDING

Payees specifically exempted from backup withholding on ALL payments include the following:

•: A corporation.
•: A financial institution.
•: An organization exempt from tax under section 501(a), or an individual retirement plan or a custodial account under Section 403(b)(7).
•: The United States or any agency or instrumentality thereof.
•: A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof.
•: A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof.
•: An international organization or any agency, or instrumentality thereof.
•: A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S.
•: A real estate investment trust.
•: A common trust fund operated by a bank under section 584(a).
•: An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1).
•: An entity registered at all times under the Investment Company Act of 1940.
•: A foreign central bank of issue.
•: A futures commission merchant registered with the Commodity Futures Trading Commission.
•: A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc. Nominee List.

Payments of dividends and patronage dividends not generally subject to backup withholding include the following:

•: Payments to nonresident aliens subject to withholding under section 1441.
•: Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner.
•: Payments of patronage dividends where the amount received is not paid in money.
•: Payments made by certain foreign organizations.

Payments of interest not generally subject to backup withholding include the following:

•: Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer.
•: Payments of tax-exempt interest (including exempt-interest dividends under section 852).
•: Payments described in section 6049(b)(5) to non-resident aliens.
•: Payments on tax-free covenant bonds under section 1451.
•: Payments made by certain foreign organizations.
•: Mortgage interest paid to an individual.

Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.

Certain payments, other than interest, dividends, and patronage dividends, that are not subject to information reporting, are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A.

PRIVACY ACT NOTICE—Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold a portion of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.

PENALTIES

(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER—If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING—If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.

(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION—Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.

The Depositary for the Tender Offer is:

Mellon Investor Services LLC

*If delivering by mail:*		*If delivering by hand or courier:*
Mellon Investor Services LLC Attn: Corporate Action Dept., 27th Floor P.O. Box 3301 South Hackensack, NJ 07606		Mellon Investor Services LLC Attn: Corporate Action Dept., 27th Floor 480 Washington Boulevard Jersey City, NJ 07310

Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and addresses set forth below. Questions or requests for assistance or additional copies of the Offer to Purchase and this Letter of Transmittal may be directed to the Information Agent at the address and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the tender offer.

The Information Agent for the Tender Offer is:

D.F. King & Co., Inc.

48 Wall Street
New York, New York 10005

Banks and Brokerage Firms, Please Call:
(212) 269-5550
Stockholders and All Others Call Toll-Free
(888) 605-1957

The Dealer Manager for the Tender Offer is:

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue
New York, NY 10010-3629

(888) 537-0427 (Call Toll-Free)

QuickLinks

Additional Information if Shares Have Been Lost, Are Being Delivered By Book-Entry Transfer or Are Being Delivered Pursuant to a Previous Notice of Guaranteed Delivery
NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
IMPORTANT TAX INFORMATION
Purpose of Substitute Form W-9
What Number to Give the Depositary
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
WHAT NAME AND NUMBER TO GIVE THE PAYER
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2
EX-99.(A)(1)(C) 4 a2185989zex-99_a1c.htm EXHIBIT 99(A)(1)(C)
QuickLinks -- Click here to rapidly navigate through this document

NOTICE OF GUARANTEED DELIVERY
For Tender of Shares of Common Stock
(Including the Associated Rights to Purchase
Series A Junior Participating Preferred Stock)
of
KOSAN BIOSCIENCES INCORPORATED
at
$5.50 NET PER SHARE
Pursuant to the Offer to Purchase dated May 29, 2008

by

KB ACQUISITION CORP.
a wholly-owned subsidiary of
BRISTOL-MYERS SQUIBB COMPANY

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 25, 2008, UNLESS THE TENDER OFFER IS EXTENDED.

This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (defined below) if (i) certificates representing shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock (the "Shares"), of Kosan Biosciences Incorporated, a Delaware corporation, are not immediately available, (ii) the procedure for book-entry transfer cannot be completed on a timely basis or (iii) time will not permit all required documents to reach Mellon Investor Services LLC (the "Depositary") prior to the expiration of the Offer. This Notice of Guaranteed Delivery may be delivered by hand, facsimile transmission or mail to the Depositary. See Section 3 of the Offer to Purchase.

The Depositary for the Tender Offer is:
Mellon Investor Services LLC

*By Mail:*	*By Facsimile Transmission:*	*By Hand/Overnight Delivery:*
	(Eligible Institutions Only)
Mellon Investor Services LLC	(201) 680-4626	Mellon Investor Services LLC
Attn: Corporate Action Dept.		Attn: Corporate Action Dept.
27th Floor		27th Floor
P.O. Box 3301	*Confirm Facsimile Receipt*	480 Washington Boulevard
South Hackensack, NJ 07606	*by Telephone:*	Jersey City, NJ 07310
	(201) 680-4860

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE APPROPRIATE LETTER OF TRANSMITTAL.

The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal or an Agent's Message (as defined in the Offer to Purchase) and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution.

Ladies and Gentlemen:

The undersigned hereby tenders to KB Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Bristol-Myers Squibb Company, a Delaware corporation, upon the terms and subject to the conditions set forth in the offer to purchase, dated May 29, 2008 (the "Offer to Purchase"), and the related Letter of Transmittal (such offer, the "Offer"), receipt of which is hereby acknowledged, the number of shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock (the "Shares"), of Kosan Biosciences Incorporated, a Delaware corporation, specified below, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.

Number of Shares and Certificate No.(s) (if available):						Name(s) of Record Holder(s):

						(Please type or print)
						Address(es):
						(Zip Code)

o	Check here if Shares will be tendered by book entry transfer.	Area Code and Tel. No.:	(Daytime telephone number)
DTC Account Number:		Signature(s):
Dated: , 2008

GUARANTEE
(Not to be used for signature guarantee)

The undersigned, an Eligible Institution (defined in Section 3 of the Offer to Purchase), hereby (i) represents that the tender of Shares effected hereby complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and (ii) guarantees delivery to the Depositary, at one of its addresses set forth above, of certificates representing the Shares tendered hereby, in proper form for transfer, or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (defined in Section 2 of the Offer to Purchase), in either case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an Agent's Message (defined in Section 2 of the Offer to Purchase), together with any other documents required by the Letter of Transmittal, all within three Nasdaq Global Market trading days after the date hereof.

Name of Firm:
						(Authorized Signature)

Address:	Name:
		(Please type or print)
(Zip Code)	Title:

Area Code and Tel. No.:

Date:

NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

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NOTICE OF GUARANTEED DELIVERY For Tender of Shares of Common Stock (Including the Associated Rights to Purchase Series A Junior Participating Preferred Stock) of KOSAN BIOSCIENCES INCORPORATED at $5.50 NET PER SHARE Pursuant to the Offer to Purchase dated May 29, 2008 by KB ACQUISITION CORP. a wholly-owned subsidiary of BRISTOL-MYERS SQUIBB COMPANY
GUARANTEE (Not to be used for signature guarantee)

NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

EX-99.(A)(1)(D) 5 a2185989zex-99_a1d.htm EXHIBT 99(A)(1)(D)

Offer To Purchase For Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase
Series A Junior Participating Preferred Stock)
of
KOSAN BIOSCIENCES INCORPORATED
at
$5.50 NET PER SHARE
Pursuant to the Offer to Purchase dated May 29, 2008
by
KB ACQUISITION CORP.
a wholly-owned subsidiary of
BRISTOL-MYERS SQUIBB COMPANY

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JUNE 25, 2008, UNLESS THE OFFER IS EXTENDED.

May 29, 2008

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

We have been engaged by KB Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Bristol-Myers Squibb Company, a Delaware corporation, to act as Dealer Manager in connection with the Purchaser's offer to purchase (the "Offer") all outstanding shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock (the "Shares"), of Kosan Biosciences Incorporated, a Delaware corporation, at a purchase price of $5.50 per Share, net to the seller in cash, less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 29, 2008 (the "Offer to Purchase"), and the related Letter of Transmittal enclosed herewith.

For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents:

1. The Offer to Purchase;

2. The Letter of Transmittal for your use in accepting the Offer and tendering Shares and for the information of your clients, together with "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" providing information relating to backup federal income tax withholding;

3. A Notice of Guaranteed Delivery to be used to accept the Offer if the Shares and all other required documents cannot be delivered to Mellon Investor Services LLC (the "Depositary") by the Expiration Date (as defined in the Offer to Purchase) or if the procedure for book-entry transfer cannot be completed by the Expiration Date;

4. The Company's Solicitation/Recommendation Statement on Schedule 14D-9;

5. A form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; and

6. A return envelope addressed to Mellon Investor Services LLC, the Depositary, for your use only.

Certain conditions to the Offer are described in Section 16 of the Offer to Purchase.

We urge you to contact your clients as promptly as possible. Please note that the Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Wednesday, June 25, 2008, unless the Offer is extended.

For Shares to be properly tendered pursuant to the Offer, (a) the share certificates or confirmation of receipt of such Shares under the procedure for book-entry transfer, together with a properly completed and duly executed Letter of Transmittal, including any required signature guarantees, or an "Agent's Message" (as defined in the Offer to Purchase) in the case of book-entry transfer, and any other documents required in the Letter of Transmittal, must be timely received by the Depositary or (b) the tendering stockholder must comply with the guaranteed delivery procedures, all in accordance with the Offer to Purchase and Letter of Transmittal.

The Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Depositary and the Information Agent as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. The Purchaser will pay all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal.

Any inquiries you may have with respect to the Offer should be addressed to the Information Agent or the undersigned at the addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from the Information Agent.

Very truly yours,
Credit Suisse Securities (USA) LLC

Nothing contained herein or in the enclosed documents shall constitute you the agent of the Purchaser, the Dealer Manager, the Information Agent or the Depositary or any affiliate of any of them or authorize you or any other person to use any document or make any statement on behalf of any of them in connection with the Offer other than the enclosed documents and the statements contained therein.

EX-99.(A)(1)(E) 6 a2185989zex-99_a1e.htm EXHIBIT 99(A)(1)(E)

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JUNE 25, 2008, UNLESS THE OFFER IS EXTENDED.

May 29, 2008

To Our Clients:

Enclosed for your consideration are the Offer to Purchase, dated May 29, 2008 (the "Offer to Purchase"), and the related Letter of Transmittal in connection with the offer (the "Offer") by KB Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Bristol-Myers Squibb Company ("Parent"), a Delaware corporation, to purchase all outstanding shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock (the "Shares"), of Kosan Biosciences Incorporated, a Delaware corporation, at a purchase price of $5.50 per Share, net to the seller in cash, less any required withholding taxes, upon the terms and subject to the conditions of the Offer.

We or our nominees are the holder of record of Shares held for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account.

We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the enclosed Offer to Purchase and the Letter of Transmittal.

Please note carefully the following:

1.: The offer price for the Offer is $5.50 per Share, net to you in cash.
2.: The Offer is being made for all outstanding Shares.
3.: The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Wednesday, June 25, 2008, unless the Offer is extended by the Purchaser.
4.: The Offer is subject to certain conditions described in Section 16 of the Offer to Purchase, including, among other things, the condition that the number of outstanding Shares which have been validly tendered and not validly withdrawn prior to the expiration of the Offer, when added to any Shares already owned by Parent or any of its controlled subsidiaries, if any, represent at least a majority of the outstanding Shares (determined on a fully diluted basis on the date of determination).
5.: Tendering stockholders who are registered stockholders or who tender their Shares directly to Mellon Investor Services LLC, the Depositary for the Offer, will not be obligated to pay any brokerage commissions or fees, solicitation fees, or, except as set forth in the Offer to Purchase and the Letter of Transmittal, stock transfer taxes on the Purchaser's purchase of Shares pursuant to the Offer.

If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing, detaching and returning to us the Instruction Form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, all such Shares will be tendered unless otherwise specified on the Instruction Form.

Your prompt action is requested. Your Instruction Form should be forwarded to us in ample time to permit us to submit the tender on your behalf before the expiration of the Offer.

The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction.

INSTRUCTION FORM
With Respect to the Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase Series A
Junior Participating Preferred Stock)
of
KOSAN BIOSCIENCES INCORPORATED
at
$5.50 NET PER SHARE
Pursuant to the Offer to Purchase
dated May 29, 2008
by

KB ACQUISITION CORP.
a wholly-owned subsidiary of
BRISTOL-MYERS SQUIBB COMPANY

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated May 29, 2008, and the related Letter of Transmittal, in connection with the offer (the "Offer") by KB Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Bristol-Myers Squibb Company, a Delaware corporation, to purchase all outstanding shares of common stock, par value $0.001 per share, including all rights to purchase Senior A Junior Participating Preferred Stock (the "Shares"), of Kosan Biosciences Incorporated, a Delaware corporation, at a purchase price of $5.50 per Share, net to the seller in cash, less any required withholding taxes, upon the terms and subject to the conditions of the Offer.

The undersigned hereby instruct(s) you to tender to the Purchaser the number of Shares indicated below or, if no number is indicated, all Shares held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer.

ACCOUNT NUMBER:

NUMBER OF SHARES BEING TENDERED HEREBY: SHARES*

The method of delivery of this document is at the election and risk of the tendering stockholder. If delivery is by mail, then registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

*: Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered.

Dated: , 2008

(Signature(s))
Please Print Name(s)

Address
Include Zip Code
Area Code and Telephone No.
Taxpayer Identification or Social Security No.

EX-99.(A)(5)(A) 7 a2185989zex-99_a5a.htm EXHIBIT 99(A)(5)(A)
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BRISTOL-MYERS SQUIBB TO ACQUIRE KOSAN BIOSCIENCES

Bristol-Myers Squibb Advances Company Strategy with Latest Acquisition

Princeton, N.J. and Hayward, CA, May 29, 2008—Bristol-Myers Squibb Company (NYSE: BMY) and Kosan Biosciences Inc. (NASDAQ: KOSN) announced today that the companies have signed a definitive merger agreement providing for the acquisition of Kosan, a cancer therapeutics company, by Bristol-Myers Squibb, for $5.50 per share in cash. The transaction, with a net aggregate purchase price of approximately $190 million after deducting Kosan's projected net cash balance at June 30, 2008, has been unanimously approved by the boards of directors of both companies. The acquisition of Kosan will enhance Bristol-Myers Squibb's pipeline with compounds in two important classes of anticancer agents: novel Hsp90 (heat shock protein 90) inhibitors and epothilones.

"Helping patients prevail against serious disease is paramount at Bristol-Myers Squibb," said Jim Cornelius, chairman and chief executive officer. "We pursue innovative science, both internally and externally, that can accelerate the discovery and development of new medicines. Kosan's technology, coupled with our development and commercialization capabilities, will result in new treatment options for patients, and represents another important milestone in the execution of our strategy to become a next-generation BioPharma leader."

"We believe that this combination with Bristol-Myers Squibb, a global leader in oncology, provides an excellent opportunity for the potential of Kosan's development portfolio to be realized through a transaction which also provides our stockholders with attractive financial terms," said Helen S. Kim, Kosan's president and chief executive officer. "Kosan has evolved from a research platform to a development company, and we have reached a turning point in our growth as an independent company. We believe that this transaction represents a timely opportunity to place our clinical programs and technology assets in the hands of a world-class company with the experience and expertise to bring innovative cancer treatment options to patients in need."

"Kosan has done great work advancing two classes of novel anticancer medicines: epothilones and Hsp90 inhibitors," said Elliott Sigal, M.D., Ph.D., executive vice president and chief scientific officer, Bristol-Myers Squibb. "Epothilones are microtubule stabilizers with multiple therapeutic applications in various cancers and potentially in neurodegenerative diseases. The Hsp90 program includes a Phase III compound for the treatment of patients with multiple myeloma, an area of high unmet medical need."

Under the terms of the definitive merger agreement, Bristol-Myers Squibb will commence a cash tender offer on or about May 29, 2008 to purchase all of the outstanding shares of Kosan common stock for $5.50 per share in cash. The closing of the tender offer is subject to customary terms and conditions, including the tender of a number of shares that constitutes at least a majority of Kosan's outstanding shares of common stock (on a fully diluted basis) and expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvement Act. The agreement also provides for the parties to effect, subject to customary conditions, a merger to be completed following the completion of the tender offer which would result in all shares not tendered in the tender offer being converted into the right to received $5.50 per share in cash. The directors and executive officers of Kosan have entered into agreements with Bristol-Myers Squibb pursuant to which they have agreed to tender their shares in connection with the tender offer contemplated by the merger agreement, subject to securities law limitations. The merger agreement contains a provision under which Kosan has agreed not to solicit any competing offers for the company. Bristol-Myers Squibb will finance the acquisition from its existing cash resources. The companies expect the tender offer to close in approximately thirty (30) days.

Bristol-Myers Squibb and Kosan also announced today that they have entered into a separate license agreement under which Kosan has granted to Bristol-Myers Squibb an exclusive worldwide

license to Kosan's epothilone compounds and related intellectual property and data and will assign to Bristol-Myers Squibb its epothilone investigational new drug (IND) applications. Under the license agreement, Kosan will receive an initial payment of $25 million and is entitled to milestone payments in connection with the development of epothilone product candidates and royalty payments on net sales of such products. The license agreement will remain in effect between the parties in the event that the acquisition is not completed, unless the merger agreement is terminated due to an intentional breach by Bristol-Myers Squibb of its covenants under that agreement.

Credit Suisse Securities (USA) LLC is serving as financial advisor to Bristol-Myers Squibb in connection with the acquisition, and Bristol-Myers Squibb is represented by Cravath, Swaine & Moore LLP, New York, New York. Lazard Frères & Co. LLC is serving as financial advisor to Kosan in connection with the acquisition, and Kosan is represented by Cooley Godward Kronish LLP, Palo Alto, California.

Kosan Conference Call and Webcast Today

Kosan will hold a conference call to discuss the planned acquisition of Kosan by Bristol-Myers Squibb today at 7:00 a.m. Pacific / 10:00 a.m. Eastern. To access the live call, please dial 800.591.6942 (U.S.) or 617.614.4909 (International), access code 40535858. Interested parties may listen to the webcast live at http://www.kosan.com by clicking on the "Webcasts" tab under the heading "Investors/Press." The webcast is also being distributed over Thomson's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson's individual investor center at http://www.earnings.com or by visiting any of the investor sites in Thomson's Individual Investor Network. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents, at http://www.streetevents.com. A telephonic replay will be available through June 5, 2008 by dialing 888.286.8010, access code 53056563. International callers can dial 617.801.6888, access code 53056563.

About Bristol-Myers Squibb

Bristol-Myers Squibb is a global biopharmaceutical company whose mission is to extend and enhance human life. For more information visit: www.bms.com.

About Kosan

Kosan Biosciences is a biotechnology company advancing two new classes of anticancer agents through clinical development—Hsp90 (heat shock protein 90) inhibitors and epothilones. Kosan has leveraged its proprietary technologies to develop drug candidates from polyketides, an important class of natural products. For additional information on Kosan Biosciences, please visit the company's website at http://www.Kosan.com.

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, relating to the acquisition of Kosan Biosciences Inc. by Bristol-Myers Squibb Company and the discovery, development and commercialization of certain anticancer agents. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. No forward-looking statement can be guaranteed. Among other risks, there can be no guarantee that the acquisition described in this release will receive all necessary regulatory approvals, that the acquisition will be completed, or if it is completed, that it will close by the timelines described in this release. In addition, the compounds described in this release are subject to all the risks inherent in the drug development process, and there can be no assurance that the development of these compounds will be successful, that it will ultimately receive regulatory approval, or that if it receives such approvals, that these compounds will be commercially successful. Forward-looking statements in the press release should be evaluated together with the many uncertainties that affect Bristol-Myers Squibb's business, particularly those identified in the cautionary factors discussion in Bristol-Myers Squibb's Annual

Report on Form 10-K for the year ended December 31, 2007, its Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Bristol-Myers Squibb undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "Act"). Such forward-looking statements include but are not limited to statements regarding the anticipated closing of the acquisition of Kosan, the potential receipt of milestones and royalty payments under the license agreement, and the further development and potential safety, efficacy and potential of Kosan's product candidates. Words such as "will," "would," "expect," "believe," and similar expressions are intended to identify forward-looking statements. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based upon Kosan's current expectations. Forward-looking statements involve risks and uncertainties. Kosan's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, the risk that the acquisition of Kosan may not be consummated as the transaction is subject to certain closing conditions, risks related to Kosan' dependence on Bristol-Myers Squibb to develop epothilone products in order for Kosan to receive milestones or royalties, and risks related to the uncertain progress and results of Kosan's preclinical and clinical testing; manufacturing; the effort and expense necessary for further development of Kosan's product candidates, including the costs of bortezomib; intellectual property matters; and Kosan's dependence on its collaboration with Pfizer for development of its motilin agonist product candidate. These and other risk factors are discussed under "Risk Factors" in Kosan's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and other periodic filings with the SEC. Kosan expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein.

The tender offer described herein has not commenced. The description contained herein is neither an offer to purchase nor a solicitation of an offer to sell shares of Kosan. At the time the tender offer is commenced, Bristol-Myers Squibb and its subsidiary, KB Acquisition Corp., intend to file a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer, and Kosan intends to file a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the tender offer. Bristol-Myers Squibb, KB Acquisition Corp., and Kosan intend to mail these documents to the stockholders of Kosan. These documents will contain important information about the tender offer and stockholders of Kosan are urged to read them carefully when they become available. Stockholders of Kosan will be able to obtain a free copy of these documents (when they become available) at the website maintained by the Securities and Exchange Commission at http://www.sec.gov/. In addition, stockholders will be able to obtain a free copy of these documents (when they become available) from Bristol-Myers Squibb by mailing requests for such materials to: Office of the Corporate Secretary, 345 Park Avenue, New York, New York 10154-0037.

CONTACTS:


Bristol-Myers Squibb Company		Kosan Biosciences Inc.
Media:		Jane M. Green, Ph.D
Jennifer Fron Mauer		Vice President, Corporate Communications
R&D Communications		Phone: 510-731-5335
Phone: 609-252-6579		green@kosan.com
jennifer.mauer@bms.com
Investor Relations: John Elicker Vice President, Investor Relations Phone: 212-546-3775 john.elicker@bms.com

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BRISTOL-MYERS SQUIBB TO ACQUIRE KOSAN BIOSCIENCES Bristol-Myers Squibb Advances Company Strategy with Latest Acquisition
EX-99.(A)(5)(B) 8 a2185989zex-99_a5b.htm EXHIBIT 99(A)(5)(B)
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This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made only by the Offer to Purchase, dated May 29, 2008, and the related Letter of Transmittal and any amendments or supplements thereto, and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In those jurisdictions where applicable laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser (as defined below) by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by the Purchaser.

Notice of Offer to Purchase for Cash

All of the Outstanding Shares of Common Stock

(Including the Associated Rights to Purchase
Series A Junior Participating Preferred Stock)

KOSAN BIOSCIENCES INCORPORATED

$5.50 Net Per Share

KB ACQUISITION CORP.

a Wholly-Owned Subsidiary

BRISTOL-MYERS SQUIBB COMPANY

KB Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of Bristol-Myers Squibb Company, a Delaware corporation ("Parent"), offers to purchase all outstanding shares of common stock, par value $0.001 per share, including all rights to purchase Series A Junior Participating Preferred Stock (the "Shares"), of Kosan Biosciences Incorporated, a Delaware corporation (the "Company"), at a price of $5.50 per Share, net to the seller in cash, less any required withholding taxes (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 29, 2008 (the "Offer to Purchase"), and in the related Letter of Transmittal (such offer, the "Offer").

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 25, 2008, UNLESS THE OFFER IS EXTENDED.

The term "Minimum Tender Condition" is defined in Section 16 ("Certain Conditions of the Offer") of the Offer to Purchase and generally requires that the number of Shares which have been validly tendered and not validly withdrawn prior to the expiration of the Offer, when added to any Shares already owned by Parent or any of its controlled subsidiaries, if any, represent at least a majority of the outstanding Shares (determined on a fully diluted basis for all outstanding stock options,

restricted stock units and any other rights to acquire Shares on the date of determination). The Offer is also subject to other important conditions set forth in the Offer to Purchase.

The Merger Agreement provides, among other things, that subject to certain conditions, the Purchaser will be merged (the "Merger") with and into the Company with the Company continuing as the surviving corporation, wholly owned by Parent. Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each Share outstanding immediately prior to the Effective Time (other than (i) Shares held by the Company as treasury stock or owned by Parent or the Purchaser, all of which shall be canceled and retired and shall cease to exist, and (ii) Shares owned by the Company's stockholders who perfect their appraisal rights under Section 262 of the General Corporation Law of the State of Delaware) will be converted into the right to receive $5.50 (or any greater per Share price paid in the Offer) net in cash without interest.

The Board of Directors of the Company has (i) approved and declared advisable the Merger Agreement and the Stockholder Agreement, dated as of May 28, 2008, by and among Parent, the Purchaser and the executive officers and directors of the Company (the "Stockholder Agreement"), the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement, (ii) declared that it is in the best interests of the stockholders of the Company that the Company enter into the Merger Agreement and consummate the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the Stockholder Agreement on the terms and subject to the conditions set forth therein, (iii) declared that the terms of the Offer and the Merger are fair to the Company's stockholders and (iv) recommended that the Company's stockholders accept the Offer, tender their Shares pursuant to the Offer and, if required by applicable law, adopt the Merger Agreement.

For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not validly withdrawn as, if and when the Purchaser gives oral or written notice to Mellon Investor Services LLC (the "Depositary") of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Offer Price for such Shares with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares or confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of book-entry transfer, an Agent's Message (as defined in the Offer to Purchase) and (iii) any other documents required by the Letter of Transmittal.

The term "Expiration Date" means 12:00 midnight, New York City time, on Wednesday, June 25, 2008 (which is the end of the day on June 25, 2008), unless the Purchaser, in accordance with the Merger Agreement, extends the period during which the Offer is open, in which event the term "Expiration Date" means the latest time and date at which the Offer, as so extended, expires.

The Merger Agreement provides that the Purchaser may, in its discretion, without the consent of the Company, (i) extend the Offer on one or more occasions for any period ending no later than August 28, 2008 or, if extended in accordance with the terms of the Merger Agreement, November 28, 2008 (the "Termination Date"), if on any then-scheduled expiration date of the Offer any of the conditions of the Offer shall not be satisfied, until such time as such conditions are satisfied or waived and (ii) extend the Offer for any period ending no later than the Termination Date required by any rule, regulation, interpretation or position of the Securities and Exchange Commission or the staff thereof applicable to the Offer. The Merger Agreement further provides that if not all of the conditions of the Offer are satisfied or, in the Purchaser's sole discretion, waived on any then-scheduled expiration date of the Offer, then, provided that all such conditions are reasonably capable of being

satisfied by the Termination Date and subject to the rights of Parent under the termination provisions of the Merger Agreement, the Purchaser shall extend the Offer on one or more occasions, in consecutive increments of up to ten business days each, for an aggregate period of time ending no later than the Termination Date that Parent reasonably believes is necessary for such conditions to be satisfied, until such time as such conditions are satisfied; provided, however, that the Purchaser shall not be required to extend the Offer beyond the Termination Date. Following the Purchaser's acceptance of and payment for Shares tendered in the Offer, the Purchaser may, without the consent of the Company, elect to provide for a "subsequent offering period" (a "Subsequent Offering Period") in accordance with Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Any extension of the Offer will be followed as promptly as practicable by a public announcement. Such announcement will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not validly withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such stockholder's Shares except during a Subsequent Offering Period. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless previously accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after July 27, 2008. If the initial offering period has expired and the Purchaser elects to provide for a Subsequent Offering Period, Shares tendered during a Subsequent Offering Period may not be withdrawn. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If share certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such share certificates, the serial numbers shown on such share certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. All questions as to validity, form, eligibility (including time of receipt) and acceptance for payment of any tendered Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties.

The information required to be disclosed by Paragraph (d)(1) of Rule 14d-6 of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal, together with the Company's Solicitation/Recommendation Statement on Schedule 14D-9, will be mailed to record holders of Shares whose names appear on the Company's stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to banks, brokers, dealers and other nominees whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing.

The Offer to Purchase and the related Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer.

Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers listed below. Additional copies of the Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the Information Agent. Stockholders may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer.

The Information Agent for the Tender Offer is:
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005

Banks and Brokerage Firms, Please Call:
(212) 269-5550
Stockholders and All Others Call Toll-Free
(888) 605-1957

The Dealer Manager for the Tender Offer is:

Eleven Madison Avenue
New York, NY 10010-3629

(888) 537-0427 (Call Toll-Free)

May 29, 2008

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Notice of Offer to Purchase for Cash
EX-99.(A)(5)(C) 9 a2185989zex-99_a5c.htm EXHIBIT 99(A)(5)(C)
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BRISTOL-MYERS SQUIBB BEGINS TENDER OFFER TO ACQUIRE
KOSAN BIOSCIENCES INC.

PRINCETON, NJ, May 29, 2008—Bristol-Myers Squibb Company (NYSE: BMY) is commencing today, through its wholly owned subsidiary KB Acquisition Corp., a cash tender offer to purchase all outstanding shares of common stock of Kosan Biosciences Inc. (NASDAQ: KOSN). Bristol-Myers Squibb reported earlier today its intent to acquire Kosan.

Upon the successful closing of the tender offer, shareholders of Kosan will receive $5.50 in cash for each share of Kosan common stock tendered in the offer, less any required withholding taxes. Following the purchase of shares in the tender offer, Kosan will become a subsidiary of Bristol-Myers Squibb.

Bristol-Myers Squibb will file today with the Securities and Exchange Commission a tender offer statement on Schedule TO that provides the terms of the tender offer. Kosan will file today with the SEC a solicitation/recommendation statement on Schedule 14D-9 that includes the recommendation of Kosan's board of directors that Kosan shareholders accept the tender offer and tender their shares to Bristol-Myers Squibb. As previously announced, Kosan's board of directors has unanimously concluded that the merger agreement and its related transactions (including the tender offer and the merger) are advisable, fair, and in the best interests of Kosan and it shareholders.

The tender offer will expire at 12:00 midnight (New York City time) on Wednesday, June 25, 2008, unless extended in accordance with the merger agreement and the applicable rules and regulations of the SEC. The offer will be subject to customary conditions, including customary regulatory clearances and the acquisition by Bristol-Myers Squibb of a majority of Kosan's shares on a fully diluted basis.

D.F. King & Co., Inc. is acting as information agent for Bristol-Myers Squibb. Credit Suisse Securities (USA) LLC is serving as financial advisor to Bristol-Myers Squibb in connection with the transactions and will be the dealer-manager for the tender offer. Lazard Frères & Co. LLC is serving as financial advisors to Kosan in connection with the transactions. Cravath, Swaine & Moore LLP is acting as legal counsel to Bristol-Myers Squibb.

* * * * *

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, relating to the acquisition of Kansas by Bristol-Myers Squibb Company and the discovery, development and commercialization of certain anticancer agents. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. No forward-looking statement can be guaranteed. Among other risks, there can be no guarantee that the acquisition described in this release will receive all necessary regulatory approvals, that the acquisition will be completed, or if it is completed, that it will close by the timelines described in this release. In addition, the compounds described in this release are subject to all the risks inherent in the drug development process, and there can be no assurance that the development of these compounds will be successful, that it will ultimately receive regulatory approval, or that if it receives such approvals, that these compounds will be commercially successful. Forward-looking statements in the press release should be evaluated together with the many uncertainties that affect Bristol-Myers Squibb's business, particularly those identified in the cautionary factors discussion in Bristol-Myers Squibb's Annual Report on Form 10-K for the year ended December 31, 2007, its Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Bristol-Myers Squibb undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

This press release is neither an offer to purchase nor a solicitation of an offer to sell shares of Kosan. Bristol-Myers Squibb Company and KB Acquisition Corp. will file a tender offer statement with the Securities and Exchange Commission, and will mail an offer to purchase, forms of letter or transmittal and related documents to Kosan shareholders. Kosan will file with the Securities and Exchange Commission, and will mail to Kosan shareholders a solicitation/recommendation statement on Schedule 14D-9. These documents contain important information about the tender offer and stockholders of Kosan are urged to read them carefully when they become available.

These documents will be available at no charge at the SEC's website at www.sec.gov. The tender offer statement and the related materials may be obtained for free by directing a request by mail to D.F. King & Co., Inc., 48 Wall Street, New York, New York 10005 or by calling toll-free (888) 605-1958, and may also be obtained from Bristol-Myers Squibb by directing a request to:

Bristol-Myers Squibb Company
Jennifer Fron Mauer
R&D Communications
Phone: 609-252-6579
jennifer.mauer@bms.com

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BRISTOL-MYERS SQUIBB BEGINS TENDER OFFER TO ACQUIRE KOSAN BIOSCIENCES INC.
EX-99.(D)(A) 10 a2185989zex-99_da.htm EXHIBIT 99(D)(A)
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EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

among

BRISTOL-MYERS SQUIBB COMPANY,

KB ACQUISITION CORP.

and

KOSAN BIOSCIENCES INCORPORATED

dated as of May 28, 2008

TABLE OF CONTENTS

ARTICLE I

The Offer

		Page
SECTION 1.01. The Offer		1
SECTION 1.02. Company Actions		3
SECTION 1.03. Top-Up Option		4

ARTICLE II

The Merger

SECTION 2.01. The Merger		5
SECTION 2.02. Closing		5
SECTION 2.03. Effective Time of the Merger		5
SECTION 2.04. Effects of the Merger		5
SECTION 2.05. Certificate of Incorporation and Bylaws		5
SECTION 2.06. Directors		5
SECTION 2.07. Officers		5

ARTICLE III

Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of Certificates

SECTION 3.01. Effect on Capital Stock		6
SECTION 3.02. Exchange of Certificates		7

ARTICLE IV

Representations and Warranties

SECTION 4.01. Representations and Warranties of the Company		8
SECTION 4.02. Representations and Warranties of Parent and Sub		30

ARTICLE V

Covenants Relating to Conduct of Business

SECTION 5.01. Conduct of Business		32
SECTION 5.02. No Solicitation		36
SECTION 5.03. WARN Act Matters		39

ARTICLE VI

Additional Agreements

SECTION 6.01. Preparation of the Proxy Statement; Stockholders Meeting		39
SECTION 6.02. Access to Information; Confidentiality		40
SECTION 6.03. Reasonable Best Efforts; Consultation and Notice		40
SECTION 6.04. Equity Awards		42

SECTION 6.05. Indemnification, Exculpation and Insurance		43
SECTION 6.06. Fees and Expenses		44
SECTION 6.07. Public Announcements		45
SECTION 6.08. Sub Compliance		45
SECTION 6.09. Directors		45
SECTION 6.10. Rule 14d-10 Matters		46
SECTION 6.11. Rights Agreement		46
SECTION 6.12. Company Benefit Plan Matters		46

ARTICLE VII

Conditions Precedent

SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger

ARTICLE VIII

Termination, Amendment and Waiver

SECTION 8.01. Termination		47
SECTION 8.02. Effect of Termination		48
SECTION 8.03. Amendment		48
SECTION 8.04. Extension; Waiver		48

ARTICLE IX

General Provisions

SECTION 9.01. Nonsurvival of Representations and Warranties		48
SECTION 9.02. Notices		49
SECTION 9.03. Definitions		49
SECTION 9.04. Exhibits and Schedules; Interpretation		51
SECTION 9.05. Counterparts		51
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries		51
SECTION 9.07. Governing Law		51
SECTION 9.08. Assignment		51
SECTION 9.09. Consent to Jurisdiction; Service of Process; Venue		52
SECTION 9.10. Waiver of Jury Trial		52
SECTION 9.11. Enforcement		52
SECTION 9.12. Consents and Approvals		52
SECTION 9.13. Severability		52
SECTION 9.14. Obligation of Parent		53

EXHIBIT A		Conditions to the Offer
EXHIBIT B		Form of Amended and Restated Certificate of Incorporation of the Surviving Corporation

GLOSSARY

Term		Section
Acquisition Agreement		5.02(b)
Additional ESPP Shares		4.01(c)(vi)
Adverse Recommendation Change		5.02(b)
Adverse Recommendation Change Notice		5.02(b)
affiliate		9.03(a)
Agreement		Preamble
Appraisal Shares		3.01(d)
Arrangements		4.01(q)
Biologic		4.01(v)(i)
business day		9.03(b)
CEFF Shares		4.01(c)(ii)
Certificate		3.01(c)
Certificate of Merger		2.03
Closing		2.02
Closing Date		2.02
Code		1.01(d)
Commonly Controlled Entity		4.01(m)(i)
Company		Preamble
Company Benefit Agreement		4.01(m)(i)
Company Benefit Plan		4.01(m)(i)
Company Bylaws		4.01(a)
Company Certificate		2.05(a)
Company Common Stock		Recitals
Company Disclosure Schedule		4.01
Company Personnel		4.01(i)(A)(iii)
Company Preferred Stock		4.01(c)(i)
Company Rights		4.01(c)(i)
Company RSUs		4.01(c)(ii)
Company SEC Documents		4.01(e)(i)
Company Specified Representations		Exhibit A
Company Stock Options		4.01(c)(ii)
Company Stock Plans		4.01(c)(ii)
Company Warrant		4.01(c)(ii)
Compensation Committee		4.01(q)
Confidentiality Agreement		1.02(c)
Contract		4.01(d)
Covered Product Candidates		4.01(p)(i)
Covered Securityholders		4.01(q)
Current ESPP Shares		4.01(c)(vi)
DGCL		2.01
Drug		4.01(v)(i)
Effective Time		2.03
Employment Compensation Arrangement		4.01(q)
Environmental Claims		4.01(k)(ii)
Environmental Law		4.01(k)(ii)
Environmental Permit		4.01(k)(ii)
ERISA		4.01(m)(i)
Event		9.03(d)

iii

Exchange Act		1.01(a)
FDA		4.01(j)
FDCA		4.01(j)
Filed Company SEC Documents		4.01(e)(i)
GAAP		4.01(e)(i)
Governmental Entity		4.01(d)
Grant Date		4.01(c)(v)
Hazardous Materials		4.01(k)(ii)
HSR Act		4.01(d)
IND		4.01(v)(i)
indebtedness		4.01(e)(i)
Independent Director		4.01(d)
Information Statement		4.01(d)
Intellectual Property Rights		4.01(p)(i)
Judgment		4.01(d)
Kingsbridge		4.01(c)(ii)
knowledge		9.03(c)
Law		4.01(d)
Leased Real Property		4.01(o)(i)
Legal Restraints		7.01(c)
Liens		4.01(b)
Material Adverse Effect		9.03(d)
Material Contract		4.01(i)(B)
Merger		Recitals
Merger Consideration		3.01(c)
Minimum Tender Condition		Exhibit A
NASDAQ		4.01(c)(v)
New Exercise Date		6.04(a)(iii)
Offer		Recitals
Offer Closing		1.01(a)
Offer Closing Date		1.01(a)
Offer Conditions		1.01(a)
Offer Documents		1.01(b)
Offer Price		Recitals
Parent		Preamble
Parent Independent Director		6.09(b)
Paying Agent		3.02(a)
PCAOB		5.01(a)(xiv)
Permits		4.01(j)
Permitted Liens		4.01(i)(A)(vi)
person		9.03(e)
Proxy Statement		4.01(d)
Purchase Plan		4.01(c)(ii)
Release		4.01(k)(ii)
Representatives		5.02(a)
Rights Agreement		4.01(c)(i)
Schedule 14D-9		1.02(b)
SEC		1.01(a)
Section 262		3.01(d)
Securities Act		4.01(e)(i)

Social Security Act		4.01(v)(v)
SOX		4.01(e)(i)
Specified Contracts		4.01(u)(i)
Specified Parachute Payments		4.01(m)(v)
Specified Stockholders		Recitals
Standstill Agreement		5.02(a)
Stockholder Agreement		Recitals
Stockholder Approval		4.01(d)
Stockholders Meeting		6.01(b)
Sub		Preamble
Subsidiary		9.03(f)
Superior Proposal		5.02(a)
Superior Proposal Notice		5.02(b)
Surviving Corporation		2.01
Tail Period		6.05(c)
Takeover Proposal		5.02(a)
tax return		4.01(n)(ix)
taxes		4.01(n)(ix)
taxing authority		4.01(n)(ix)
Termination Date		8.01(b)(i)
Termination Fee		6.06(b)
Top-Up Option		1.03(a)
Top-Up Shares		1.03(a)
Transaction Agreements		Recitals
Transaction Claims		6.03(b)(i)(D)
Uncured Inaccuracy		9.03(g)
WARN Act		4.01(l)

AGREEMENT AND PLAN OF MERGER dated as of May 28, 2008 (this "Agreement"), by and among Bristol-Myers Squibb Company, a Delaware corporation ("Parent"), KB Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"), and Kosan Biosciences Incorporated, a Delaware corporation (the "Company").

WHEREAS Parent desires to acquire the Company on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, in furtherance of the acquisition of the Company by Parent on the terms and subject to the conditions set forth in this Agreement, Parent proposes to cause Sub to make a tender offer (as it may be amended from time to time as permitted under this Agreement, the "Offer") to purchase all the outstanding shares of common stock, par value $0.001 per share, of the Company (the "Company Common Stock"), including the associated Company Rights, at a price per share of Company Common Stock (including the associated Company Rights) of $5.50 (such amount, or any other amount per share paid pursuant to the Offer and this Agreement, the "Offer Price"), net to the seller in cash, without interest, on the terms and subject to the conditions set forth in this Agreement;

WHEREAS the Boards of Directors of each of the Company and Sub have approved the merger of Sub with and into the Company (the "Merger"), on the terms and subject to the conditions set forth in this Agreement;

WHEREAS Parent, Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Offer and the Merger and also to prescribe various conditions to the Offer and the Merger; and

WHEREAS concurrently with the execution and delivery of this Agreement Parent, Sub and certain stockholders of the Company (the "Specified Stockholders") are entering into an agreement (the "Stockholder Agreement" and, together with this Agreement, the "Transaction Agreements") pursuant to which the Specified Stockholders will agree to take specified actions in furtherance of the Offer and the Merger.

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

ARTICLE I

The Offer

SECTION 1.01. The Offer. (a) Subject to the conditions of this Agreement, as promptly as practicable (but in no event later than ten (10) business days) after the date of this Agreement, Sub shall, and Parent shall cause Sub to, commence, within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the "Exchange Act"), the Offer. The obligations of Sub to, and of Parent to cause Sub to, commence the Offer and accept for payment, and pay for, any shares of Company Common Stock tendered pursuant to the Offer are subject to the conditions set forth in Exhibit A (the "Offer Conditions"). The initial expiration date of the Offer shall be midnight, New York City time, on the 20th business day following the commencement of the Offer (determined pursuant to Rule 14d-1(g)(3) under the Exchange Act). Sub expressly reserves the right to, in its sole discretion, waive, in whole or in part, any Offer Condition or modify the terms of the Offer; provided, however, that, without the prior written consent of the Company (unless the Company takes any action contemplated by Section 5.02(b)), Sub shall not (i) reduce the number of shares of Company Common Stock subject to the Offer, (ii) reduce the Offer Price, (iii) change, modify or waive the Minimum Tender Condition, (iv) add to the conditions set forth in Exhibit A or modify or change any Offer Condition in a manner materially adverse to any holders of Company Common Stock, (v) except as otherwise provided in this Section 1.01(a), extend or otherwise change the expiration date of the Offer, (vi) change the form of consideration payable in the Offer or (vii) otherwise amend, modify or supplement any of the terms of the Offer in any manner materially adverse to any holders of Company Common Stock. Notwithstanding anything in this Agreement to the contrary, Sub may, in its discretion, without consent

of the Company, (A) without limiting Parent's or Sub's obligations under the following sentence, extend the Offer on one or more occasions for any period ending no later than the Termination Date, if on any then-scheduled expiration date of the Offer any of the Offer Conditions shall not be satisfied, until such time as such conditions are satisfied or waived and (B) extend the Offer for any period ending no later than the Termination Date required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer. Parent and Sub agree that if not all of the Offer Conditions are satisfied or, in Sub's sole discretion, waived on any then-scheduled expiration date of the Offer, then, provided that all such conditions are reasonably capable of being satisfied by the Termination Date and subject to the rights of Parent under Article VIII, Sub shall, and Parent shall cause Sub to, extend the Offer on one or more occasions, in consecutive increments of up to ten (10) business days each, for an aggregate period of time ending no later than the Termination Date that Parent reasonably believes is necessary for such conditions to be satisfied, until such time as such conditions are satisfied; provided, however, that Sub shall not be required to extend the Offer beyond the Termination Date. In any event, the Offer may not be terminated prior to its expiration date (as such expiration date may be extended and re-extended in accordance with this Section 1.01(a)), unless this Agreement is validly terminated in accordance with Article VIII. On the terms and subject to the conditions of the Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept and pay for (subject to any withholding of tax pursuant to Section 1.01(d)) all shares of Company Common Stock validly tendered and not validly withdrawn pursuant to the Offer that Sub becomes obligated to purchase pursuant to the Offer as soon as practicable after the expiration date of the Offer (as it may be extended and re-extended in accordance with this Section 1.01(a)). Acceptance for payment of shares of Company Common Stock pursuant to and subject to the conditions of the Offer is referred to in this Agreement as the "Offer Closing", and the date on which the Offer Closing occurs is referred to in this Agreement as the "Offer Closing Date". Sub expressly reserves the right to, in its sole discretion, extend the Offer for a "subsequent offering period" in accordance with Rule 14d-11 under the Exchange Act following the Offer Closing, and the Offer Documents may, in Sub's sole discretion, provide for such a reservation of right.

(b) On the date of commencement of the Offer, Parent and Sub shall file with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer, which shall contain an offer to purchase and a related letter of transmittal and summary advertisement (such Schedule TO and the documents included therein pursuant to which the Offer will be made, together with any supplements or amendments thereto, the "Offer Documents"). The Company shall promptly furnish to Parent and Sub all information concerning the Company required by the Exchange Act to be set forth in the Offer Documents. Each of Parent, Sub and the Company shall promptly correct any information supplied by it for inclusion or incorporation by reference in the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect, and each of Parent and Sub shall take all steps necessary to amend or supplement the Offer Documents and to cause the Offer Documents as so amended or supplemented to be filed with the SEC and disseminated to the stockholders of the Company, in each case as and to the extent required by applicable Federal securities Laws. Parent and Sub shall promptly notify the Company upon the receipt of any comments from the SEC, or any request from the SEC for amendments or supplements, to the Offer Documents, and shall provide the Company with copies of all correspondence between them and their representatives, on the one hand, and the SEC, on the other hand. Prior to the filing of the Offer Documents (including any amendment or supplement thereto) with the SEC or dissemination thereof to the stockholders of the Company, or responding to any comments of the SEC with respect to the Offer Documents, Parent and Sub shall provide the Company a reasonable opportunity to review and comment on such Offer Documents or response (including the proposed final version thereof), and Parent and Sub shall give reasonable consideration to any such comments.

(c) Parent shall provide or cause to be provided to Sub on a timely basis the funds necessary to pay for any shares of Company Common Stock that Sub becomes obligated to accept for payment, and

pay for, pursuant to the Offer, and shall cause Sub to perform, on a timely basis, all of Sub's obligations under this Agreement.

(d) Sub shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Offer to any holder of shares of Company Common Stock such amounts as Sub is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of state, local or foreign tax Law. To the extent that amounts are so withheld and paid over by Sub to the appropriate taxing authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock in respect of which such deduction and withholding was made by Sub.

SECTION 1.02. Company Actions. (a) The Company hereby approves of and consents to the Offer, the Merger and the other transactions contemplated by the Transaction Agreements.

(b) On or as promptly as practicable after the date the Offer Documents are filed with the SEC, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, together with any supplements or amendments thereto, the "Schedule 14D-9") containing the recommendation described in Section 4.01(d) and shall mail the Schedule 14D-9 to the stockholders of the Company. Parent and Sub shall promptly furnish to the Company all information concerning Parent and Sub required by the Exchange Act to be set forth in the Schedule 14D-9. Each of the Company, Parent and Sub shall promptly correct any information supplied by it for inclusion or incorporation by reference in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect, and the Company shall take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and disseminated to the stockholders of the Company, in each case as and to the extent required by applicable Federal securities Laws. The Company shall promptly notify Parent upon the receipt of any comments from the SEC, or any request from the SEC for amendments or supplements, to the Schedule 14D-9, and shall provide Parent with copies of all correspondence between the Company and its representatives, on the one hand, and the SEC, on the other hand. Prior to the filing of the Schedule 14D-9 (including any amendment or supplement thereto) with the SEC or mailing thereof to the stockholders of the Company, or responding to any comments of the SEC with respect to the Schedule 14D-9, the Company shall provide Parent a reasonable opportunity to review and comment on such Schedule 14D-9 or response (including the proposed final version thereof), and the Company shall give reasonable consideration to any such comments. The Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Board of Directors of the Company contained in the Schedule 14D-9.

(c) In connection with the Offer and the Merger, the Company shall cause its transfer agent to furnish Parent and Sub promptly with mailing labels containing the names and addresses of the record holders of Company Common Stock as of a recent date and of those persons becoming record holders subsequent to such date, together with copies of all lists of stockholders, security position listings and computer files and all other information in the Company's possession or control regarding the beneficial owners of Company Common Stock, and shall furnish to Sub such information and assistance (including updated lists of stockholders, security position listings and computer files) as Parent may reasonably request in communicating the Offer to holders of Company Common Stock. Subject to the requirements of applicable Law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the transactions contemplated by the Transaction Agreements, Parent and Sub shall hold in confidence the information contained in any such labels, listings and files in accordance with the requirements of the Confidentiality Agreement dated April 9, 2008 between Parent and the Company (as it may be amended from time to time, the "Confidentiality Agreement"), shall use such information only in connection with the Offer and the

Merger and, if this Agreement shall be terminated, shall, upon request, destroy all copies of such information then in their possession or control.

SECTION 1.03. Top-Up Option. (a) The Company hereby grants to Sub an irrevocable option (the "Top-Up Option"), exercisable only on the terms and conditions set forth in this Section 1.03, to purchase at a price per share equal to the Offer Price paid in the Offer up to that number of newly issued shares of Company Common Stock (the "Top-Up Shares") equal to the lowest number of shares of Company Common Stock that, when added to the number of shares of Company Common Stock directly or indirectly owned by Parent at the time of exercise of the Top-Up Option, shall constitute one share more than ninety percent (90%) of the shares of Company Common Stock outstanding immediately after the issuance of the Top-Up Shares (determined on a fully diluted basis for all outstanding stock options, restricted stock units and any other rights to acquire Company Common Stock outstanding on the date of determination); provided, however, that (i) the Top-Up Option shall not be exercisable for a number of shares of Company Common Stock in excess of the shares of Company Common Stock authorized and unissued at the time of exercise of the Top-Up Option (giving effect to the shares of Company Common Stock issuable pursuant to all then-outstanding stock options, restricted stock units and any other rights to acquire Company Common Stock as if such shares were outstanding) and (ii) the issuance of the Top-Up Shares shall not require approval of the Company's stockholders under applicable Law (including the rules of NASDAQ). The Top-Up Option shall be exercisable at any one time following the Offer Closing and prior to the earlier to occur of (a) the Effective Time and (b) the termination of this Agreement in accordance with its terms. The obligation of the Company to issue and deliver the Top-Up Shares upon the exercise of the Top-Up Option is subject only to the condition that no Legal Restraint that has the effect of preventing the exercise of the Top-Up Option or the issuance and delivery of the Top-Up Shares in respect of such exercise shall be in effect.

(b) The parties shall cooperate to ensure that the issuance and delivery of the Top-Up Shares comply with all applicable Laws, including compliance with an applicable exemption from registration of the Top-Up Shares under the Securities Act. In the event Sub wishes to exercise the Top-Up Option, Sub shall give the Company at least three (3) business days prior written notice, specifying (i) the number of shares of the Company Common Stock directly or indirectly owned by Parent at the time of such notice and (ii) a place and a time for the closing of such purchase. The Company shall, as soon as practicable following receipt of such notice, deliver written notice to Sub specifying, based on the information provided by Sub in its notice, the number of Top-Up Shares. At the closing of the purchase of Top-Up Shares, the purchase price owed by Sub to the Company therefor shall be paid to the Company (i) in cash, by wire transfer or cashier's check or (ii) by issuance by Sub to the Company of a promissory note on terms reasonably satisfactory to the Company.

(c) Parent and Sub acknowledge that the Top-Up Shares that Sub may acquire upon exercise of the Top-Up Option will not be registered under the Securities Act and will be issued in reliance upon an applicable exemption from registration under the Securities Act. Each of Parent and Sub hereby represents and warrants to the Company that Sub is, and will be, upon the purchase of the Top-Up Shares, an "accredited investor", as defined in Rule 501 of Regulation D under the Securities Act. Sub agrees that the Top-Up Option and the Top-Up Shares to be acquired upon exercise of the Top-Up Option are being and will be acquired by Sub for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof (within the meaning of the Securities Act).

ARTICLE II

The Merger

SECTION 2.01. The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the General Corporation Law of the State of Delaware (the

"DGCL"), Sub shall be merged with and into the Company at the Effective Time. At the Effective Time, the separate corporate existence of Sub shall cease and the Company shall continue as the surviving corporation and as a wholly-owned Subsidiary of Parent (the "Surviving Corporation").

SECTION 2.02. Closing. The closing of the Merger (the "Closing") will take place at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, unless another time, date or place is agreed to in writing by Parent and the Company, at 10:00 a.m., New York time, on a date to be specified by the parties, which shall be not later than the second business day after satisfaction or waiver of the conditions set forth in Article VII, other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions. The date on which the Closing occurs is referred to in this Agreement as the "Closing Date".

SECTION 2.03. Effective Time of the Merger. Upon the terms and subject to the conditions set forth in this Agreement, as soon as practicable on or after the Closing Date, the parties shall file a certificate of merger (the "Certificate of Merger") in such form as is required by, and executed and acknowledged in accordance with, the relevant provisions of the DGCL. The Merger shall become effective on such date and at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such subsequent date and time as Parent and the Company shall agree and specify in the Certificate of Merger. The date and time at which the Merger becomes effective is referred to in this Agreement as the "Effective Time".

SECTION 2.04. Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL.

SECTION 2.05. Certificate of Incorporation and Bylaws. (a) The Amended and Restated Certificate of Incorporation of the Company (the "Company Certificate") shall be amended at the Effective Time to read in the form of Exhibit B hereto and, as so amended, the Company Certificate shall be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.

(b) The Bylaws of Sub as in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.

SECTION 2.06. Directors. The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

SECTION 2.07. Officers. The officers of Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

ARTICLE III

Effect of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates

SECTION 3.01. Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of Company Common Stock, or the holder of any shares of capital stock of Parent or Sub:

(a) Capital Stock of Sub. Each share of common stock of Sub, par value $0.001 per share, issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation.

(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares of Company Common Stock that are owned as treasury stock by the Company or owned by Parent or Sub immediately prior to the Effective Time shall automatically be canceled and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefor.

(c) Conversion of Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) shares to be canceled in accordance with Section 3.01(b) and (ii) except as provided in Section 3.01(d), the Appraisal Shares) shall be converted into the right to receive from the Surviving Corporation, in cash and without interest, the Offer Price paid in the Offer (the "Merger Consideration"). At the Effective Time such shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate, or evidence of shares held in book-entry form, that immediately prior to the Effective Time represented any such shares (a "Certificate") shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration in accordance with the terms of this Agreement. The right of any holder of any share of Company Common Stock to receive the Merger Consideration shall be subject to and reduced by the amount of any withholding that is required under applicable tax Law, such withholding to be pursuant to the terms of Section 3.02(f) and any applicable tax Law.

(d) Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time that are held by any holder who is entitled to demand and properly demands appraisal of such shares (the "Appraisal Shares") pursuant to, and who complies in all respects with, the provisions of Section 262 of the DGCL ("Section 262") shall not be converted into the right to receive from the Surviving Corporation, in cash and without interest, the Merger Consideration as provided in Section 3.01(c), but instead such holder shall be entitled to payment of the fair value of such shares in accordance with the provisions of Section 262. At the Effective Time, the Appraisal Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate, or evidence of shares held in book-entry form, that immediately prior to the Effective Time represented Appraisal Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such shares in accordance with the provisions of Section 262. Notwithstanding anything in this Agreement to the contrary, if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262 or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262, then the right of such holder to be paid the fair value of such holder's Appraisal Shares under Section 262 shall cease and such Appraisal Shares shall be deemed to have been converted at the Effective Time into, and shall have become, the right to receive from the Surviving Corporation, in cash and without interest, the Merger Consideration as provided in Section 3.01(c). The Company shall serve prompt notice to Parent of any demands for appraisal of any shares of Company Common Stock, withdrawals of any such demands and any

other instruments served pursuant to the DGCL received by the Company, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. The Company shall not, without the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do or commit to do any of the foregoing.

(e) Adjustment Events. If, between the date of this Agreement and the Effective Time, the outstanding shares of Company Common Stock are changed into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction, then the Merger Consideration shall be adjusted to the extent appropriate.

SECTION 3.02. Exchange of Certificates. (a) Paying Agent. Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company to act as agent for the payment of the Merger Consideration upon surrender of Certificates (the "Paying Agent"), and, from time to time after the Effective Time, Parent shall make available, or cause the Surviving Corporation to make available, to the Paying Agent funds in amounts and at the times necessary for the payment of the Merger Consideration pursuant to Section 3.01(c) upon surrender of Certificates, it being understood that any and all interest or other amounts earned with respect to such funds shall be for the account of and turned over to Parent in accordance with Section 3.02(g).

(b) Exchange Procedure. As soon as reasonably practicable after the Effective Time, Parent shall cause the Paying Agent to mail to each holder of record of a Certificate, (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates held by such person shall pass, only upon proper delivery of the Certificates to the Paying Agent and shall be in a form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly completed and validly executed, and such other documents as may reasonably be required by the Paying Agent, the holder of such Certificate shall be entitled to receive in exchange therefor the amount of cash equal to the Merger Consideration that such holder has the right to receive pursuant to Section 3.01(c), and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Company Common Stock that is not registered in the stock transfer books of the Company, payment of the Merger Consideration in exchange therefor may be made to a person other than the person in whose name the Certificate so surrendered is registered if, upon presentation to the Paying Agent, such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of such Certificate or establish to the satisfaction of the Surviving Corporation that such taxes have been paid or are not applicable. No interest shall be paid or shall accrue on the cash payable upon surrender of any Certificate.

(c) No Further Ownership Rights in Company Common Stock. All cash paid upon the surrender of a Certificate in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock formerly represented by such Certificate. At the close of business on the day on which the Effective Time occurs, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares that were outstanding immediately prior to the Effective Time. If, after the close of business on the day on which the Effective Time occurs, Certificates are presented to the Surviving Corporation or the Paying Agent for transfer or any other reason, they shall be canceled and exchanged as provided in this Article III.

(d) No Liability. None of Parent, Sub, the Company, the Surviving Corporation or the Paying Agent shall be liable to any person in respect of any cash that would otherwise have been payable in respect of any Certificate that is delivered to a public official in accordance with any applicable abandoned property, escheat or similar Law. If any Certificates shall not have been surrendered prior to one (1) year after the Effective Time (or immediately prior to such earlier date on which any Merger Consideration would otherwise escheat to or become the property of any Governmental Entity), any such Merger Consideration in respect thereof shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto.

(e) Lost Certificates. If any Certificate shall have been lost, stolen, defaced or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen, defaced or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond in such amount as the Surviving Corporation may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall pay the Merger Consideration in respect of such lost, stolen, defaced or destroyed Certificate.

(f) Withholding Rights. Parent, the Surviving Corporation or the Paying Agent shall be entitled to deduct and withhold from the Merger Consideration otherwise payable pursuant to this Agreement (including any payments made in respect of the Appraisal Shares) to any holder of shares of Company Common Stock such amounts as Parent, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax Law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Parent, the Surviving Corporation or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock in respect of which such deduction and withholding was made by Parent, the Surviving Corporation or the Paying Agent.

(g) Termination of Fund. At any time following the date six (6) months after the Effective Time, Parent or the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest or other amounts earned with respect thereto) that had been made available to the Paying Agent and which have not been disbursed to holders of Certificates, and thereafter, subject to time limitations in Section 3.02(d), such holders shall be entitled to look only to Parent and the Surviving Corporation (subject to abandoned property, escheat or similar Laws) as general creditors thereof with respect to the payment of any Merger Consideration that may be payable upon surrender of any Certificates held by such holders, as determined pursuant to this Agreement, without any interest thereon.

ARTICLE IV

Representations and Warranties

SECTION 4.01. Representations and Warranties of the Company. Except as set forth in the disclosure schedule (with specific reference to the particular Section or subsection of this Agreement to which the information set forth in such disclosure schedule relates; provided, however, that any information set forth in one section of such disclosure schedule shall be deemed to apply to each other Section or subsection thereof or hereof to which its relevance is readily apparent on its face) delivered by the Company to Parent prior to the execution of this Agreement (the "Company Disclosure Schedule"), the Company represents and warrants to Parent and Sub as follows:

(a) Organization, Standing and Corporate Power. Each of the Company and its Subsidiaries has been duly organized and is validly existing and in good standing (in the jurisdictions that recognize the concept of good standing) under the laws of the jurisdiction of its incorporation or formation, as the case may be, and has all requisite power and authority and possesses all

governmental licenses, permits, authorizations and approvals necessary to enable it to use its corporate or other name and to own, lease or otherwise hold and operate its properties and other assets and to carry on its business as presently conducted and as currently proposed by its management to be conducted, except where the failure to be in good standing (except with respect to the Company), have such power or authority or possess such governmental licenses, permits, authorizations or approvals individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect. Each of the Company and its Subsidiaries is duly qualified or licensed to do business and is in good standing (in jurisdictions that recognize the concept of good standing) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed or to be in good standing individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect. The Company has made available to Parent, prior to the execution of this Agreement, complete and accurate copies of the Company Certificate and its Amended and Restated Bylaws (the "Company Bylaws"), and the comparable organizational documents of each of its Subsidiaries, in each case as amended to the date hereof. The Company has made available to Parent complete and accurate copies of the minutes (or, in the case of minutes that have not yet been finalized, drafts thereof) of, and resolutions approved and adopted at, all meetings of the stockholders of the Company and each of its Subsidiaries, the Boards of Directors of the Company and each of its Subsidiaries and the committees of each of such Boards of Directors, in each case held since January 1, 2005 and prior to the date hereof.

(b) Subsidiaries. Section 4.01(b) of the Company Disclosure Schedule lists as of the date hereof each Subsidiary of the Company and, for each such Subsidiary, the jurisdiction of incorporation or formation and, as of the date hereof, each jurisdiction in which such Subsidiary is qualified or licensed to do business. All issued and outstanding shares of capital stock of, or other equity interests in, each such Subsidiary have been validly issued and are fully paid and nonassessable and are owned directly or indirectly by the Company free and clear of all pledges, liens, charges, encumbrances or security interests of any kind or nature whatsoever (other than liens, charges and encumbrances for current taxes not yet due and payable) (collectively, "Liens"), and free of any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity interests. Except for the capital stock of, or voting securities or equity interests in, its Subsidiaries, the Company does not own, directly or indirectly, any capital stock of, or other voting securities or equity interests in, any corporation, limited liability company, partnership, joint venture, association or other entity.

(c) Capital Structure. (i) The authorized capital stock of the Company consists of 100,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share ("Company Preferred Stock"), of which 1,000,000 shares of Company Preferred Stock were designated by the Board of Directors of the Company as Series A Junior Participating Preferred Stock and are issuable upon exercise of the rights (the "Company Rights") under the Rights Agreement dated as of October 5, 2001, between the Company and Mellon Investor Services LLC, as rights agent (the "Rights Agreement").

(ii) At the close of business on May 27, 2008, (A) 42,656,290 shares of Company Common Stock were issued and outstanding, (B) 118,916 shares of Company Common Stock were held by the Company in its treasury, (C) 8,433,753 shares of Company Common Stock were reserved and available for issuance pursuant to the 2006 Equity Incentive Plan of the Company, the 1996 Stock Option Plan of the Company and the 2000 Non-Employee Director Stock Option Plan of the Company (such plans, together with the 2000 Employee Stock Purchase Plan of the Company (the "Purchase Plan"), the "Company Stock Plans"), of which 3,888,806 shares of Company Common Stock were subject to outstanding options (other than rights under the Purchase Plan) to acquire

shares of Company Common Stock from the Company (such options, together with any other options to acquire shares of Company Common Stock from the Company granted after May 27, 2008 under the Company Stock Plans or otherwise, the "Company Stock Options") and 469,505 shares of Company Common Stock were subject to outstanding restricted stock units with respect to Company Common Stock (such restricted stock units, together with any other restricted stock units with respect to Company Common Stock granted after May 27, 2008 under the Company Stock Plans or otherwise, the "Company RSUs"), (D) 178,638 shares of Company Common Stock were reserved and available for issuance pursuant to the Purchase Plan, (E) 6,109,517 shares of Company Common Stock (such shares, the "CEFF Shares") were reserved and available for issuance pursuant to the terms of that certain Common Stock Purchase Agreement, dated as of July 19, 2006, by and between the Company and Kingsbridge Capital Limited ("Kingsbridge"), (F) 285,000 shares of Company Common Stock were subject to an outstanding warrant issued to Kingsbridge with an exercise price of $4.94 per share (the "Company Warrant") and (G) no shares of Company Preferred Stock were issued or outstanding or were held by the Company as treasury shares.

(iii) Since the close of business on May 27, 2008, (A) there have been no issuances by the Company of shares of capital stock or other voting securities or equity interests of the Company, other than issuances of shares of Company Common Stock pursuant to the exercise of Company Stock Options, the Company Warrant and rights under the Purchase Plan and the settlement of Company RSUs, in each case outstanding as of the close of business on May 27, 2008, and only if and to the extent required by their terms as in effect on such date, and (B) there have been no issuances by the Company of securities convertible into, or exchangeable or exercisable for, or options, warrants or other rights to acquire, or shares of deferred stock, restricted stock units, stock-based performance units, stock appreciation rights or "phantom" stock awards with respect to, any such stock, interests or securities, or other rights that are linked to the value of Company Common Stock or the value of the Company or any part thereof, other than rights under the Purchase Plan.

(iv) There are no outstanding shares of Company Common Stock or Company Preferred Stock subject to vesting or restrictions on transfer imposed by the Company. All outstanding Company Stock Options and Company RSUs have been granted under the Company Stock Plans. Other than the Company Stock Plans, there is no plan, contract, agreement or arrangement providing for the grant of options to acquire shares of Company Common Stock by the Company or any of its Subsidiaries. Section 4.01(c)(iv) of the Company Disclosure Schedule sets forth a complete and accurate list, as of May 27, 2008, of (A) all outstanding Company Stock Options, the number of shares of Company Common Stock subject to each such Company Stock Option, the grant date, expiration date, exercise price per share and vesting schedule thereof and the name of the holder thereof and an indication of whether or not such holder is a current employee of the Company or any of its Subsidiaries and whether or not such Company Stock Option is intended to qualify as an incentive stock option under Section 422 of the Code and (B) all shares of Company Common Stock that are subject to outstanding Company RSUs, the grant date and vesting schedule of each Company RSU and name of the holder thereof and an indication of whether or not such holder is a current employee of the Company or any of its Subsidiaries. All Company Stock Options and Company RSUs are evidenced by stock option agreements, restricted stock unit agreements or other award agreements, in each case substantially in the forms made available to Parent or as filed as exhibits to the Filed Company SEC Documents, except that the forms of such agreements differ with respect to the number of Company Stock Options, Company RSUs or shares covered thereby, the exercise price (if applicable), vesting schedule and expiration date applicable thereto and other similar terms, provided that no stock option agreement, restricted stock unit agreement or other award agreement contains terms that are inconsistent in any material respect with, or material terms in addition to, such forms.

(v) With respect to the Company Stock Options, (A) each Company Stock Option intended to qualify as an "incentive stock option" under Section 422 of the Code so qualifies, (B) each grant of a Company Stock Option was duly authorized no later than the date on which the grant of such Company Stock 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, (C) each such grant was made in accordance with the terms of the applicable Company Stock Plan, the Exchange Act and all other applicable Laws, including the rules of The NASDAQ Stock Market LLC ("NASDAQ"), (D) the per share exercise price of each Company Stock Option was equal to the fair market value (as defined in the Company Stock Plans) of a share of Company Common Stock on the applicable Grant Date and (E) each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company and disclosed in the Company SEC Documents in accordance with the Exchange Act and all other applicable Laws. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, Company Stock Options prior to, or otherwise knowingly coordinate the grant of Company Stock Options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.

(vi) As of the close of business on May 27, 2008, there were outstanding Company Stock Options to purchase 1,343,561 shares of Company Common Stock with exercise prices on a per share basis lower than the Merger Consideration, and the weighted average exercise price of such Company Stock Options was equal to $3.76 per share. As of the close of business on May 27, 2008, (A) 102,203 shares of Company Common Stock were subject to outstanding rights under the Purchase Plan based on payroll information for the period ended May 15, 2008 (assuming the fair market value per share of Company Common Stock determined in accordance with the terms of the Purchase Plan on the last day of the offering period in effect under the Purchase Plan on the date hereof will be equal to the Merger Consideration and that payroll deductions continue at the current rate through September 30, 2008) (the "Current ESPP Shares") and (B) up to a maximum of 76,435 shares of Company Common Stock in addition to the Current ESPP Shares (the "Additional ESPP Shares") could be subject to outstanding rights under the Purchase Plan based on payroll information for the period ended May 15, 2008 (assuming the fair market value per share of Company Common Stock determined in accordance with the terms of the Purchase Plan on the last day of the offering period in effect under the Purchase Plan on the date hereof will be equal to the Merger Consideration and that payroll deductions increase as permitted by the terms of the Purchase Plan through September 30, 2008), resulting in a potential increase in the aggregate Merger Consideration payable for the Additional ESPP Shares of up to approximately $320,000 after giving effect to the purchase price per share of the Additional ESPP Shares. Each Company Stock Option and each Company RSU may, by its terms, be treated at the Effective Time as set forth in Section 6.04(a)(i) or 6.04(a)(ii), as applicable, and all rights to purchase shares of Company Common Stock under the Purchase Plan may, by their terms, be treated in accordance with Section 6.04(a)(iii). No holder of a Company Stock Option or Company RSU or right to purchase shares of Company Common Stock under the Purchase Plan is entitled to any treatment of such Company Stock Option or Company RSU or right to purchase shares of Company Common Stock under the Purchase Plan other than as provided in Section 6.04(a), and after the Closing no holder of a Company Stock Option or Company RSU (or former such holder) shall have the right to acquire any capital stock of the Company or any other equity interest therein.

(vii) All outstanding shares of capital stock of the Company are, and all shares which may be issued pursuant to the Company Warrant, Company Stock Options or the Company RSUs or rights

under the Purchase Plan will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company are entitled to vote. Except as set forth above in this Section 4.01(c) and for shares of Company Common Stock issued or to be issued upon the exercise or settlement of Company Stock Options, Company RSUs and the Company Warrant and included in clauses (C) and (F), as applicable, of Section 4.01(c)(ii), as of May 27, 2008, (A) there were not issued, reserved for issuance or outstanding (1) any shares of capital stock or other voting securities or equity interests of the Company or any of its Subsidiaries, (2) any securities of the Company or any of its Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or other voting securities or equity interests of the Company or any of its Subsidiaries, (3) any warrants, calls, options or other rights to acquire from the Company or any of its Subsidiaries, and no obligation of the Company or any of its Subsidiaries to issue, any capital stock, voting securities, equity interests or securities convertible into or exchangeable or exercisable for capital stock or voting securities of the Company or any of its Subsidiaries or (4) any shares of deferred stock, restricted stock units, stock-based performance units, stock appreciation rights or "phantom" stock awards with respect to any capital stock of the Company or any of its Subsidiaries, or other rights that are linked to the value of the Company Common Stock or the value of the Company or any part thereof and (B) there were not any outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any such securities or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities. Neither the Company nor any of its Subsidiaries is a party to any voting or other agreement with respect to the voting of any such securities and, to the knowledge of the Company, as of the date hereof, there are no irrevocable proxies and no voting agreements, other than those contemplated by the Transaction Agreements, with respect to any such securities.

(d) Authority; Noncontravention. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to consummate the Merger and the other transactions contemplated by the Transaction Agreements, assuming the accuracy of the representations and warranties of Parent and Sub in Section 4.02(f) and subject, in the case of the Merger if required by applicable Law, to the affirmative vote of the holders of a majority of the outstanding shares of the Company Common Stock in favor of adopting this Agreement (the "Stockholder Approval"), and to comply with the provisions of this Agreement. The execution and delivery of this Agreement by the Company, the consummation by the Company of the Merger and the other transactions contemplated by the Transaction Agreements and the compliance by the Company with the provisions of this Agreement have been duly authorized by all necessary corporate action on the part of the Company, and no other corporate proceedings on the part of the Company are necessary to authorize the Transaction Agreements, to comply with the terms of this Agreement or to consummate the Merger and the other transactions contemplated by the Transaction Agreements, assuming the accuracy of the representations and warranties of Parent and Sub in Section 4.02(f) and subject, in the case of the Merger if required by applicable Law, to obtaining the Stockholder Approval. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by each of the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (subject to bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies). The Board of Directors of the Company, at a meeting duly called and held at which all directors of the Company were present, duly and unanimously adopted resolutions (i) approving and declaring advisable the Transaction Agreements, the Offer, the Merger and the other transactions contemplated by the Transaction Agreements, (ii) declaring that it is in the best interests of the stockholders of the Company that the Company enter into this Agreement and

consummate the Offer, the Merger and the other transactions contemplated by the Transaction Agreements on the terms and subject to the conditions set forth therein, (iii) declaring that the terms of the Offer and the Merger are fair to the Company's stockholders, (iv) recommending that the Company's stockholders accept the Offer, tender their shares of Company Common Stock pursuant to the Offer and, if required by applicable Law, adopt this Agreement and (v) determining that each member of the Compensation Committee approving any employment compensation, severance or other employee benefit arrangement as set forth in Section 4.01(q) is an "independent director" within the meaning of NASDAQ Rule 4200(a)(15) (an "Independent Director"), which resolutions, except to the extent permitted by Section 5.02, have not been rescinded, modified or withdrawn in any way. The execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the Offer, the Merger and the other transactions contemplated by the Transaction Agreements and compliance by the Company with the provisions of this Agreement will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or other assets of the Company or any of its Subsidiaries under, (x) the Company Certificate or the Company Bylaws or the comparable organizational documents of any of its Subsidiaries, (y) any loan or credit agreement, bond, debenture, note, mortgage, indenture, lease, supply agreement, license agreement, development agreement, distribution agreement or other legally binding contract, agreement, obligation, commitment, arrangement, understanding, instrument, permit, franchise or license, whether oral or written (each, including all amendments thereto, a "Contract"), to which the Company or any of its Subsidiaries is a party or any of their respective properties or other assets is subject or (z) subject to (i) the accuracy of the representations and warranties of Parent and Sub in Section 4.02(f), (ii) the Stockholder Approval and (iii) the governmental filings and the other matters referred to in the following sentence, any (A) Federal, state or local, domestic or foreign, statute, law, code, ordinance, rule or regulation of any Governmental Entity (each, a "Law") or (B) Federal, state or local, domestic or foreign, judgment, injunction, order, writ or decree of any Governmental Entity (each, a "Judgment"), in each case applicable to the Company or any of its Subsidiaries or their respective properties or other assets, other than, in the case of clauses (y) and (z), any such conflicts, violations, breaches, defaults, rights, losses or Liens that individually or in the aggregate have not had and would not reasonably be expected to have a Material Adverse Effect. The Company and its Board of Directors have taken all action necessary to (i) render the Company Rights inapplicable to the Transaction Agreements, the Offer, the Merger and the other transactions contemplated by the Transaction Agreements and (ii) ensure that (A) neither Parent nor any of its affiliates or associates is or will become an "Acquiring Person" (as defined in the Rights Agreement) by reason of the Transaction Agreements, the Offer, the Merger or any other transaction contemplated by the Transaction Agreements, (B) a "Distribution Date" (as defined in the Rights Agreement) shall not occur, and the Company Rights to purchase Series A Junior Participating Preferred Stock shall not become exercisable, by reason of the Transaction Agreements, the Offer, the Merger or any other transaction contemplated by the Transaction Agreements and (C) the Company Rights shall expire, and the Final Expiration Date (as defined in the Rights Agreement) shall occur, immediately prior to the Effective Time. No consent, approval, order or authorization of, action by or in respect of, or registration, declaration or filing with, any Federal, state, local or foreign government, any court, administrative, regulatory or other governmental agency, commission or authority or any non-governmental self-regulatory agency, commission or authority (each, a "Governmental Entity") is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the Offer, the Merger or the other transactions contemplated by the Transaction Agreements or the compliance by the Company with the provisions of this Agreement, except for (1) the filing of a premerger

notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (including the rules and regulations promulgated thereunder, the "HSR Act"), and the receipt, termination or expiration, as applicable, of approvals or waiting periods required under the HSR Act or any other applicable competition, merger control, antitrust or similar Law, (2) the filing with the SEC of (A) the Schedule 14D-9, (B) a proxy statement relating to the adoption by the stockholders of the Company of this Agreement, if required by applicable Law (as amended or supplemented from time to time, the "Proxy Statement"), (C) an information statement required in connection with the Offer under Rule 14f-1 under the Exchange Act (as amended or supplemented from time to time, the "Information Statement") and (D) such reports under the Exchange Act as may be required in connection with the Transaction Agreements, the Offer, the Merger and the other transactions contemplated by the Transaction Agreements, (3) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and appropriate documents with the relevant authorities of other states in which the Company or any of its Subsidiaries is qualified to do business, (4) any filings required under the rules and regulations of NASDAQ and (5) such other consents, approvals, orders, authorizations, actions, registrations, declarations and filings the failure of which to be obtained or made individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect.

(e) Company SEC Documents. (i) The Company has filed or furnished, as applicable, all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) with the SEC required to be filed or furnished, as applicable, by the Company since January 1, 2005 (such documents, together with any documents and information incorporated therein by reference and together with any documents filed during such period by the Company with the SEC on a voluntary basis on Current Reports on Form 8-K, the "Company SEC Documents"). As of their respective filing dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended (including the rules and regulations promulgated thereunder, the "Securities Act"), the Exchange Act, and the Sarbanes-Oxley Act of 2002 (including the rules and regulations promulgated thereunder, "SOX") applicable to such Company SEC Documents, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent that information contained in any Company SEC Document has been revised, amended, supplemented or superseded by a later-filed Company SEC Document, none of the Company SEC Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, which individually or in the aggregate would require an amendment, supplement or corrective filing to any such Company SEC Document. The Company has made available to Parent copies of all comment letters received by the Company from the SEC since January 1, 2005 (excluding all letters received from the SEC indicating that the SEC would not be reviewing any registration statement filed with the SEC by the Company), and relating to the Company SEC Documents, together with all written responses of the Company thereto. As of the date of this Agreement, there are no outstanding or unresolved comments in such comment letters received by the Company from the SEC. The Company has not received any written notice from the SEC that any of the Company SEC Documents is the subject of any ongoing review by the SEC. Each of the financial statements (including the related notes) of the Company included in the Company SEC Documents complied at the time it was filed as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto in effect at the time of filing, has been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied

on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as disclosed in the Company SEC Documents filed by the Company and publicly available prior to the date of this Agreement (the "Filed Company SEC Documents"), neither the Company nor any of its Subsidiaries has any material liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise). None of the Subsidiaries of the Company is, or has at any time been, subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act. Except as disclosed in the Filed Company SEC Documents, neither the Company nor any of its Subsidiaries has any (A) indebtedness for borrowed money, (B) indebtedness evidenced by any bond, debenture, note, mortgage, indenture or other debt instrument or debt security, (C) accounts payable to trade creditors and accrued expenses not arising in the ordinary course of business, (D) amounts owing as deferred purchase price for the purchase of any property outside of the ordinary course of business or (E) guarantees with respect to any indebtedness or obligation of a type described in clauses (A) through (D) above of any other person (collectively, "indebtedness").

(ii) Each of the principal executive officer of the Company and principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with respect to the Company SEC Documents, and the statements contained in such certifications are true and accurate. For purposes of this Agreement, "principal executive officer" and "principal financial officer" shall have the meanings given to such terms in SOX. Neither the Company nor any of its Subsidiaries has outstanding, or has arranged any outstanding, "extensions of credit" to directors or executive officers within the meaning of Section 402 of SOX, except for broker-assisted "cashless" exercise programs in connection with Company Stock Options conducted in accordance with Regulation T issued by the Board of Governors of the Federal Reserve System.

(iii) The Company maintains a system of "internal control over financial reporting" (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurance (A) regarding the reliability of the Company's financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, (B) that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, (C) that receipts and expenditures of the Company are being made only in accordance with the authorization of management and directors of the Company and (D) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's financial statements.

(iv) The "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) of the Company are designed to provide reasonable assurance that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure and to enable the chief executive officer and chief financial officer of the Company to make the certifications required under the Exchange Act with respect to such reports.

(v) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off balance sheet partnership or any similar Contract (including any Contract or arrangement relating to any transaction or relationship between or

among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any "off balance sheet arrangements" (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company's or such Subsidiary's published financial statements or other Company SEC Documents.

(vi) Since January 1, 2005, the Company has not received any oral or written notification of any "material weakness" in the Company's internal control over financial reporting. There is no outstanding "significant deficiency" or "material weakness" which the Company's independent accountants certify has not been appropriately and adequately remedied by the Company, other than, in the case of any "significant deficiencies", any such deficiency which individually or in the aggregate has not had or would not reasonably be expected to have a Material Adverse Effect. For purposes of this Agreement, the terms "significant deficiency" and "material weakness" shall have the meanings assigned to them in Release No. 2007-005 of the Public Company Accounting Oversight Board, as in effect on the date hereof.

(f) Information Supplied. None of the information included or incorporated by reference in the Schedule 14D-9, the Information Statement or the Proxy Statement (and none of the information supplied by the Company in writing specifically for inclusion or incorporation by reference in the Offer Documents) will, in the case of the Schedule 14D-9, the Information Statement and the Offer Documents, at the respective times the Schedule 14D-9, the Information Statement and the Offer Documents are filed with the SEC or first published, sent or given to the Company's stockholders or, in the case of the Proxy Statement, at the time the Proxy Statement is first mailed to the Company's stockholders or at the time of the Stockholders Meeting, contain any statement that, in light of the circumstances under which it is made, is false or misleading with respect to any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference in the Schedule 14D-9, the Information Statement or the Proxy Statement based on information supplied by Parent or Sub in writing specifically for inclusion or incorporation by reference therein. The Schedule 14D-9, the Information Statement and the Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act.

(g) Absence of Certain Changes or Events. Except to the extent readily apparent from disclosure in the Filed Company SEC Documents (excluding, in each case, any disclosures set forth in any risk factor section or in any section relating to forward looking statements and any other disclosures included therein to the extent that they are cautionary, predictive or forward looking in nature), between December 31, 2007 and the date of this Agreement, the Company and its Subsidiaries have conducted their respective businesses only in the ordinary course consistent with past practice, and there has not been any event, change, effect or development that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect, and during such period there has not been any action which, if it had been taken or occurred after the execution of this Agreement, would have required the consent of Parent pursuant to the second sentence of Section 5.01(a) of this Agreement.

(h) Litigation. There is no suit, action or proceeding pending or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries or any of their respective assets or properties that individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against, or, to the Company's knowledge, any investigation by any Governmental Entity involving, the Company or any of its Subsidiaries or any of their respective assets that individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect.

(i) Contracts. (A) Section 4.01(i) of the Company Disclosure Schedule contains a complete and correct list, as of the date of this Agreement, of each of the Contracts described below in this Section 4.01(i)(A) that are in effect as of the date of this Agreement:

(i) each Contract to which the Company or any of its Subsidiaries is a party that restricts in any material respect the ability of the Company or any of its Subsidiaries to compete with any person in any area or to engage in any activity or business;

(ii) each Contract to which the Company or any of its Subsidiaries is a party providing for exclusivity or any substantially similar requirement or that (1) restricts the Company or any of its Subsidiaries in any material respect or (2) after the Effective Time would restrict Parent or any of its Subsidiaries in any material respect, in each case with respect to the development, manufacture, marketing or distribution of their respective services, products or product candidates, including Covered Product Candidates, or with respect to the granting of licenses or otherwise with respect to the operation of their businesses;

(iii) each Contract to which the Company or any of its Subsidiaries is a party with (1) any affiliate of the Company or any of its Subsidiaries, (2) any current director, officer or employee of the Company or any of its Subsidiaries (each, a "Company Personnel") (other than the Company Benefit Plans and the Company Benefit Agreements) or (3) any person known by the Company to be an affiliate of any Company Personnel;

(iv) each Contract to which the Company or any of its Subsidiaries is a party under which the Company or any of its Subsidiaries has incurred any material indebtedness;

(v) each Contract to which the Company or any of its Subsidiaries is a party (other than the Company Benefit Plans and the Company Benefit Agreements) under which the Company or any of its Subsidiaries has agreed to issue, deliver, sell, pledge, encumber or grant registration rights in respect of any shares of its capital stock, any other equity or voting interests or any securities convertible into, or exchangeable for, or any options, warrants, calls or rights to acquire, any such stock, interests or securities or any stock appreciation rights, restricted stock units, stock-based performance units, "phantom" stock awards or other rights that are linked to the value of Company Common Stock or the value of the Company or any part thereof;

(vi) each Contract to which the Company or any of its Subsidiaries is a party creating or granting a Lien, other than (1) Liens for taxes not yet due and payable, that are payable without penalty or that are being contested in good faith and for which adequate reserves have been recorded, (2) Liens for assessments and other governmental charges or landlords', carriers', warehousemen's, mechanics', repairmen's, workers' and similar Liens incurred in the ordinary course of business, consistent with past practice, in each case for sums not yet due and payable or due but not delinquent or being contested in good faith by appropriate proceedings, (3) Liens incurred in the ordinary course of business, consistent with past practice, in connection with workers' compensation, unemployment insurance and other types of social security or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations, (4) Liens securing equipment subject to any lease required to be capitalized on the Company's balance sheet in accordance with GAAP and (5) Liens incurred in the ordinary course of business consistent with past practice that are not reasonably likely to adversely interfere in a material way with the use of properties or assets encumbered thereby (collectively, "Permitted Liens");

(vii) each Contract to which the Company or any of its Subsidiaries is a party granting the other party to such Contract or a third party "most favored nation" pricing or terms that

(1) applies to the Company or any of its Subsidiaries or (2) following the Effective Time, would apply to Parent or any of its Subsidiaries other than the Surviving Corporation;

(viii) each Contract to which the Company or any of its Subsidiaries is a party containing any "non-solicitation", "no-hire" or substantially similar provision that restricts in any material respect the Company or any of its Subsidiaries;

(ix) each Contract to which the Company or any of its Subsidiaries is a party for any joint venture (whether in partnership, limited liability company or other organizational form) or material alliance or similar material arrangement, including each material Contract relating to research, clinical trial, development, distribution, sale, supply, license, marketing, co-promotion, manufacturing or other commercial activities by the Company or any of its Subsidiaries or by third parties, and each material Contract with any contract research organizations, laboratory testing companies, medical institutions, clinical investigators, contract manufacturing organizations and third party manufacturers;

(x) each Contract to which the Company or any of its Subsidiaries is a party with any Governmental Entity;

(xi) each Contract to which the Company or any of its Subsidiaries is a party with any beneficial owner of any shares of Company Common Stock, or securities convertible into, or exchangeable for, or any options, warrants, calls or rights to acquire, any shares of Company Common Stock, where such Contract provides for consideration payable to such beneficial owner or any of its affiliates as a result of the tender of the shares of Company Common Stock beneficially owned by such beneficial owner in the Offer;

(xii) each Contract that governs or otherwise applies to the Intellectual Property Rights owned by, licensed by, licensed to, used by or held for use by the Company or any of its Subsidiaries (excluding: (1) non-disclosure or confidentiality agreements entered into in the ordinary course of business consistent with past practice; (2) Contracts entered into in the ordinary course of business consistent with past practice with independent contractors, consultants, contract research organizations, laboratory testing companies, medical institutions, clinical investigators, contract manufacturing organizations, third party manufacturers and other vendors not otherwise required to be disclosed pursuant to any other subsection of this Section 4.01(i)(A); and (3) "material transfer agreements" and evaluation agreements entered into in the ordinary course of business consistent with past practice that are not otherwise required to be disclosed pursuant to any other subsection of this Section 4.01(i)(A)) and each Contract containing any material option or future material right in respect of any such Intellectual Property Rights;

(xiii) each Contract to which the Company or any of its Subsidiaries is a party in respect of Leased Real Property; and

(xiv) each Contract to which the Company or any of its Subsidiaries is a party containing any standstill provisions which in any material respect limits (1) the ability of any person to acquire the securities or assets of the Company or any of its Subsidiaries or (2) the ability of the Company or any of its Subsidiaries to acquire the securities or assets of any person.

(B) The Company has made available to Parent a complete and correct copy of each of the Contracts referred to in Section 4.01(i)(A). Except as disclosed in the Filed Company SEC Documents, as of the date hereof, neither the Company nor any of its Subsidiaries is a party to, and none of their respective properties or other assets is subject to, any Contract that is of a nature required to be filed as an exhibit to a report or filing under the Securities Act or the Exchange Act and the rules and regulations promulgated thereunder. Each Contract of the Company or any of its Subsidiaries that is required to be set forth on Section 4.01(i) of the

Company Disclosure Schedule or required to be filed as an exhibit to the Filed Company SEC Documents (a "Material Contract") is in full force and effect (except for those Contracts that have expired or have been terminated in accordance with their terms) and is a legal, valid and binding agreement of the Company or its Subsidiary, as the case may be, and, to the knowledge of the Company, of each other party thereto, enforceable against the Company or such Subsidiary, as the case may be, and, to the knowledge of the Company, each other party thereto (subject to bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies), in each case, in accordance with its terms. Each of the Company and its Subsidiaries has performed or is performing all obligations required to be performed by it under the Material Contracts and is not (with or without notice or lapse of time or both) in breach in any material respect or in default under the Material Contracts currently in effect, and has not waived or failed to enforce any material rights or benefits thereunder, and, to the knowledge of the Company, no other party to any of the Material Contracts is (with or without notice or lapse of time or both) in breach in any material respect or default thereunder. There has occurred no event giving to others (with or without notice or lapse of time or both) any right of termination, material amendment or cancellation of any Material Contract or any license thereunder.

(j) Permits; Compliance with Laws. The Company and its Subsidiaries have in effect all certificates, permits, licenses, franchises, approvals, concessions, qualifications, registrations, certifications and similar authorizations from any Governmental Entity (collectively, "Permits"), including all Permits under the Federal Food, Drug, and Cosmetic Act of 1938, as amended (including the rules and regulations promulgated thereunder, the "FDCA"), and the regulations of the Federal Food and Drug Administration (the "FDA") promulgated thereunder, that are necessary for them to own, lease or operate their properties and assets and to carry on their businesses in all material respects as currently conducted. The execution and delivery of this Agreement by the Company does not, and the consummation of the Offer, the Merger and the other transactions contemplated by the Transaction Agreements and compliance with the terms thereof could not reasonably be expected to, cause the revocation or cancellation of any material Permit. Each of the Company and its Subsidiaries is, and since January 1, 2005 has been, in compliance in all material respects with all applicable Laws and Judgments. Neither the Company nor any of its Subsidiaries has received any written communication during the past three (3) years from any person that alleges that the Company or any of its Subsidiaries is not in compliance in all material respects with, or is subject to any material liability under, any Permit, Law or Judgment or relating to the revocation or modification of any material Permit. Neither the Company nor any of its Subsidiaries has received any written notice that any investigation or review by any Governmental Entity is pending with respect to the Company or any of its Subsidiaries or any of the properties, assets or operations of the Company or any of its Subsidiaries or that any such investigation or review is contemplated.

(k) Environmental Matters. (i) Except for those matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect, (A) the assets, properties, businesses and operations of each of the Company and its Subsidiaries are, and have been, in compliance with all applicable Environmental Laws, and neither the Company nor any of its Subsidiaries has received any written communication alleging that the Company or any of its Subsidiaries is in violation of, or has any liability under, any Environmental Law, (B) each of the Company and its Subsidiaries has obtained and is, and has been, operating in compliance with all Environmental Permits, and all such Environmental Permits are valid and in good standing, (C) there is no Environmental Claim pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective predecessors, (D) there has been no Release of any Hazardous Material at, on, under or from any property or facility currently or formerly owned, leased or operated by the Company or any of its

Subsidiaries or, to the knowledge of the Company, at any adjacent or off-site location, that would reasonably be expected to form the basis of any Environmental Claim against the Company or any of its Subsidiaries or against any person whose liabilities for such Environmental Claim the Company or any of its Subsidiaries has, or may have, retained or assumed, either contractually or by operation of law, and (E) to the knowledge of the Company, there are no facts, circumstances or conditions with respect to any of the current or former assets, properties, businesses or operations of the Company or its Subsidiaries that have resulted, or would reasonably be expected to result, in a violation of, or liability under, any Environmental Law.

(ii) The term "Environmental Claim" means any administrative, regulatory or judicial action, suit, order, claim, demand, directive, Lien, investigation, proceeding or notice of noncompliance by or from any Governmental Entity or any other person alleging liability relating to or arising out of a Release of, or human exposure to, any Hazardous Material or the failure to comply with any Environmental Law or Environmental Permit. The term "Environmental Permit" means any permit, license, exemption, order, franchise, authorization, consent or approval required under any applicable Environmental Law for the Company or its Subsidiaries to conduct its respective businesses. The term "Environmental Law" means any Law or legally binding Contract relating to pollution, contamination or cleanup, protection or restoration of the environment or natural resources, or human health as it relates to the environment. The term "Hazardous Material" means any medical, biological or biohazardous material, including without limitation any infectious material, biological product, bodily fluid, stock, culture, diagnostic specimen or regulated medical waste, or any other chemical, substance, material or waste that is listed or defined as a "hazardous substance", "hazardous waste", "hazardous material", "extremely hazardous substance", "toxin", "pollutant", "contaminant" or terms of similar import under any applicable Environmental Law. The term "Release" means any release, spill, emission, leaking, pumping, emitting, depositing, discharging, injecting, escaping, leaching, dispersing, dumping, pouring, disposing or migrating into, onto or through the environment (including ambient air, surface water, ground water, land surface or subsurface strata) or within any building, structure, facility or fixture.

(l) Labor Relations. There are no collective bargaining or other labor union agreements to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound. None of the employees of the Company or any of its Subsidiaries are represented by any union with respect to their employment by the Company or any such Subsidiary. Since January 1, 2005, neither the Company nor any of its Subsidiaries has experienced any labor disputes, union organization attempts, strikes, work stoppages, slowdowns or lockouts. There is no unfair labor practice charge or complaint or other proceeding pending, or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries before the National Labor Relations Board or any similar Governmental Entity. The Company is, and has been, in compliance in all material respects with all applicable Laws respecting employment, including discrimination or harassment in employment, terms and conditions of employment, termination of employment, wages, overtime classifications, hours, occupational safety and health, employee whistle-blowing, immigration, employee privacy, employment practices and classification of employees, consultants and independent contractors. The Company has not effectuated, and does not intend to effectuate, (i) a "plant closing" (as defined in the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act")) affecting any single site of employment or one or more facilities or operating units within any single site of employment of the Company or (ii) a "mass layoff" (as defined in the WARN Act) affecting any single site of employment or facility of the Company; or, in the case of clauses (i) and (ii) of this sentence, any similar action under any comparable Law requiring notice to employees in the event of a plant closing, layoff or substantial cessation of industrial or commercial operations. The Company has complied in all material respects with any applicable Law with respect to the employment,

discharge or layoff of any such employee, including the WARN Act and any comparable Law. No Company Personnel is primarily based outside of the United States.

(m) Employee Benefits. (i) Section 4.01(m)(i)(1) of the Company Disclosure Schedule sets forth a complete and accurate list of each (A) "employee pension benefit plan" (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), (B) "employee welfare benefit plan" (as defined in Section 3(1) of ERISA), (C) post-retirement or employment health or medical plan, program, policy or arrangement, (D) bonus, incentive or deferred compensation or equity or equity-based compensation plan, program, policy or arrangement, (E) severance, change in control, retention or termination plan, program, policy or arrangement or (F) other material compensation or benefit plan, program, policy or arrangement, in each case, sponsored, maintained, contributed to or required to be maintained or contributed to by the Company, any of its Subsidiaries or any other person or entity that, together with the Company, is treated as a single employer under Section 414 of the Code (each, a "Commonly Controlled Entity") for the benefit of any Company Personnel (each, a "Company Benefit Plan") in effect as of the date hereof. Section 4.01(m)(i)(2) of the Company Disclosure Schedule sets forth a complete and accurate list of each written employment, consulting, bonus, incentive or deferred compensation, equity or equity-based compensation, severance, change in control, retention, termination or other written contract between the Company or any of its Subsidiaries, on the one hand, and any Company Personnel, on the other hand (each, a "Company Benefit Agreement"). Except for the Company Benefit Plans and the Company Benefit Agreements, there are no material Contracts between the Company or any of its Subsidiaries, on the one hand, and any Company Personnel, on the other hand, providing for employment, consulting or other services or any compensation or other benefits. With respect to each Company Benefit Plan and Company Benefit Agreement, the Company has made available to Parent complete and accurate copies of (A) such Company Benefit Plan or Company Benefit Agreement, including any amendment thereto, (B) each trust, insurance, annuity or other funding Contract related thereto, (C) the most recent audited financial statements and actuarial or other valuation reports prepared with respect thereto, (D) the two most recent annual reports on Form 5500 required to be filed with the Internal Revenue Service with respect thereto (if any) and (E) the most recent determination letter (or opinion letter) issued by the Internal Revenue Service (if any).

(ii) Each Company Benefit Plan and Company Benefit Agreement (and any related trust or other funding vehicle) has been administered in all material respects in accordance with its terms and is in compliance in all material respects with ERISA, the Code and all other applicable Laws. Each of the Company and its Subsidiaries is in compliance in all material respects with ERISA, the Code and all other Laws applicable to Company Benefit Plans and Company Benefit Agreements. Each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter (or opinion letter) from the Internal Revenue Service that such Company Benefit Plan is qualified and the plan and trust related thereto are exempt from Federal income taxes under Section 401(a) and 501(a), respectively, of the Code, and no condition exists and no event has occurred that would reasonably be expected to result in the revocation of such letter. None of the Company or any of its Subsidiaries has received written notice of, and, to the knowledge of the Company, there are no material investigations by any Governmental Entity with respect to, or termination proceedings or other material claims, suits or proceedings (except routine claims for benefits payable in the ordinary course) against or involving, any Company Benefit Plan or Company Benefit Agreement. None of the Company or any Commonly Controlled Entity has engaged in any transactions that are reasonably expected to result in the imposition of material penalties pursuant to Section 502(i) of ERISA, material damages pursuant to Section 409 of ERISA or a material tax pursuant to Section 4975(a) of the Code.

(iii) None of the Company, any of its Subsidiaries or any Commonly Controlled Entity has sponsored, maintained, contributed to or been required to maintain or contribute to, or has any actual or contingent liability under, any Company Benefit Plan that is subject to Section 302 or Title IV of ERISA or Section 412 of the Code or is otherwise a defined benefit plan. No Company Benefit Plan or Company Benefit Agreement provides health, medical or other welfare benefits after retirement or other termination of employment (other than continuation coverage required under Section 4980(B)(f) of the Code or analogous state Laws).

(iv) None of the execution and delivery of this Agreement, the obtaining of the Stockholder Approval or the consummation of the Offer or the Merger or any other transaction contemplated by the Transaction Agreements (alone or in conjunction with any other event, including any termination of employment on or following the Effective Time) will (A) entitle any Company Personnel to any compensation or benefit, except as required by any Law, (B) accelerate the time of payment or vesting, or trigger any payment or funding, of any compensation or benefit or trigger any other material obligation under any Company Benefit Plan or Company Benefit Agreement or (C) result in any material breach or violation of, or default under, or limit the Company's right to amend, modify or terminate, any Company Benefit Plan or Company Benefit Agreement.

(v) Section 4.01(m)(v)(1) of the Company Disclosure Schedule sets forth, with respect to each "disqualified individual" (as defined in Section 280G(c) of the Code) with respect to the Company that would reasonably be expected to receive any "excess parachute payment" (as defined in Section 280G(b)(1) of the Code), (A) such person's name, title and "base amount" (as defined in Section 280G(b)(3) of the Code) and (B) a calculation of the aggregate present value of the "parachute payments" (as defined in Section 280G(b)(2) of the Code) such person could receive (collectively, the "Specified Parachute Payments"). Other than the Specified Parachute Payments, no amount or other entitlement that could be received as a result of the execution and delivery of this Agreement, the obtaining of the Stockholder Approval or the consummation of the Offer, the Merger or any other transaction contemplated by the Transaction Agreements (alone or in conjunction with any other event, including any termination of employment on or following the Effective Time) by any disqualified individual with respect to the Company will constitute an excess parachute payment. Section 4.01(m)(v)(2) of the Company Disclosure Schedule sets forth the Company Personnel entitled to receive gross-up or additional payment by reason of the tax required by Section 409A or 4999 of the Code being imposed on such person.

(vi) Each Company Benefit Plan and Company Benefit Agreement that is a "nonqualified deferred compensation plan" within the meaning of Section 409A(d)(1) of the Code subject to Section 409A of the Code has been operated in compliance with Section 409A of the Code since January 1, 2005, based upon a good faith, reasonable interpretation of Section 409A of the Code and the final Treasury Regulations and other guidance issued by the Internal Revenue Service thereunder.

(vii) None of the Company, any of its Subsidiaries or any Commonly Controlled Entity has sponsored, maintained, contributed to or been required to contribute to any Company Benefit Plan or Company Benefit Agreement covering employees primarily based outside of the United States.

(n) Taxes. (i) The Company and each of its Subsidiaries has filed on a timely basis all tax returns (taking into account applicable extensions) that it was required to file, and all such tax returns were complete and accurate in all material respects. The Company and each of its Subsidiaries has paid on a timely basis all material taxes that were due and payable by it, whether or not such taxes were shown as due and payable on any tax returns. The Company and each of its Subsidiaries is not and has never been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary tax returns. The Company and each of

its Subsidiaries (A) does not have any actual or potential material liability for any taxes of any person other than the Company and each of its Subsidiaries (I) under Treasury Regulations Section 1.1502-6 (or any comparable or similar provision of Federal, state, local or foreign Law), (II) as a transferee or successor, (III) pursuant to any contractual obligation or (IV) otherwise, and (B) is not a party to or bound by any tax indemnity, tax sharing, tax allocation or similar agreement. All taxes that the Company and each of its Subsidiaries is or was required by Law to withhold or collect have been duly withheld or collected in all material respects and, to the extent required by Law, have been paid to the proper Governmental Entity.

(ii) The Company and each of its Subsidiaries has made available to Parent for inspection (A) complete and correct copies of all tax returns of the Company and each of its Subsidiaries relating to taxes for all taxable periods for which the applicable statute of limitations has not yet expired and (B) complete and correct copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests and any similar documents submitted by, received by or agreed to by or on behalf of the Company and each of its Subsidiaries relating to taxes for all taxable periods for which the statute of limitations has not yet expired. No tax return of the Company or any of its Subsidiaries is or has ever been under audit or examination by any taxing authority or Governmental Entity, and no examination or audit of any tax return of the Company or any of its Subsidiaries by any Governmental Entity has been threatened in writing or is pending. The Company and each of its Subsidiaries has not waived any statute of limitations with respect to taxes or agreed to extend the period for assessment or collection of any taxes.

(iii) There are no adjustments under Section 481 of the Code (or any similar adjustments under any provision of the Code or the corresponding foreign, state or local tax Laws) that are required to be taken into account by the Company or any of its Subsidiaries in any period ending after the Effective Time by reason of a change in method of accounting in any taxable period ending on or before the Effective Time or as a result of the transactions contemplated by the Transaction Agreements.

(iv) The Company and each of its Subsidiaries has not distributed to its stockholders or security holders stock or securities of a controlled corporation, nor has stock or securities of the Company or any of its Subsidiaries been distributed, in a transaction to which Section 355 of the Code applies (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of Section 355(e) of the Code) that includes the transactions contemplated by the Transaction Agreements.

(v) The Company and each of its Subsidiaries has not engaged in any "reportable transaction" for purposes of Treasury Regulation Sections 1.6011-4(b) or Code Section 6111 or any analogous provision of foreign, state or local Law.

(vi) No material Liens for taxes exist with respect to any assets or properties of the Company or any of its Subsidiaries, except for statutory Liens for taxes not yet due.

(vii) Since January 1, 2003, no written claim has been made in writing by any Governmental Entities in a jurisdiction where the Company and each of its Subsidiaries do not file tax returns that any such entity is, or may be, subject to taxation by that jurisdiction.

(viii) For purposes of this Agreement, (i) "taxes" means all taxes, charges, fees, levies or other similar assessments or liabilities in the nature of taxes, including income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, services, transfer, withholding, employment, payroll and franchise taxes imposed by the United States of America or any state, government, or any agency thereof, and any interest, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof, (ii) "taxing authority" means any Governmental Entity exercising any authority to impose, regulate or administer the imposition of taxes and (iii) "tax returns" means all reports, returns, declarations, statements or other information required to be supplied to a taxing authority or other Governmental Entity in connection with taxes.

(o) Title to Properties. (i) Section 4.01(o)(i) of the Company Disclosure Schedule sets forth, as of the date of this Agreement, a complete and correct list of all real property and interests in real property leased by the Company or any of its Subsidiaries (each such property, a "Leased Real Property"). Neither the Company nor any of its Subsidiaries currently owns, or has previously owned, in fee any real property or interests in real property.

(ii) Each of the Company and its Subsidiaries has good and valid title to or valid leasehold or sublease interests or other comparable contract rights in or relating to all of its real properties and other tangible assets necessary for the conduct of its business as presently conducted and as currently proposed by its management to be conducted, except as have been disposed of in the ordinary course of business and except for defects in title, easements, restrictive covenants and similar encumbrances that individually or in the aggregate have not materially interfered with, and would not reasonably be expected to materially interfere with, its ability to conduct its business as presently conducted and as currently proposed by its management to be conducted. All such properties and other assets, other than properties and other assets in which the Company or any of its Subsidiaries has a leasehold or sublease interest or other comparable contract right, are free and clear of all Liens, except for Liens that individually or in the aggregate have not materially interfered with, and would not reasonably be expected to materially interfere with, the ability of the Company or any of its Subsidiaries to conduct their respective businesses as presently conducted and as currently proposed by its management to be conducted.

(p) Intellectual Property. (i) Subject to Sections 4.01(p)(ii), 4.01(p)(iii) and 4.01(p)(v), each of the Company and its Subsidiaries owns, or is validly licensed or otherwise has the right to use, all patents, patent applications, inventions, trademarks, trademark rights, trade dress, trade names, trade name rights, domain names, service marks, service mark rights, copyrights, trade secrets, software, technical know-how and other proprietary intellectual property rights, including any regulatory filings made in respect of any of the foregoing and data associated therewith, but excluding any commercial off-the-shelf software (collectively, "Intellectual Property Rights"), used in the research, clinical trial or development of, or required for the maintenance of, any of the Company's or its Subsidiaries' product candidates (whether or not such product candidates are under development) (collectively, the "Covered Product Candidates") or that are otherwise material to the conduct of the business of the Company and its Subsidiaries as presently conducted and as currently proposed to be conducted, in each case free and clear of all Liens (other than Liens that will be released as of the Closing or any Permitted Liens). Except as otherwise disclosed in Section 4.01(p)(i) of the Company Disclosure Schedule, the Company is not subject to any material restriction (whether contractual, legal or otherwise) on the use of any material Intellectual Property Rights which are owned by or licensed to the Company, no such material Intellectual Property Rights are subject to an obligation of assignment or license to any person, and there has occurred no event giving to others (with or without notice or lapse of time or both) the right to limit the use by the Company or any of its Subsidiaries of any such Intellectual Property Rights.

(ii) To the knowledge of the Company, neither the Company nor any of its Subsidiaries has infringed, is infringing or, upon commercialization of any Covered Product Candidate, will infringe (including with respect to the research, development, clinical testing, manufacture, use, license or sale by the Company or any of its Subsidiaries of Covered Product Candidates) the valid claim of any issued patent of any person in a material manner. To the knowledge of the Company, no person is infringing the valid claim of any issued patent of the Company or any of its Subsidiaries in a material manner.

(iii) Except as disclosed in the Filed Company SEC Documents, no material claims are pending or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries challenging the ownership or license rights of the Company or any of its Subsidiaries in any of their respective Intellectual Property Rights.

(iv) Section 4.01(p)(iv) of the Company Disclosure Schedule sets forth, as of the date hereof, a complete and accurate list of all (A) patents and applications therefor that are owned (wholly or jointly) by or licensed to the Company or any of its Subsidiaries and (B) registered trademarks and applications therefor, domain name registrations (if any) and copyright registrations (if any) that are owned (wholly or jointly) by or licensed to the Company or any of its Subsidiaries. All patents and patent applications required to be listed in Section 4.01(p)(iv) of the Company Disclosure Schedule are either (I) owned (wholly or jointly) by, or are subject to an obligation of assignment to, the Company or a Subsidiary of the Company free and clear of all Liens (except for any Liens that will be released as of the Closing or any Permitted Liens) or (II) licensed to the Company or a Subsidiary of the Company free and clear (to the knowledge of the Company) of all Liens (except for any Liens that will be released as of the Closing or any Permitted Liens). Unless otherwise indicated in Section 4.01(p)(iv) of the Company Disclosure Schedule, each such patent, patent application, registered trademark, trademark application, domain name registration and copyright registration is wholly owned by the Company or any of its Subsidiaries. The patent applications listed in Section 4.01(p)(iv) of the Company Disclosure Schedule that are owned (wholly or jointly) by the Company or any of its Subsidiaries are (and such applications that are licensed to the Company or any of its Subsidiaries are to the Company's knowledge) pending and have not been abandoned, and have been and continue to be prosecuted and maintained. All patents, registered trademarks and applications therefor owned (wholly or jointly) by the Company or any of its Subsidiaries have been (and all such patents, registered trademarks and applications licensed to the Company or any of its Subsidiaries have been to the Company's knowledge) duly registered and/or filed with or issued by each appropriate Governmental Entity in the jurisdiction indicated in Section 4.01(p)(iv) of the Company Disclosure Schedule, all related necessary affidavits of continuing use have been (or, with respect to licenses, to the Company's knowledge have been) timely filed, and all related necessary maintenance fees have been (or, with respect to licenses, to the Company's knowledge have been) timely paid to continue all such rights in effect. None of the patents listed in Section 4.01(p)(iv) of the Company Disclosure Schedule that are owned (wholly or jointly) by the Company or any of its Subsidiaries has (and no such patents that are licensed to the Company or any of its Subsidiaries has to the Company's knowledge) expired or been declared invalid or unenforceable in whole or in part by any Governmental Entity, or been disclaimed. There are no material ongoing oppositions or cancellations or similar proceedings involving any of the trademarks or trademark applications required to be listed in Section 4.01(p)(iv) of the Company Disclosure Schedule and owned (wholly or jointly) by the Company or any of its Subsidiaries (or to the knowledge of the Company, licensed to the Company or any of its Subsidiaries). There are no material ongoing interferences, oppositions, reissues, reexaminations or similar proceedings involving any of the patents or patent applications listed in Section 4.01(p)(iv) of the Company Disclosure Schedule and owned (wholly or jointly) by the Company or any of its Subsidiaries (or to the Company's knowledge, licensed to the Company or any of its Subsidiaries), including ex parte and post-grant proceedings, in the United States

Patent and Trademark Office or in any foreign patent office or similar administrative agency. To the knowledge of the Company, there are no published patents, patent applications, articles or other prior art references or other facts or circumstances that would reasonably be likely to adversely affect the validity or enforceability of any patent listed in Section 4.01(p)(iv) of the Company Disclosure Schedule in a material way, excluding any prior art disclosed to the United States Patent and Trademark Office or in any foreign patent office or similar administrative agency before the application for any such patent was prosecuted. Each of the patents and patent applications listed in Section 4.01(p)(iv) of the Company Disclosure Schedule that are owned (wholly or jointly) by the Company or any of its Subsidiaries and that were prosecuted by or on behalf of the Company or any of its Subsidiaries properly identifies (and to the knowledge of the Company, all other such patents and patent applications that are owned (wholly or jointly) by the Company or any of its Subsidiaries and all such patents and applications that are licensed to the Company or any of its Subsidiaries, in each case properly identify) each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such patent is issued or such patent application is pending. Each inventor named on the patents and patent applications listed in Section 4.01(p)(iv) of the Company Disclosure Schedule that are owned (wholly or jointly) by the Company or any of its Subsidiaries and that were prosecuted by or on behalf of the Company or any of its Subsidiaries has executed (and, to the knowledge of the Company, such inventors named on all other such patents and patent applications that are owned (wholly or jointly) by the Company or any of its Subsidiaries and such inventors named on all such patents and patent applications that are licensed to and material to the Company and its Subsidiaries, in each case have executed) an agreement assigning his, her or its entire right, title and interest in and to such patent or patent application, and the inventions embodied and claimed therein, to the Company or a Subsidiary of the Company (or to a joint owner of such patent or application) or, in the case of licensed patents or patent applications, to the appropriate owners. To the knowledge of the Company, no such inventor has any contractual or other obligation that would preclude any such assignment or otherwise conflict with the obligations of such inventor to the Company or such Subsidiary under such agreement with the Company or such Subsidiary.

(v) Section 4.01(p)(v) of the Company Disclosure Schedule sets forth a complete and accurate list as of the date hereof of all options, rights, licenses or interests of any kind relating to Intellectual Property Rights that (i) are used in the research, clinical trial or development of, or required for the maintenance or commercialization of, any Covered Product Candidate, and (ii) are granted (A) to the Company or any of its Subsidiaries (other than software licenses for generally available software and except pursuant to employee proprietary inventions agreements (or similar employee agreements)) or (B) by the Company or any of its Subsidiaries to any other person (including any obligations of such other person to make any fixed or contingent payments, including royalty payments), in each case other than non-disclosure or confidentiality agreements, "material transfer agreements", evaluation agreements and consulting agreements entered into by the Company or any of its Subsidiaries in the ordinary course of business consistent with past practice. All material obligations for payment of monies currently due and payable by the Company or any of its Subsidiaries in connection with such options, rights, licenses or interests have been satisfied in a timely manner.

(vi) The Company and its affiliates have used reasonable efforts and taken commercially reasonable steps to maintain their trade secrets in confidence, including the development of a policy for the protection of intellectual property and periodic training for employees of the Company and its Subsidiaries on the implementation of such policy; requiring all employees of the Company and its Subsidiaries to execute confidentiality agreements with respect to intellectual property developed for or obtained from the Company or any of its Subsidiaries; making reasonable efforts to advise employees of the Company and its Subsidiaries that were voluntarily or involuntarily severed from the Company or any of its Subsidiaries of their continuing obligation

to maintain such trade secrets in confidence; and entering into licenses and Contracts that generally require licensees, contractors and other third persons with access to such trade secrets to keep such trade secrets confidential (which licenses and Contracts will be enforceable to the extent sufficient to exploit such trade secrets, subject to bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies). Each employee, contractor or consultant of the Company and its Subsidiaries who has proprietary knowledge of or information relating to the Intellectual Property Rights of the Company or any of its Subsidiaries has executed and delivered to the Company or the applicable Subsidiary of the Company an agreement or agreements, substantially in the form(s) set forth in Section 4.01(p)(vi) of the Company Disclosure Schedule (or is otherwise subject to restrictions), restricting such person's right to use and disclose confidential information of the Company or any of its Subsidiaries and assigning to the Company or any of its Subsidiaries such person's right to any inventions or other Intellectual Property Rights developed in the course of such person's employment with the Company or such Subsidiary.

(vii) The execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the Offer, the Merger and the other transactions contemplated by the Transaction Agreements and compliance by the Company with the provisions of this Agreement will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien, other than Permitted Liens, in or upon, any Intellectual Property Right used in the research, clinical trial or development of, or required for the maintenance of, any Covered Product Candidate.

(q) Rule 14d-10 Matters. All amounts payable to holders of Company Common Stock and other securities of the Company (the "Covered Securityholders") pursuant to employment compensation, severance and other employee benefit plans of the Company, including the Company Benefit Plans and the Company Benefit Agreements (collectively, the "Arrangements"), (i) are being paid or granted as compensation for past services performed, future services to be performed or future services to be refrained from performing, by the Covered Securityholders (and matters incidental thereto) and (ii) are not calculated based on the number of shares tendered or to be tendered into the Offer by the applicable Covered Securityholder. The Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") (each member of which is an "independent director" in accordance with the requirements of Rule 14d-10(d)(2) under the Exchange Act) (A) at a meeting duly called and held at which all members of the Compensation Committee were present, duly and unanimously adopted resolutions approving as an "employment compensation, severance or other employee benefit arrangement" within the meaning of Rule 14d-10(d)(1) under the Exchange Act (an "Employment Compensation Arrangement") (1) each Company Stock Plan, (2) the treatment of the Company Stock Options and Company RSUs in accordance with the terms set forth in this Agreement, the applicable Company Stock Plan and any applicable Company Benefit Plans and Company Benefit Agreements, (3) the terms of Section 6.05 of this Agreement and (4) each other Company Benefit Plan and Company Benefit Agreement, which resolutions have not been rescinded, modified or withdrawn in any way, and (B) has taken all other actions necessary to satisfy the requirements of the non-exclusive safe harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to the foregoing arrangements.

(r) State Takeover Statutes. Assuming the accuracy of the representations and warranties of Parent and Sub in Section 4.02(f), the approval by the Board of Directors of the Company of the Offer, the Merger and the transactions contemplated by the Transaction Agreements, as referred to in Section 4.01(d), constitutes the only action necessary to render inapplicable to the

Transaction Agreements, the Offer, the Merger, the other transactions contemplated the Transaction Agreements, and compliance with the terms of the Transaction Agreements, the restrictions on "business combinations" (as defined in Section 203 of the DGCL) set forth in Section 203 of the DGCL to the extent, if any, such restrictions would otherwise be applicable to the Transaction Agreements, the Offer, the Merger, the other transactions contemplated by the Transaction Agreements, or compliance with the terms of the Transaction Agreements. No other state takeover or similar statute or regulation is applicable to the Transaction Agreements, the Offer, the Merger, the other transactions contemplated by the Transaction Agreements or compliance with the terms of the Transaction Agreements.

(s) Brokers and Other Advisors. No broker, investment banker, financial advisor or other person (other than Lazard Frères & Co. LLC), the fees and expenses of which will be paid by the Company, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transaction Agreements and the transactions contemplated thereby based upon arrangements made by or on behalf of the Company. The Company has delivered to Parent complete and accurate copies of all Contracts under which any such fees or expenses are payable and all indemnification and other agreements related to the engagement of the persons to whom such fees are payable.

(t) Opinion of Financial Advisor. The Company has received the written opinion of Lazard Frères & Co. LLC in customary form to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth therein, each of the Offer Price and the Merger Consideration to be paid to the holders of Company Common Stock pursuant to this Agreement is fair, from a financial point of view, to such holders, a copy of which opinion has been, or will promptly be, delivered to Parent.

(u) Research, Development, Distribution, Marketing and Manufacturing Agreements. (i) Section 4.01(u) of the Company Disclosure Schedule sets forth, as of the date hereof, a complete and accurate list of all Material Contracts to which the Company or any of its Subsidiaries is a party as of the date hereof for the research, clinical trial, development, distribution, sale, supply, license, marketing, co-promotion, manufacturing or other commercial activities by the Company or any of its Subsidiaries or by third parties of (x) Covered Product Candidates, (y) products (including product candidates) of such third parties (whether or not such products or product candidates are commercially available or under development) or (z) the Intellectual Property Rights of the Company or any Subsidiary of the Company (collectively, all such Contracts, the "Specified Contracts"). The Company has made available to Parent a complete and accurate copy of each Specified Contract.

(ii) Except as disclosed in Section 4.01(u) of the Company Disclosure Schedule, none of the Specified Contracts or any other Contract to which the Company or any of its Subsidiaries is a party (A) grants or obligates the Company or any Subsidiary of the Company to grant any material right to such third party for the research, clinical trial, development, distribution, sale, supply, license, marketing, co-promotion or manufacturing of any such product (or product candidate), patent or other Intellectual Property Right, (B) provides for the payment by the Company or any Subsidiary of the Company of any early termination fees in excess of $200,000 or (C) requires or obligates the Company or any Subsidiary of the Company to purchase specified minimum amounts of any drug product (or product candidate) or to perform or conduct research, clinical trials or development for the benefit of any person other than the Company or any Subsidiary of the Company.

(v) Regulatory Compliance. (i) As to each product candidate subject to the FDCA and the regulations of the FDA promulgated thereunder or similar Laws in any foreign jurisdiction that is or has been developed, manufactured and/or tested by or on behalf of the Company or any of its

Subsidiaries (each such product candidate, a "Biologic" or a "Drug"), each such Biologic or Drug is being or has been developed, manufactured and/or tested in compliance in all material respects with all applicable requirements under the FDCA and the regulations of the FDA promulgated thereunder and similar foreign Laws, including those relating to investigational use, good manufacturing practices, good clinical practices, good laboratory practices, labeling, record keeping and filing of required reports. Neither the Company nor any of its Subsidiaries has received any notice or other communication from the FDA or any other Governmental Entity (A) withdrawing the investigational new drug application ("IND") of any product candidate of the Company or any of its Subsidiaries, (B) placing any IND of the Company or any of its Subsidiaries on "clinical hold", (C) providing any material correspondence to the Company about any Drug or Biologic beyond the correspondence previously provided to Parent or (D) otherwise alleging any material violation by the Company or any of its Subsidiaries of any Laws or Judgments applicable to any Biologic or Drug.

(ii) Complete and accurate copies of all material data of the Company, and all material correspondence with the FDA and foreign health authorities, with respect to each Biologic or Drug of the Company have been made available to Parent.

(iii) As to each Biologic or Drug of the Company or any of its Subsidiaries for which an IND or similar state or foreign regulatory application has been granted, cleared, approved or allowed to go into effect, the Company and its Subsidiaries are in compliance in all material respects with all applicable Laws administered by the FDA or foreign health authorities.

(iv) Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any officer, employee or agent of the Company or any of its Subsidiaries, has made an untrue statement of a material fact or fraudulent statement to the FDA or any other Governmental Entity, failed to disclose a material fact required to be disclosed to the FDA or any other Governmental Entity, or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to provide a basis for the FDA or any other Governmental Entity to invoke its policy respecting "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities", set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any officer, employee or agent of the Company or any of its Subsidiaries, has been convicted of any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a) or any similar Laws or authorized by 21 U.S.C. § 335a(b) or any similar Laws. Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any officer, employee or agent of the Company or any of its Subsidiaries, has been convicted of any crime or engaged in any conduct for which such person or entity could be excluded from participating in the Federal health care programs under Section 1128 of the Social Security Act of 1935, as amended (the "Social Security Act"), or any similar Laws.

(v) All scientific data and information provided by the Company or its Subsidiaries to the FDA or any other Governmental Entity or to Parent are true and accurate representations in all material respects of the research and any related activities conducted by the Company and its Subsidiaries, and none of these representations was false, misleading or inaccurate in any material respect when made.

(vi) To the knowledge of the Company, there are no material investigations, suits, claims, actions or proceedings against or affecting the Company or any of its Subsidiaries relating to or arising under (a) the FDCA or the regulations of the FDA promulgated thereunder or similar Laws, (b) the Social Security Act or regulations of the Office of Inspector General of the Department of Health and Human Services or similar Laws or (c) applicable Laws relating to government health care programs, private health care plans, or the privacy and confidentiality of patient health information, including Federal and state Laws pertaining to the Medicare and Medicaid programs, Federal, state and foreign Laws applicable to health care fraud and abuse, kickbacks, physician self-referral, false claims made to a government or private health care program, and Federal, state and foreign Laws pertaining to contracting with the government and similar Laws.

(w) Insurance. Section 4.01(w) of the Company Disclosure Schedule contains a complete and accurate list of all policies of fire, liability, workers' compensation, title and other forms of insurance owned, held by or applicable to the Company (or its assets or business) with policy periods in effect as of the date hereof, and the Company has heretofore made available to Parent a complete and accurate copy of all such policies. All material policies are with such deductibles and against such risks and losses as are customary for businesses in the Company's and its Subsidiaries' business, are in full force and effect, all premiums with respect thereto covering all periods up to and including the Closing Date have been (or, if not yet due as of the date hereof, will prior to the Closing Date be) paid, and no notice of cancellation or termination has been received with respect to any such policy. Each of the Company and its Subsidiaries has complied in all material respects with the provisions of each such policy under which it is an insured party. The Company has not been refused any insurance with respect to its assets or operations by any insurance carrier to which it has applied for any such insurance or with which it has carried insurance, during the last five (5) years prior to the date hereof. There are no pending or, to the knowledge of the Company, threatened material claims under any insurance policy.

SECTION 4.02. Representations and Warranties of Parent and Sub. Parent and Sub represent and warrant to the Company as follows:

(a) Organization. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite corporate power and authority to carry on its business as now being conducted. Each of Parent and Sub is duly qualified or licensed to do business and is in good standing in each material jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary.

(b) Authority; Noncontravention. Each of Parent and Sub has all requisite corporate power and authority to execute and deliver the Transaction Agreements and to consummate the transactions contemplated by the Transaction Agreements. The execution and delivery of the Transaction Agreements and the consummation of the transactions contemplated by the Transaction Agreements have been duly authorized by all necessary corporate action on the part of Parent and Sub and no other corporate proceedings on the part of Parent or Sub are necessary to authorize the Transaction Agreements or to consummate the transactions contemplated hereby and thereby. The Transaction Agreements have been duly executed and delivered by each of Parent and Sub and, assuming the due authorization, execution and delivery by the Company or the Specified Stockholders, as the case may be, constitute legal, valid and binding obligations of Parent and Sub, as applicable, enforceable against Parent and Sub, as applicable, in accordance with their respective terms (subject to bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies). The execution and delivery of the Transaction Agreements do not, and the consummation of the Offer, the Merger and the other transactions contemplated by the Transaction Agreement and compliance by

Parent and Sub with the provisions of the Transaction Agreements will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or other assets of Parent or Sub under (x) the Amended and Restated Certificate of Incorporation or Bylaws of Parent or the Certificate of Incorporation or Bylaws of Sub, (y) any Contract to which Parent or Sub is a party or any of their respective properties or other assets is subject, in any way that would reasonably be expected to prevent, materially impede or materially delay the consummation by Parent of the Offer, the Merger or the other transactions contemplated by the Transaction Agreements or (z) subject to the governmental filings and other matters referred to in the following sentence, any Law or Judgment, in each case applicable to Parent or Sub or their respective properties or other assets, and in each case, in any way that would reasonably be expected to prevent, materially impede or materially delay the consummation by Parent of the Offer, the Merger or the other transactions contemplated by the Transaction Agreements. No material consent, approval, order or authorization of, action by or in respect of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Parent or Sub in connection with the execution and delivery of the Transaction Agreements by Parent and Sub or the consummation by Parent and Sub of the Offer, the Merger or the other transactions contemplated by the Transaction Agreements, except for (1) the filing of a premerger notification and report form under the HSR Act and the receipt, termination or expiration, as applicable, of approvals or waiting periods required under the HSR Act or any other applicable competition, merger control, antitrust or similar Law, (2) the filing with the SEC of the Offer Documents, (3) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and appropriate documents with the relevant authorities of other states in which the Company or any of its Subsidiaries is qualified to do business and (4) such other consents, approvals, orders, authorizations, registrations, declarations, filings and notices, the failure of which to be obtained or made, individually or in the aggregate, could not reasonably be expected to impair in any material respect the ability of each of Parent and Sub to perform its obligations under the Transaction Agreements or prevent, materially impede or materially delay the consummation of the Offer, the Merger or the other transactions contemplated by the Transaction Agreements.

(c) Information Supplied. None of the information included or incorporated by reference in the Offer Documents (and none of the information supplied by Parent or Sub specifically for inclusion or incorporation by reference in the Schedule 14D-9, the Information Statement or the Proxy Statement) will, (A) in the case of the Offer Documents, the Schedule 14D-9 and the Information Statement, at the respective times the Offer Documents, the Schedule 14D-9 and the Information Statement are filed with the SEC or first published, sent or given to the Company's stockholders or (B) in the case of the Proxy Statement, at the time the Proxy Statement is first mailed to the Company's stockholders or at the time of the Stockholders Meeting, contain any statement that, in light of the circumstances under which it is made, is false or misleading with respect to any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, except that no representation or warranty is made by Parent or Sub with respect to statements made or incorporated by reference in the Offer Documents based on information supplied by the Company specifically for inclusion or incorporation by reference therein. The Offer Documents will comply as to form in all material respects with the requirements of the Exchange Act.

(d) Interim Operations of Sub. Sub was formed solely for the purpose of engaging in the Offer, the Merger and the other transactions contemplated by the Transaction Agreements and has

engaged in no business other than in connection with the Offer, the Merger and the other transactions contemplated by the Transaction Agreements.

(e) Sufficiency of Funds. Parent has sufficient funds to consummate the Offer and the Merger on the terms contemplated by this Agreement, and, at the Offer Closing and the Effective Time, Parent will have available all of the funds necessary for the acquisition of all shares of Company Common Stock pursuant to the Offer and the Merger, as the case may be.

(f) Company Stock. Neither Parent nor Sub is, nor at any time during the last three years has it been, an "interested stockholder" of the Company as defined in Section 203 of the DGCL. As of the date hereof, neither Parent nor Sub owns (directly or indirectly, beneficially or of record), and neither Parent nor Sub is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, any shares of capital stock of the Company (except as contemplated by the Transaction Agreements and except for any such shares that may be owned by any employee benefit or other plan administered by or on behalf of Parent or any of its Subsidiaries, to the extent the determination to acquire such shares was not directed by Parent or Sub).

ARTICLE V

Covenants Relating to Conduct of Business

SECTION 5.01. Conduct of Business. (a) Conduct of Business by the Company. During the period from the date of this Agreement to the Effective Time, except with the prior written consent of Parent or as specifically contemplated by this Agreement or as set forth in Section 5.01(a) of the Company Disclosure Schedule, the Company shall, and shall cause each of its Subsidiaries to, carry on their respective businesses in the ordinary course consistent with past practice and use commercially reasonable efforts to comply with all applicable Laws and, to the extent consistent therewith, use commercially reasonable efforts to keep available the services of their present officers and other employees and to preserve their assets and preserve their relationships with licensors, licensees, partners, customers, suppliers, distributors and others having business dealings with them and maintain their franchises, rights and Permits. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Effective Time, except with the prior written consent of Parent or as specifically contemplated by this Agreement or as set forth in Section 5.01(a) of the Company Disclosure Schedule (with specific reference to the subsection of this Section 5.01 to which the information stated in such disclosure relates), the Company shall not, and shall not permit any of its Subsidiaries to:

(i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock or other equity or voting interests, except for dividends by a direct or indirect wholly-owned Subsidiary of the Company to its parent, (B) split, combine or reclassify any of its capital stock or other equity or voting interests, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity or voting interests, (C) purchase, redeem or otherwise acquire any shares of capital stock or any other securities of the Company or any of its Subsidiaries or any options, warrants, calls or rights to acquire any such shares or other securities (including any Company Stock Options and Company RSUs, except pursuant to the forfeiture of Company Stock Options and Company RSUs or the acquisition by the Company of shares of Company Common Stock in settlement of the exercise price of a Company Stock Option or the tax withholding obligations of holders of Company Stock Options and Company RSUs, in each case in accordance with their terms as in effect on the date of this Agreement) or (D) take any action that would result in any amendment, modification or change of any term of any indebtedness of the Company or any of its Subsidiaries;

(ii) issue, deliver or sell (including any CEFF Shares) or pledge or otherwise encumber any shares of its capital stock, any other equity or voting interests or any securities convertible into, or exchangeable for, or any options, warrants, calls or rights to acquire, any such stock, interests or securities or any stock appreciation rights, restricted stock units, stock-based performance units, "phantom" stock awards or other rights that are linked to the value of Company Common Stock or the value of the Company or any part thereof; provided, however, that the Company may issue shares of Company Common Stock upon the exercise of the Company Warrant and Company Stock Options and rights under the Purchase Plan or the settlement of Company RSUs, in each case outstanding on the date of this Agreement and only if and to the extent required by their terms as in effect on the date of this Agreement;

(iii) amend the Company Certificate or the Company Bylaws or other comparable charter or organizational documents of any of the Company's Subsidiaries, except as may be required by law or the rules and regulations of the SEC or NASDAQ;

(iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing all or a substantial portion of the assets of, or by purchasing all or a substantial equity or voting interest in, or by any other manner, any person or business or division thereof or (B) any other assets other than immaterial assets acquired in the ordinary course of business consistent with past practice;

(v) sell, lease, license, sell and lease back, mortgage or otherwise subject to any Lien or otherwise dispose of any of its properties or assets (including any shares of capital stock, equity or voting interests or other rights, instruments or securities), except sales of used equipment in the ordinary course of business consistent with past practice and except for Permitted Liens incurred in the ordinary course of business consistent with past practice;

(vi) (A) repurchase, prepay or incur any indebtedness, including by way of a guarantee or an issuance or sale of debt securities, or issue and sell options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries, enter into any "keep well" or other Contract to maintain any financial statement or similar condition of another person or enter into any arrangement having the economic effect of any of the foregoing or (B) make any loans, advances or capital contributions to, or investments in, any other person, other than the Company or any direct or indirect wholly-owned Subsidiary of the Company, and except for advances to employees in respect of travel or other related ordinary expenses in the ordinary course of business consistent with past practice;

(vii) incur or commit to incur any capital expenditures, or any obligations or liabilities in connection therewith, that are in excess of the budgeted amounts specified on Section 5.01(a)(vii) of the Company Disclosure Schedule;

(viii) except as required by Law (including the rules of NASDAQ), (A) pay, discharge, settle or satisfy any claims, liabilities or obligations (other than Transaction Claims) (whether absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction in the ordinary course of business consistent with past practice, or as required by their terms as in effect on the date of this Agreement, of claims, liabilities or obligations reserved against in the Company's most recent financial statements (including the notes thereto) included in the Filed Company SEC Documents (for amounts not in excess of such reserves) or incurred since the date of such financial statements in the ordinary course of business consistent with past practice, in each case, the payment, discharge, settlement or satisfaction of which does not include any obligation (other than the payment of money) to be performed by the Company or its Subsidiaries following the Closing Date, (B) settle or compromise any suit, claim, action, investigation, proceeding or audit pending against or with respect to the Company or any of its Subsidiaries in respect of any tax or enter into any material closing agreement that would

reasonably be expected to adversely affect Parent's tax liability, (C) waive, relinquish, release, grant, transfer or assign any right of material value or (D) waive any material benefits of, or agree to modify in any adverse respect, or fail to enforce, or consent to any matter with respect to which its consent is required under, any confidentiality, standstill or similar Contract to which the Company or any of its Subsidiaries is a party; provided, however, that, except as otherwise provided in Section 6.03(c), the prior written consent of Parent shall not be required with respect to any of the actions set forth in this Section 5.01(a)(viii) taken in connection with or that relate to any Transaction Claims;

(ix) except as required by any Law (including the rules of NASDAQ), enter into any Material Contract, modify or amend in any material respect any Material Contract, waive, release, assign or fail to exercise or pursue any material rights or claims under any Material Contract or accelerate, terminate or cancel any Material Contract;

(x) except as required to ensure that any Company Benefit Plan or Company Benefit Agreement in effect on the date of this Agreement is not then out of compliance with applicable Law (including the rules of NASDAQ) or as specifically required pursuant to this Agreement (and, in each case, only to the extent the Compensation Committee has duly approved (by vote of members of the Compensation Committee who have been determined by the Board of Directors of the Company to be "independent directors" in accordance with the requirements of Rule 14d-10(d)(2) under the Exchange Act at the time of such approval) the arrangements resulting from such action as Employment Compensation Arrangements and taken all other actions necessary to satisfy the requirements of the non-exclusive safe harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to such arrangements), (A) adopt, enter into, establish, terminate, amend or modify any Company Benefit Plan or Company Benefit Agreement, (B) increase in any manner the compensation or benefits of, or pay any bonus to, or grant any loan to, any Company Personnel, except as required to comply with any Company Benefit Plan or Company Benefit Agreement in effect on the date of this Agreement, other than the payment of earned compensation and the provision of benefits, in each case, as required by applicable Law, (C) except as permitted by the preceding clause (B), pay or provide to any Company Personnel any compensation or benefit not provided for under a Company Benefit Plan or Company Benefit Agreement as in effect on the date of this Agreement, other than the payment of base cash compensation in the ordinary course of business consistent with past practice, (D) grant or amend any awards under any Company Benefit Plan (including the grant or amendment of any equity or equity-based or related compensation) or remove or modify existing restrictions in any Company Benefit Plan or Company Benefit Agreement or awards made thereunder, (E) except as permitted by the preceding clause (B), grant or pay any severance, separation, change in control, retention, incentive compensation, termination or similar compensation or benefits to, or increase in any manner the severance, separation, change in control, retention, termination or similar compensation or benefits of, any Company Personnel, other than with respect to the payment of any severance, separation, retention, incentive compensation, termination or similar compensation to the extent required pursuant to Company Benefit Plans or Company Benefit Agreements with Company Personnel in effect as of the date of this Agreement or under applicable Law, (F) enter into any trust, annuity or insurance Contract or similar agreement with respect to, or take any action to fund or in any other way secure the payment of compensation or benefits under, any Company Benefit Plan or Company Benefit Agreement, (G) take any action to accelerate the time of payment or vesting of any compensation or benefits under any Company Benefit Plan or Company Benefit Agreement, (H) make any material determination under any Company Benefit Plan or Company Benefit Agreement that is inconsistent with the ordinary course of business or past practice or (I) hire any employee, officer or independent contractor or terminate the employment of any Company Personnel without prior notification to Parent;

(xi) form any Subsidiary of the Company;

(xii) enter into any Contract containing any restriction on the ability of the Company or any of its Subsidiaries to assign all or any portion of its rights, interests or obligations thereunder, unless such restriction expressly excludes any assignment to Parent and any of its Subsidiaries in connection with or following the consummation of the Offer, the Merger or the other transactions contemplated by the Transaction Agreements;

(xiii) except as required by applicable Law, adopt or enter into any collective bargaining agreement or other labor union Contract applicable to the employees of the Company or any of its Subsidiaries;

(xiv) write down any of its material assets, including any Intellectual Property Rights, or make any change in any material respect in any financial or tax accounting principle, method or practice, other than as required by GAAP, the SEC, the Public Company Accounting Oversight Board ("PCAOB") or applicable Law;

(xv) except as required by GAAP, the SEC, PCAOB or applicable Law, engage in (A) any practice which would have the effect of accelerating to prior fiscal quarters (including the current fiscal quarter) collections of receivables that would otherwise be expected to be made in subsequent fiscal quarters or (B) any practice which would have the effect of postponing to subsequent fiscal quarters payments by the Company or any of its Subsidiaries that would otherwise be expected to be made in prior fiscal quarters (including the current fiscal quarter);

(xvi) knowingly take any action or fail to take any action which action or failure to act would result in the material loss or reduction in value of the Intellectual Property Rights of the Company and its Subsidiaries, taken as a whole, or disclose any confidential or proprietary information of the Company or any of its Subsidiaries other than pursuant to a confidentiality agreement restricting the right of the recipient thereof to use and disclose such confidential or proprietary information;

(xvii) except for this Agreement, enter into (A) any Contract with any beneficial owner of any shares of Company Common Stock, or securities convertible into, or exchangeable for, or any options, warrants, calls or rights to acquire, any shares of Company Common Stock, where such Contract provides for consideration payable to such beneficial owner or any of its affiliates as a result of the tender of the shares of Company Common Stock beneficially owned by such beneficial owner in the Offer or (B) any Contract with any person where the amount payable thereunder is calculated based on the number of shares of Company Common Stock tendered, or to be tendered, in the Offer by such person or any of its affiliates;

(xviii) except as contemplated by this Agreement, amend the Rights Agreement, redeem the Company Rights or take any action with respect to, or make any determination under, the Rights Agreement; or

(xix) authorize any of, or commit or agree to take any of, the foregoing actions.

(b) Certain Tax Matters. During the period from the date of this Agreement to the Effective Time:

(i) The Company and each of its Subsidiaries will promptly notify Parent of any suit, claim, action, investigation, proceeding or audit pending against or with respect to the Company or any of its Subsidiaries in respect of any tax.

(ii) Except as required by applicable tax Law or with Parent's prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), neither the Company nor any of its Subsidiaries will (a) make or change any material tax election, (b) file any material

amended tax return, (c) agree to any material adjustment of any tax attribute, (d) change (or make a request to any taxing authority to change) any of its methods of reporting income or deductions for Federal income tax purposes, (e) file any claim for a material refund of taxes or (f) consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment that would reasonably be expected to adversely affect Parent's tax liability.

(iii) The Company and each of its Subsidiaries will retain all books, documents and records reasonably necessary for the preparation of tax returns.

(iv) The Company shall deliver to Sub at or prior to the expiration of the Offer a certificate, in form and substance satisfactory to Sub, duly executed and acknowledged, certifying that the Company has not been a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

SECTION 5.02. No Solicitation. (a) The Company shall not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit any of its and its Subsidiaries' directors, officers, employees, investment bankers, attorneys, accountants or other advisors or representatives (collectively, "Representatives") to, directly or indirectly (and it shall instruct, and cause each of its Subsidiaries to instruct, each such Representative of the Company or any of its Subsidiaries not to), (i) solicit, initiate or knowingly encourage, or take any other action knowingly to facilitate, any Takeover Proposal or any inquiries or the making of any proposal that could reasonably be expected to lead to a Takeover Proposal or (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or otherwise cooperate in any way with respect to, any Takeover Proposal. The Company shall, and shall cause its Subsidiaries and direct its Representatives to, (A) immediately cease and cause to be terminated all existing discussions and negotiations with any person conducted heretofore with respect to any Takeover Proposal and (B) as promptly as practicable after the date hereof, request the prompt return or destruction of all confidential information previously furnished to such person(s) within the last twelve (12) months for the purpose of evaluating a possible Takeover Proposal. Notwithstanding anything in this Agreement to the contrary, if, at any time prior to the Offer Closing, the Company, in response to a bona fide written Takeover Proposal that the Board of Directors of the Company determines in good faith constitutes or is reasonably likely to lead to a Superior Proposal, and which Takeover Proposal was not solicited after the date hereof and was made after the date hereof and did not otherwise result from a material breach of this Section 5.02, may, and may permit and authorize its Subsidiaries and its and its Subsidiaries' Representatives to, in each case subject to compliance with Section 5.02(c) and the other provisions of this Agreement, (A) furnish information with respect to the Company and its Subsidiaries to the person making such Takeover Proposal (and its Representatives) pursuant to a confidentiality agreement which contains terms that are not materially less restrictive than those contained in each of the Confidentiality Agreement and the Standstill Agreement dated May 15, 2008 between Parent and the Company (as it may be amended from time to time, the "Standstill Agreement") and which need not restrict such person from making an unsolicited Takeover Proposal, provided that all such information had been provided, or is concurrently provided, to Parent, and (B) participate in discussions or negotiations with the person making such Takeover Proposal (and its Representatives) regarding such Takeover Proposal. Without limiting the generality of the foregoing, it is understood that any material violation of the restrictions set forth in this Section 5.02(a) by any Subsidiary of the Company or any of the Company's or its Subsidiaries' Representatives shall be deemed to be a material breach by the Company of this Section 5.02(a).

For purposes of this Agreement, the term "Takeover Proposal" means any inquiry, proposal or offer from any person (other than Parent or Sub or any of their affiliates) relating to, or that could reasonably be expected to lead to, any direct or indirect acquisition, in one transaction or a series of transactions, including by way of any merger, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution, joint venture, license agreement or similar transaction, of (i) assets or businesses that constitute or represent fifteen percent (15%) or more of the total revenue or assets of the Company and its Subsidiaries, taken as a whole, or (ii) fifteen percent (15%) or more of the outstanding shares of Company Common Stock or of any class of capital stock of, or other equity or voting interests in, one or more of the Subsidiaries of the Company which, in the aggregate, directly or indirectly, hold the assets or businesses referred to in clause (i) above.

For purposes of this Agreement, the term "Superior Proposal" means any bona fide written offer, which was not solicited after the date hereof and did not result from a material breach of Section 5.02(a), made by any person (other than Parent or Sub or any of their affiliates) that, if consummated, would result in such person (or in the case of a direct merger between such person and the Company, the stockholders of such person) acquiring, directly or indirectly, more than fifty percent (50%) of the voting power of the Company Common Stock or all or substantially all the assets of the Company and its Subsidiaries, taken as a whole, and which offer, the Board of Directors of the Company determines in good faith, after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation, (i) provides a higher value to the stockholders of the Company than the consideration payable in the Offer and the Merger (taking into account all of the terms and conditions of such proposal and this Agreement (including any changes to the terms of the Offer or this Agreement proposed by Parent in response to such Superior Proposal or otherwise)), (ii) is not subject to any financing condition or financing contingency and (iii) is reasonably capable of being completed in a timely fashion, taking into account all financial, legal, regulatory and other aspects of such proposal.

(b) Neither the Board of Directors of the Company nor any committee thereof shall (i) withdraw or modify in a manner adverse to Parent or Sub, or propose publicly to withdraw or modify in a manner adverse to Parent or Sub, the recommendation or declaration of advisability by such Board of Directors or any such committee of this Agreement, regarding the Offer or the Merger, or recommend, or propose publicly to recommend, the approval or adoption of any Takeover Proposal, or resolve or agree to take any such action (any such action, resolution or agreement to take such action being referred to herein as an "Adverse Recommendation Change"), (ii) adopt or approve any Takeover Proposal, or propose the approval or adoption of any Takeover Proposal, or resolve or agree to take any such action, or (iii) cause or permit the Company to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement (each, an "Acquisition Agreement") constituting or related to, or which is intended to or would reasonably be expected to lead to, any Takeover Proposal (other than a confidentiality agreement referred to in Section 5.02(a)). Notwithstanding anything in this Agreement to the contrary, at any time prior to the Offer Closing, the Board of Directors of the Company may (x) effect an Adverse Recommendation Change, provided that the Board of Directors of the Company determines in good faith, after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation, that the failure to do so would result in a breach of its fiduciary duties to the stockholders of the Company under applicable Law and (y) in response to a Superior Proposal, cause the Company to terminate this Agreement and concurrently with such termination, cause the Company to enter into an Acquisition Agreement and provided, further, that (1) the Board of Directors of the Company may not effect such an Adverse Recommendation Change and (2) no termination of this Agreement pursuant to this Section 5.02(b) may be made, in each case unless (A) the Board of Directors shall have first provided prior written notice to Parent that it is prepared to (I) effect an Adverse Recommendation Change (an "Adverse

Recommendation Change Notice") or (II) terminate this Agreement pursuant to this Section 5.02(b) in response to a Superior Proposal (a "Superior Proposal Notice"), which notice shall, if the basis for the proposed action by the Board of Directors of the Company is not related to a Superior Proposal, contain a description of the events, facts and circumstances giving rise to such proposed action or, if the basis for the proposed action by the Board of Directors of the Company is a Superior Proposal, contain a description of the material terms and conditions of such Superior Proposal, and (B) Parent does not make, within five (5) business days after the receipt of such notice, a proposal that would, in the reasonable good faith judgment of the Board of Directors of the Company (after consultation with its outside legal counsel and a financial advisor of national reputation), cause such events, facts and circumstances to no longer require the Board of Directors of the Company to effect an Adverse Recommendation Change to comply with its fiduciary duties or cause the offer previously constituting a Superior Proposal to no longer constitute a Superior Proposal, as the case may be. The Company agrees that, during the five (5) business day period prior to its effecting an Adverse Recommendation Change or terminating this Agreement pursuant to this Section 5.02(b), the Company and its Representatives shall negotiate in good faith with Parent and its Representatives regarding any revisions to the terms of the transaction contemplated by this Agreement proposed by Parent. Any material changes with respect to such events, facts or circumstances mentioned above, or material changes to the financial terms or any material change to other material terms of such Superior Proposal, as the case may be, occurring prior to the Company's effecting an Adverse Recommendation Change or terminating this Agreement pursuant to this Section 5.02(b) shall require the Company to provide to Parent a new Adverse Recommendation Change Notice or Superior Proposal Notice and a five (5) business day period and, in determining whether to effect an Adverse Recommendation Change or whether to terminate this Agreement pursuant to this Section 5.02(b), the Board of Directors of the Company shall take into account any such changes.

(c) In addition to the obligations of the Company set forth in Sections 5.02(a) and 5.02(b), the Company shall, as promptly as possible and in any event within one (1) business day after the receipt thereof, advise Parent orally and in writing of (i) any Takeover Proposal or any request for information or inquiry that expressly contemplates a Takeover Proposal or that the Company believes could reasonably be expected to lead to a Takeover Proposal and (ii) the material terms and conditions of such Takeover Proposal, request or inquiry (including any subsequent amendment or other modification to such terms and conditions) and the identity of the person making any such Takeover Proposal, request or inquiry. Commencing upon the provision of any notice referred to above, once, and not more than once, each day at mutually agreeable times, the Company (or its outside counsel) shall (A) advise and confer with Parent (or its outside counsel) regarding the progress of negotiations concerning any Takeover Proposal (to the extent such negotiations are permitted in accordance with Section 5.02(a)), the material resolved and unresolved issues related thereto and any other matters identified with reasonable specificity by Parent (or its outside counsel) and the material details (including material amendments as to price and other material terms) of any such Takeover Proposal, request or inquiry and (B) promptly upon receipt or delivery thereof, provide Parent (or its outside counsel) with copies of all documents and written communications relating to any such Takeover Proposal, request or inquiry exchanged between the Company or any of its Representatives, on the one hand, and the person making a Takeover Proposal or any of its Representatives, on the other hand.

(d) Nothing contained in this Section 5.02 or elsewhere in this Agreement shall prohibit the Company from (i) taking and disclosing to its stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act or complying with Item 1012(a) of Regulation M-A under the Exchange Act or (ii) making any disclosure to its stockholders if, in the good faith judgment of the Board of Directors of the Company (after consultation with outside legal counsel), failure so to disclose is reasonably likely to result in a breach of applicable Law; provided, however, that in no event shall the Company or its Board of Directors or any committee thereof take, agree or resolve to take any action prohibited by Section 5.02(b) (it being understood that any accurate disclosure of factual

information to the stockholders of the Company that is required to be made to such stockholders under applicable Federal securities Laws or other Laws shall not be considered an action prohibited by Section 5.02(b)).

SECTION 5.03. WARN Act Matters. The Company shall provide any notices or payments due to any of the employees of the Company or any of its Subsidiaries, and all notices, payments, fines or assessments due to any Governmental Entity, pursuant to any applicable Law with respect to the employment, discharge or layoff of such employees, including the WARN Act and any comparable Law, and shall otherwise comply with any such Law with respect to any "plant closing" (as defined in the WARN Act), "mass layoff" (as defined in the WARN Act), substantial cessation of industrial or commercial operations or group termination or similar event affecting employees of the Company or any of its Subsidiaries and occurring on or after the date hereof. The Company shall notify Parent in writing prior to the Closing of all employees of the Company or any of its Subsidiaries whose employment has been terminated within the thirty (30) days prior to the Closing and the location of employment of each such employee prior to such termination.

ARTICLE VI

Additional Agreements

SECTION 6.01. Preparation of the Proxy Statement; Stockholders Meeting. (a) If the adoption of this Agreement by the Company's stockholders is required by applicable Law, the Company shall, as promptly as practicable following the Offer Closing, prepare and file with the SEC the preliminary Proxy Statement. The Company shall use its commercially reasonable efforts to cause the definitive Proxy Statement to be mailed to the Company's stockholders as promptly as practicable after such filing. Each of the Company and Parent shall furnish all information concerning such person to the other as may be reasonably requested in connection with the preparation, filing and distribution of the Proxy Statement. The Company shall promptly notify Parent upon the receipt of any comments from the SEC or any request from the SEC for amendments or supplements to the Proxy Statement and shall provide Parent with copies of all correspondence between it and its representatives, on the one hand, and the SEC, on the other hand, with respect to the Proxy Statement. Each of the Company and Parent shall use commercially reasonable efforts to respond as promptly as practicable to any comments of the SEC with respect to the Proxy Statement. Notwithstanding the foregoing, prior to filing or mailing the Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, the Company (i) shall provide Parent an opportunity to review and comment on such document or response (including the proposed final version of such document or response) and (ii) shall include in such document or response all comments reasonably proposed by Parent. If, at any time prior to the Stockholders Meeting, any information relating to the Company, Parent or any of their respective affiliates, officers or directors should be discovered by the Company or Parent which should be set forth in an amendment or supplement to the Proxy Statement, so that the Proxy Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other parties hereto, and an appropriate amendment or supplement describing such information shall be filed with the SEC and, to the extent required by applicable Law, disseminated to the stockholders of the Company.

(b) If the adoption of this Agreement by the Company's stockholders is required by applicable Law, the Company shall, as promptly as reasonably practicable following the Offer Closing (or, with respect to calling, giving notice of, convening and holding a meeting of its stockholders, as soon as reasonably practicable following the expiration of the time period contemplated by Rule 14a-6(a) under the Exchange Act or the resolution of any comments from the SEC), establish a record date (which will be as promptly as reasonably practicable following the Offer Closing) for, duly call, give notice of,

convene and hold a meeting of its stockholders (the "Stockholders Meeting"), for the purpose of obtaining the Stockholder Approval. The notice of such Stockholders Meeting shall state that a resolution to adopt this Agreement will be considered at the Stockholders Meeting. Subject to Sections 5.02(b) and 5.02(d), the Board of Directors of the Company shall recommend to holders of the Company Common Stock that they adopt this Agreement, and shall include such recommendation in the Proxy Statement. Without limiting the generality of the foregoing, the Company agrees that its obligations pursuant to the first sentence of this Section 6.01(b) shall not be affected by (i) the commencement, public proposal, public disclosure or communication to the Company of any Takeover Proposal or (ii) any Adverse Recommendation Change effected by the Board of Directors of the Company. Notwithstanding the foregoing, if Sub shall acquire at least ninety percent (90%) of the outstanding shares of the Company Common Stock, the parties hereto shall take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the Offer Closing without the Stockholders Meeting in accordance with Section 253 of the DGCL.

(c) Parent agrees to cause all shares of Company Common Stock acquired pursuant to the Offer and all other shares of Company Common Stock owned by Parent or any Subsidiary of Parent to be voted in favor of the Stockholder Approval.

SECTION 6.02. Access to Information; Confidentiality. The Company shall, and shall cause each of its Subsidiaries to, afford to Parent and to Parent's Representatives full access upon reasonable advance notice and during normal business hours during the period prior to the Effective Time or the termination of this Agreement to all their respective properties, assets, books, records, Contracts, Permits, documents, information, directors, officers and employees but only to the extent that such access does not unreasonably interfere with the business or operations of the Company and its Subsidiaries (and access to personnel records will be provided only if authorized by the specific employees), and during such period the Company shall, and shall cause each of its Subsidiaries to, furnish to Parent any information concerning its business as Parent may reasonably request (including the work papers of Ernst & Young LLP); provided, however, that the Company shall not be required to (or to cause any of its Subsidiaries to) afford such access or furnish such information to the extent that doing so is restricted under applicable Law or otherwise would result in the loss of attorney-client privilege (provided that the Company shall use its reasonable efforts to allow for such access or disclosure in a manner that does not result in a loss of attorney-client privilege). Following the date of this Agreement and prior to the Effective Time, Parent may (but shall not be required to), following reasonable notice to the Company, contact and interview any Company Personnel and review the personnel records (if access to such personnel records is authorized by the specific employees) and such other information concerning the Company Personnel as Parent may reasonably request (provided such review is permitted by applicable Law). No investigation by Parent or any of its Representatives and no other receipt of information by Parent or any of its Representatives shall operate as a waiver or otherwise affect any representation or warranty of the Company or any covenant or other provision in this Agreement. Except as required by any applicable Law or Judgment, Parent will hold, and will direct its Representatives to hold, any and all information received from the Company confidential in accordance with the Confidentiality Agreement and the Standstill Agreement and shall otherwise comply with the Confidentiality Agreement and Standstill Agreement with respect to such information.

SECTION 6.03. Reasonable Best Efforts; Consultation and Notice. (a) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all actions that are necessary, proper or advisable to consummate and make effective the Offer, the Merger and the other transactions contemplated by the Transaction Agreements, including using its reasonable best efforts to accomplish the following: (i) the satisfaction of the conditions precedent set forth in Exhibit A and Article VII, (ii) the obtaining of all necessary actions or nonactions, waivers, consents, approvals, orders and authorizations from, and the giving of any necessary notices to, Governmental Entities and other persons and the making of all necessary registrations, declarations and filings (including filings under the HSR Act and other

registrations, declarations and filings with, or notices to, Governmental Entities, if any), (iii) the taking of all reasonable steps to provide any supplemental information requested by a Governmental Entity, including participating in meetings with officials of such entity in the course of its review of the Transaction Agreements, the Offer, the Merger or the other transactions contemplated by the Transaction Agreements, (iv) coordinating with the other party in preparing and exchanging such information and promptly providing the other party with copies of all presentations, submissions or other supplemental information drafted by a party in connection with a request by a Governmental Entity, (v) the taking of all reasonable steps as may be necessary to avoid any suit, claim, action, investigation or proceeding by any Governmental Entity or other person and (vi) to the extent commercially reasonable in light of the circumstances, the defending of any suits, claims, actions, investigations or proceedings, whether judicial or administrative, challenging the Transaction Agreements, the Offer, the Merger or the other transactions contemplated by the Transaction Agreements, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed. In connection with and without limiting the generality of the foregoing, each of the Company and its Board of Directors shall, if any state takeover statute or similar statute or regulation is or becomes applicable to the Transaction Agreements or any of the Offer, the Merger and the other transactions contemplated by the Transaction Agreements, use its reasonable best efforts to ensure that the Offer, the Merger and the other transactions contemplated by the Transaction Agreements may be consummated as promptly as practicable on the terms contemplated hereby or thereby and otherwise to minimize the effect of such statute or regulation on the Transaction Agreements, the Offer, the Merger and the other transactions contemplated by the Transaction Agreements. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, in no event shall Parent or Sub be obligated to, and the Company and its Subsidiaries shall not, without the prior written consent of Parent, agree or proffer to divest or hold separate, or enter into any licensing or similar arrangement with respect to, any assets (whether tangible or intangible) or any portion of any business of Parent, the Company or any of their respective Subsidiaries. The Company and Parent shall provide to each other such assistance, information and cooperation as is reasonably required to obtain any such actions, nonactions, waivers, consents, approvals, orders and authorizations and, in connection therewith, shall notify the other person promptly following the receipt of any comments from any Governmental Entity and of any request by any Governmental Entity for amendments, supplements or additional information in respect of any registration, declaration or filing with, or notice to, such Governmental Entity and shall supply the other person with copies of all correspondence between such person or any of its representatives, on the one hand, and any Governmental Entity, on the other hand.

(b) (i) Except as prohibited by applicable Law, the Company shall promptly notify Parent in writing of:

(A) any breach, or the occurrence of any matter or event that, individually or in the aggregate, could reasonably be expected to result in any breach, of any representation and warranty of the Company set forth in this Agreement or the failure, or the occurrence of any matter or event that, individually or in the aggregate, could reasonably be expected to result in the failure, of the Company to perform any obligation required to be performed by it under this Agreement, in each case to the extent that such breach or failure to perform would reasonably be expected to result in the failure of a condition set forth in paragraph (ii) of Exhibit A to be satisfied upon the expiration of the Offer;

(B) any notice or other communication from any Governmental Entity in connection with the Offer, the Merger or any of the other transactions contemplated by the Transaction Agreements, and a copy of any such notice or communication shall be furnished to Parent together with the Company's written notice;

(C) any filing made by the Company with any Governmental Entity in connection with the Offer, the Merger or any of the other transactions contemplated by the Transaction Agreements, and a copy of any such filing shall be furnished to Parent together with the Company's written notice; and

(D) any actions, suits, claims, proceedings or litigations commenced or threatened that relate to the consummation of the Offer, the Merger, the Transaction Agreements or any of the other transactions contemplated by the Transaction Agreements (collectively, "Transaction Claims") of which the Company has knowledge;

provided, however, that no such notification shall affect the representations, warranties, covenants, agreements or obligations of the parties (or remedies with respect thereto) or the conditions to the obligations of the parties under this Agreement (including with respect to the Offer). Neither the failure of the Company to deliver any notice required pursuant to this Section 6.03(b)(i) nor any delay in the delivery of any such notice shall be considered in determining whether the Offer Condition set forth in paragraph (ii) of Exhibit A has been satisfied or whether the termination right set forth in Section 8.01(e) is available to Parent.

(ii) Parent shall give prompt notice to the Company of (A) any representation or warranty made by Parent or Sub contained in this Agreement that is qualified as to materiality becoming untrue or any such representation or warranty that is not so qualified becoming untrue in any material respect or (B) the failure of Parent or Sub to perform in any material respect any obligation to be performed by such party under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants, agreements or obligations of the parties (or remedies with respect thereto) or the conditions to the obligations of the parties under this Agreement. Neither the failure of Parent to deliver any notice required pursuant to this Section 6.03(b)(ii) nor any delay in the delivery of any such notice shall be considered in determining whether the termination right set forth in Section 8.01(f) is available to the Company.

(c) Without limiting the generality of the foregoing, the Company shall give Parent the opportunity to participate in the defense of any Transaction Claims against the Company and/or its directors and will obtain the prior written consent of Parent prior to settling or satisfying any such Transaction Claim, it being understood and agreed that the Company shall control such defense and that this Section 6.03(c) shall in no event give Parent the right to direct such defense.

SECTION 6.04. Equity Awards. (a) As soon as practicable following the date of this Agreement, the Company agrees that the Board of Directors of the Company (or, if appropriate, any committee administering the Company Stock Plans and the Purchase Plan) shall adopt such resolutions or take such other actions (including obtaining any required consents) as may be required to effect the following:

(i) adjust the terms of all outstanding Company Stock Options, whether vested or unvested, as necessary to provide that the Company Stock Options will become fully vested and exercisable and may be exercised before the Effective Time at such applicable time or times as specified in the Company Stock Plans, and, at the Effective Time, each unexercised Company Stock Option, whether vested or unvested, that is outstanding immediately prior to the Effective Time, shall be canceled, with the holder of such Company Stock Option becoming entitled to receive, in full satisfaction of the rights of such holder with respect thereto, an amount in cash equal to (A) the excess, if any, of (1) the Merger Consideration over (2) the exercise price per share of Company Common Stock subject to such Company Stock Option, multiplied by (B) the number of shares of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time (whether vested or unvested), which amount shall be payable to such holder at or as soon as practicable following the Effective Time;

(ii) at the Effective Time, each Company RSU that is outstanding immediately prior to the Effective Time shall be canceled, with the holder of such Company RSU becoming entitled to receive, in full satisfaction of the rights of such holder with respect thereto, an amount in cash equal to the Merger Consideration multiplied by the maximum number of shares of Company Common Stock subject to such Company RSU immediately prior to the Effective Time, which amount shall be payable to such holder at or as soon as practicable following the Effective Time;

(iii) with respect to the Purchase Plan, (A) participation shall be limited to those employees who are participants on the date of this Agreement; (B) except to the extent necessary to maintain the status of the Purchase Plan as an "employee stock purchased plan" within the meaning of Section 423(b) of the Code and the Treasury Regulations thereunder, such participants shall not be permitted to increase the rate of their payroll deductions or purchase elections from those in effect on the date of this Agreement; (C) no Offering Period (as defined in the Purchase Plan) shall be commenced after the date of this Agreement; (D) if the day immediately prior to the Effective Time (the "New Exercise Date") occurs prior to the first Exercise Date (as defined in the Purchase Plan) following the date of this Agreement, each purchase right under the Purchase Plan outstanding on the New Exercise Date shall be automatically exercised by applying the payroll deductions of each then-current participant in the Purchase Plan for the then-current Offering Period in effect under the Purchase Plan to the purchase of whole shares of Company Common Stock (subject to the provisions of the Purchase Plan regarding the maximum number and value of shares purchasable per participant) at a purchase price per share equal to eighty five percent (85%) of the lower of (i) the Fair Market Value (as defined in the Purchase Plan) per share of Company Common Stock on the Enrollment Date (as defined in the Purchase Plan) and (ii) the Fair Market Value per share of Company Common Stock on the New Exercise Date; and (E) the Purchase Plan shall terminate, effective upon the earlier of the first exercise date following the date of this Agreement and the New Exercise Date, but subsequent to the exercise of purchase rights pursuant to clause (D) above.

(b) All amounts payable pursuant to this Section 6.04 shall be subject to any required withholding of taxes and shall be paid without interest.

(c) The Company shall ensure, prior to the Effective Time, that following the Effective Time, there shall be no rights to acquire shares of Company Common Stock, Company Stock Options, Company RSUs or any other interests in respect of any capital stock (including any "phantom" stock or stock appreciation rights) of the Company, the Surviving Corporation or their Subsidiaries.

(d) The Company shall take all reasonable steps as may be required to cause the transactions contemplated by this Section 6.04 and any other dispositions of Company equity securities (including derivative securities) in connection with this Agreement by each individual who is a director or officer of the Company subject to Section 16 of the Exchange Act to be exempt under Rule 16b-3 under the Exchange Act.

SECTION 6.05. Indemnification, Exculpation and Insurance. (a) Parent and Sub agree that all rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time now existing in favor of the current or former directors or officers of the Company and its Subsidiaries as provided in their respective certificates of incorporation or bylaws (or comparable organizational documents) and any indemnification or other agreements of the Company (in each case as in effect on the date of this Agreement or as amended or entered into prior to the Effective Time with the consent of Parent) shall be assumed by the Surviving Corporation in the Merger, without further action, at the Effective Time, and shall survive the Merger and shall continue in full force and effect in accordance with their terms.

(b) In the event that the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person and is not the continuing or surviving corporation or entity of

such consolidation or merger or (ii) transfers or conveys all or substantially all its properties and assets to any person, or if Parent dissolves the Surviving Corporation, then, and in each such case, Parent shall cause proper provision to be made so that the successors and assigns of the Surviving Corporation assume the obligations set forth in this Section 6.05.

(c) From the Offer Closing through the sixth (6^th) anniversary of the Effective Time (such period, the "Tail Period"), Parent shall maintain in effect the Company's current directors' and officers' liability insurance covering each person currently covered by the Company's directors' and officers' liability insurance policy for acts or omissions occurring prior to the Effective Time on terms with respect to such coverage and amounts no less favorable than those of such policy in effect on the date of this Agreement; provided that in no event shall Parent be required to pay in any one (1) year during the Tail Period premiums for insurance under this Section 6.05(c) that in the aggregate exceed one-hundred fifty percent (150%) of the aggregate premiums paid by the Company in 2007 for such purpose (which aggregate premiums for 2007 are hereby represented and warranted by the Company to be $215,000), it being understood that Parent shall nevertheless be obligated to provide such coverage, with respect to the entire Tail Period, as may be obtained for such one-hundred fifty percent (150%) amount; provided further that Parent may (i) substitute therefor policies of any reputable insurance company or (ii) satisfy its obligation under this Section 6.05(c) by causing the Company to obtain, on or prior to the Closing Date, prepaid (or "tail") directors' and officers' liability insurance policy at Parent's expense, in each case, the material terms of which, including coverage and amount, are no less favorable to such directors and officers than the insurance coverage otherwise required under this Section 6.05(c).

(d) The provisions of this Section 6.05 (i) are intended to be for the benefit of, and will be enforceable by, each indemnified party, his or her heirs and his or her representatives and (ii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by Contract or otherwise.

SECTION 6.06. Fees and Expenses. (a) Except as expressly set forth in this Section 6.06, all fees and expenses incurred in connection with this Agreement, the Stockholder Agreement (as between the Company, on the one hand, and Parent and Sub, on the other hand), the Offer, the Merger and the other transactions contemplated by this Agreement or the Stockholder Agreement, as the case may be, shall be paid by the party incurring such fees or expenses, whether or not the Offer or the Merger is consummated.

(b) In the event that (i) a Takeover Proposal has been made directly to the stockholders of the Company generally or shall have otherwise become publicly known or any person shall have publicly announced an intention (whether or not conditional and whether or not withdrawn) to make a Takeover Proposal and thereafter (A) this Agreement is terminated by either Parent or the Company pursuant to Section 8.01(b)(i) and (B) prior to the date that is eighteen (18) months after such termination, the Company or any of its Subsidiaries enters into any Acquisition Agreement with respect to any Takeover Proposal or any Takeover Proposal is consummated (solely for purposes of this Section 6.06(b)(i)(B), the term "Takeover Proposal" shall have the meaning set forth in the definition of Takeover Proposal contained in Section 5.02(a) except that all references to fifteen percent (15%) shall be deemed references to thirty five percent (35%)) or (ii) this Agreement is terminated (A) by Parent pursuant to Section 8.01(c) or 8.01(d) or (B) by the Company pursuant to Section 8.01(g), then, in each such case, the Company shall pay Parent a fee equal to $7,200,000 (the "Termination Fee") by wire transfer of same-day funds to an account designated by Parent (x) in the case of a payment as a result of any event referred to in Section 6.06(b)(i)(B), no later than the first to occur of such events, (y) in the case of a termination by Parent pursuant to Section 8.01(c) or 8.01(d), within three (3) business days after such termination, and (z) in the case of a termination by the Company pursuant to Section 8.01(g), the date of termination of this Agreement.

(c) The Company acknowledges that the agreements contained in Section 6.06(b) are an integral part of the transactions contemplated by the Transaction Agreements, and that, without these

agreements, Parent would not have entered into the Transaction Agreements. Accordingly, if the Company fails promptly to pay the amounts due pursuant to Section 6.06(b) and, in order to obtain such payment, Parent commences a suit that results in a judgment against the Company for the amounts set forth in Section 6.06(b), the Company shall pay to Parent its reasonable costs and expenses (including attorneys' fees and expenses) in connection with such suit and any appeal relating thereto, together with interest on the amounts set forth in Section 6.06(b) at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made.

SECTION 6.07. Public Announcements. The parties agree that the initial press release to be issued with respect to the transactions contemplated by the Transaction Agreements shall be in the form heretofore agreed to by the parties. Except with respect to any Adverse Recommendation Change made in accordance with the terms of this Agreement, Parent and Sub, on the one hand, and the Company, on the other hand, shall, to the extent at all reasonably practicable, consult with each other before making, and give each other a reasonable opportunity to review and comment upon, any press release or other public statements with respect to the Transaction Agreements, the Offer, the Merger and the other transactions contemplated by the Transaction Agreements, and shall not issue any such press release or make any such public statement prior to such reasonably practicable consultation, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system.

SECTION 6.08. Sub Compliance. Parent shall cause Sub to comply with all of Sub's obligations under this Agreement and Sub shall not engage in any activities of any nature except as provided in or contemplated by the Transaction Agreements.

SECTION 6.09. Directors. (a) Following the Offer Closing, Parent or Sub shall be entitled to designate, from time to time, such number of members of the Board of Directors of the Company as will give Sub, subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, representation equal to at least that number of directors, rounded up to the next whole number, that is the product of (a) the total number of directors (giving effect to the directors elected or appointed pursuant to this sentence) multiplied by (b) the percentage that (i) the number of shares of Company Common Stock owned by Parent, Sub or any other Subsidiary of Parent (including shares of Company Common Stock accepted for payment and paid for pursuant to the Offer) bears to (ii) the number of shares of the Company Common Stock then outstanding; provided, however, that in no event shall Parent or Sub be entitled to designate any directors to serve on the Company's Board of Directors unless the number of shares of Company Common Stock owned by Parent, Sub or any other Subsidiary of Parent shall equal at least a majority of the voting power of the then-outstanding shares of Company Common Stock. The Company shall take all action reasonably requested by Parent necessary to effect any such election or appointment, including (A) increasing the size of the Board of Directors of the Company and (B) obtaining the resignation of such number of its current directors as is, in each case, necessary to enable such designees to be so elected or appointed to the Board of Directors of the Company in compliance with applicable Law (including, to the extent applicable prior to the Effective Time, Rule 10A-3 under the Exchange Act and NASDAQ Rules 4350(c) and 4350(d)(2)). The Company shall mail to its stockholders the Information Statement containing the information required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, and the Company agrees to make such mailing concurrently with the mailing of the Schedule 14D-9 (provided that Parent and Sub shall have provided to the Company on a timely basis all information required to be included in the Information Statement with respect to such designees and with respect to Parent's officers, directors and affiliates).

(b) Following the election or appointment of Parent's or Sub's designees pursuant to Section 6.09(a) and prior to the Effective Time, the affirmative vote of a majority of the Parent Independent Directors then in office shall be required for (i) the Company to consent (a) to amend or terminate this Agreement, (b) to waive any of the Company's rights or remedies under this Agreement or (c) to extend the time for the performance of any of the obligations or other acts of Parent or Sub or (ii) any withdrawal, modification, amendment or qualification by the Company's Board of Directors of the recommendation described in Section 4.01(d). For purposes of this Agreement, a "Parent Independent Director" shall mean a member of the Company's Board of Directors that (i) would be an "independent director" of Parent within the meaning of NASDAQ Rule 4200(a)(15) if such director were then serving as a member of Parent's Board of Directors and (ii) does not otherwise have a relationship which, in the opinion of the Company's Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

SECTION 6.10. Rule 14d-10 Matters. Notwithstanding anything in this Agreement to the contrary, the Company will not, after the date hereof, enter into, establish, amend or modify any plan, program, agreement or arrangement pursuant to which compensation is paid or payable, or pursuant to which benefits are provided, in each case to any Company Personnel unless, prior to such entry into, establishment, amendment or modification, the Compensation Committee (each member of which shall be an "independent director" in accordance with the requirements of Rule 14d-10(d)(2) under the Exchange Act at the time of any such action) shall have taken all such steps as may be necessary to (i) approve as an Employment Compensation Arrangement each such plan, program, agreement or arrangement and (ii) satisfy the requirements of the non-exclusive safe harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to such plan, program, agreement or arrangement.

SECTION 6.11. Rights Agreement. The Company and its Board of Directors shall take all action requested in writing by Parent in order to render the Company Rights inapplicable to the Transaction Agreements, the Offer, the Merger and the other transactions contemplated by the Transaction Agreements.

SECTION 6.12. Company Benefit Plan Matters. As soon as practicable following the date of this Agreement, the Company agrees that the Board of Directors of the Company shall adopt such resolutions or take such other actions as may be required to terminate the Company's 401(k) plan effective prior to the Closing Date and to deliver to Parent prior to the Closing evidence acceptable to Parent of such termination of the Company's 401(k) plan. Following the date of this Agreement, the Company and Parent or Sub shall cooperate with respect to any notices or filings to any Governmental Entity, trustee, third party administrator or any other person required under any Company Benefit Plan or any Company Benefit Agreement or required to be provided to any Company Personnel.

ARTICLE VII

Conditions Precedent

SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or (to the extent permitted by Law) waiver on or prior to the Closing Date of the following conditions:

(a) Stockholder Approval. The Stockholder Approval shall have been obtained if required by applicable Law.

(b) Antitrust. Any waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired, and any other approval or waiting period under any other applicable competition, merger control, antitrust or similar Law shall have been obtained or terminated or shall have expired.

(c) No Injunctions or Legal Restraints. No temporary restraining order, preliminary or permanent injunction or other Judgment issued by any court of competent jurisdiction or other legal restraint or prohibition (collectively, "Legal Restraints") that has the effect of preventing the consummation of the Merger shall be in effect.

(d) Purchase of Company Common Stock in the Offer. Sub shall have previously accepted for payment and paid for shares of Company Common Stock validly tendered and not withdrawn pursuant to the Offer.

ARTICLE VIII

Termination, Amendment and Waiver

SECTION 8.01. Termination. This Agreement may be terminated, and the transactions contemplated by the Transaction Agreements may be abandoned, at any time prior to the Effective Time, whether before or after the Stockholder Approval has been obtained, upon written notice (other than in the case of Section 8.01(a) below) from the terminating party to the non-terminating party specifying the subsection of this Section 8.01 pursuant to which such termination is effected:

(a) subject to Section 6.09(b), by mutual written consent of Parent, Sub and the Company;

(b) by either Parent or the Company, if:

(i) the Offer Closing shall not have occurred prior to August 28, 2008 (the "Termination Date") for any reason; provided, however, that the right to terminate this Agreement under this Section 8.01(b)(i) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Offer Closing to occur prior to such date and such action or failure to act constitutes a breach of this Agreement, provided further that, if on the Termination Date, the conditions of the Offer set forth in paragraphs (b) and/or (i) and/or (iii) and/or (iv) of Exhibit A shall not have been fulfilled but all other conditions of the Offer set forth on Exhibit A shall have been fulfilled or shall be capable of being fulfilled, then the Termination Date shall be extended to November 28, 2008; or

(ii) any Legal Restraint that has the effect of preventing the consummation of the Offer or the Merger shall be in effect and shall have become final and nonappealable;

(c) prior to the Offer Closing, by Parent, in the event the Company has delivered an Adverse Recommendation Change Notice or an Adverse Recommendation Change has occurred;

(d) prior to the Offer Closing, by Parent, in the event the Board of Directors of the Company fails to publicly reaffirm its recommendation of the Offer within five (5) business days of a written request by Parent for such reaffirmation;

(e) prior to the Offer Closing, by Parent, if (i) the Company shall have breached any of its representations or warranties or failed to perform any of its covenants or other agreements contained in this Agreement, which breach or failure to perform (A) would give rise to the failure of a condition set forth in paragraph (ii) of Exhibit A and (B) is incapable of being cured by the Company by the Termination Date or, if capable of being cured by the Company by the Termination Date, the Company does not commence to cure such breach or failure within ten (10) business days after its receipt of written notice thereof from Parent and use its commercially reasonable efforts to pursue such cure thereafter, or (ii) if any Legal Restraint having any of the effects referred to in clauses (A) or (B) of paragraph (iii) of Exhibit A shall be in effect and shall have become final and nonappealable;

(f) prior to the Offer Closing, by the Company, if (i) the representations and warranties of Parent and Sub contained in this Agreement that are qualified as to materiality are not true and correct (as so qualified), and the representations and warranties of Parent and Sub contained in this Agreement that

are not so qualified are not true and correct in all material respects, in each case as of the date of this Agreement and as of the Offer Closing Date, except that the accuracy of representations and warranties that by their terms speak as of a specified date will be determined as of such date, or (ii) Parent or Sub shall have failed to perform in all material respects all obligations required to be performed by them under this Agreement at or prior to the Offer Closing, in each case, which breach or failure to perform is incapable of being cured by Parent or Sub by the Termination Date or, if capable of being cured by Parent by the Termination Date, Parent and Sub do not commence to cure such breach or failure within ten (10) business days after their receipt of written notice thereof from the Company use its commercially reasonable efforts to pursue such cure thereafter; or

(g) by the Company in accordance with the terms and subject to the conditions of Section 5.02(b).

SECTION 8.02. Effect of Termination. In the event of termination of this Agreement by either the Company or Parent as provided in Section 8.01, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Parent, Sub or the Company, except that (a) the provisions of Section 4.01(s), the last sentence of Section 6.02, Section 6.06, this Section 8.02 and Article IX shall survive such termination and (b) the termination of this Agreement and/or any other agreement between the parties or any payment of the Termination Fee pursuant to Section 6.06(b) shall not relieve any party hereto from any liability for any material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement.

SECTION 8.03. Amendment. Subject to Section 6.09(b), this Agreement may be amended by the parties hereto at any time, whether before or after the Offer Closing shall have occurred or the Stockholder Approval, if required by applicable Law, has been obtained; provided, however, that (a) after the Offer Closing, there shall be no amendment that decreases the Merger Consideration and (b) after the Stockholder Approval has been obtained, there shall be made no amendment that by Law requires further approval by stockholders of the Company without the further approval of such stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.

SECTION 8.04. Extension; Waiver. At any time prior to the Effective Time, the parties may, subject to Section 6.09(b), (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (c) waive compliance with any of the agreements or conditions contained herein; provided, however, that after the Stockholder Approval has been obtained, there shall be made no waiver that by Law requires further approval by stockholders of the Company without the further approval of such stockholders. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party which specifically sets forth the terms of such extension or waiver. The failure or delay by any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights nor shall any single or partial exercise by any party to this Agreement of any of its rights under this Agreement preclude any other or further exercise of such rights or any other rights under this Agreement.

ARTICLE IX

General Provisions

SECTION 9.01. Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 9.01 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time.

SECTION 9.02. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and shall be deemed given when so delivered by hand or sent by facsimile, or if mailed, three (3) days after mailing (one (1) business day in the case of express mail or overnight courier service), as follows (or at such other address for a party as shall be specified by notice given in accordance with this Section 9.02):

if to Parent or Sub, to:

Bristol-Myers Squibb Company
345 Park Avenue
New York, NY 10154-0037
Facsimile: (212) 546-9562
Attention: General Counsel

with a copy to:

Bristol-Myers Squibb Company
Route 706 and Province Line Road
Princeton, NJ 08543-4000
Facsimile: (609) 252-7680
Attention: Vice President, Corporate Development

and with a copy to:

Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700

Attention: Susan Webster, Esq.
Ronald Cami, Esq.

if to the Company, to:

with a copy to:

Kosan Biosciences Incorporated
3832 Bay Center Place
Hayward, CA 94545
Telephone: (510) 731-5254
Facsimile: (510) 731-5121
Attention: General Counsel

Cooley Godward Kronish LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Facsimile: (650) 849-7400

Attention: Suzanne Sawochka Hooper, Esq.
Chadwick L. Mills, Esq.

SECTION 9.03. Definitions. For purposes of this Agreement:

(a) "affiliate" means, with respect to any person, any other person directly or indirectly controlling, controlled by or under common control with such first person;

(b) "business day" means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized by applicable Law to close in New York, New York;

(c) as it relates to the Company, "knowledge" means, with respect to any matter in question, the actual knowledge, after reasonable inquiry and investigation, of any executive officer of the Company serving in such capacity as of the date hereof;

(d) "Material Adverse Effect" on or with respect to the Company means any state of facts, change, development, event, effect, condition, occurrence, action or omission (each, an "Event") that, individually or in the aggregate, (i) would reasonably be expected to result in a material adverse effect on the business (including on the development of the Covered Product Candidates, including clinical and/or regulatory Events), financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, or (ii) would prevent, materially impede or materially delay the consummation by the Company of the Offer, the Merger or the other transactions contemplated by the Transaction Agreements; provided, however, that none of the following shall be deemed, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect on the Company: (A) any Events generally affecting (I) the industry in which the Company primarily operates to the extent they do not materially disproportionately affect the Company and its Subsidiaries, taken as a whole, in relation to other companies in the industry in which the Company primarily operates or (II) the economy, or financial or capital markets, in the United States or elsewhere in the world to the extent they do not disproportionately affect the Company and its Subsidiaries, taken as a whole, in relation to other companies in the industry in which the Company primarily operates; (B) any Events arising from or otherwise relating to any act of terrorism, war, national or international calamity or any other similar event to the extent they do not disproportionately affect the Company and its Subsidiaries, taken as a whole; (C) any failure, in and of itself, by the Company to meet any internal or published projections or predictions (whether such projections or predictions were made by the Company or independent third parties) for any period ending on or after the date of this Agreement (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect on the Company); (D) any Events readily apparent from any matters or circumstances disclosed in or incorporated by reference into the Company Disclosure Schedule (excluding, in the case of Filed Company SEC Documents incorporated by reference into the Company Disclosure Schedule, any disclosures set forth in any risk factor section or in any section relating to forward looking statements and any other disclosures included therein to the extent that they are cautionary, predictive or forward looking in nature); (E) any Events resulting from or arising out of any change in GAAP or changes in applicable Law (including the rules of NASDAQ); (F) any Events (including any loss of employees or any loss of, or any disruption in, supplier, licensor, licensee, partner or similar relationships) directly attributable to the announcement or pendency of the Offer, the Merger or any of the other transactions contemplated by the Transaction Agreements; and (G) any Events arising from or otherwise relating to any action taken by the Company with Parent's consent or that is required by this Agreement;

(e) "person" means any natural person, corporation, limited liability company, partnership, joint venture, trust, business association, Governmental Entity or other entity;

(f) a "Subsidiary" of any person shall mean any other person (i) more than fifty percent (50%) of whose outstanding shares or securities representing the right to vote for the election of directors or other managing authority of such other person are, now or hereafter, owned or controlled, directly or indirectly, by such first person, but such other person shall be deemed to be a Subsidiary only so long as such ownership or control exists, or (ii) which does not have outstanding shares or securities with such right to vote, as may be the case in a partnership, joint venture or unincorporated association, but more than fifty percent (50%) of whose ownership interest representing the right to make the decisions for such other person is, now or hereafter, owned or controlled, directly or indirectly, by such first person, but such other person shall be deemed to be a Subsidiary only so long as such ownership or control exists; and

(g) there shall be an "Uncured Inaccuracy" in a representation or warranty of the Company contained in this Agreement as of a particular date only if such representation or warranty shall be inaccurate as of such date as if such representation or warranty were made as of such date to the extent that the inaccuracy in such representation or warranty shall not have been cured since such date; provided, however, that if any representation or warranty by its terms speaks as of the date of the Agreement or as of another particular date, then there shall not be an Uncured Inaccuracy in such representation or warranty except to the extent that such representation or warranty shall have been inaccurate as of such date and the inaccuracy in such representation or warranty shall not have been cured since such date.

SECTION 9.04. Exhibits and Schedules; Interpretation. The headings contained in this Agreement or in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein, shall have the meaning as defined in this Agreement. When a reference is made in this Agreement to an Article, Section, Subsection, Exhibit or Schedule, such reference shall be to a Section or Article of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. For all purposes hereof, the terms "include", "includes" and "including" shall be deemed followed by the words "without limitation". The words "hereof", "hereto", "hereby", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term "or" is not exclusive. The word "extent" in the phrase "to the extent" shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply "if". Whenever the words "provided to Parent," "delivered to Parent" or similar words are used in this Agreement, such words shall include making documents available to Parent in the electronic data room maintained by the Company through IntraLinks, Inc. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. Any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified or supplemented. References to a person are also to its permitted successors and assigns.

SECTION 9.05. Counterparts. This Agreement may be executed in one or more counterparts (including by facsimile), all of which shall be considered one and the same agreement and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties.

SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries. The Transaction Agreements (a) together with the Exhibits hereto and the Company Disclosure Schedule, constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of the Transaction Agreements, except for the Confidentiality Agreement and the Standstill Agreement, and (b) except for the provisions of Section 6.05, are not intended to confer upon any person other than the parties thereto (and their respective successors and

assigns) any rights (legal, equitable or otherwise) or remedies, whether as third party beneficiaries or otherwise.

SECTION 9.07. Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Laws thereof.

SECTION 9.08. Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise by any of the parties without the prior written consent of the other parties, except that Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly-owned Subsidiary of Parent, but no such assignment shall relieve Sub of any of its obligations hereunder. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns.

SECTION 9.09. Consent to Jurisdiction; Service of Process; Venue. Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the Delaware Court of Chancery (and if jurisdiction in the Delaware Court of Chancery shall be unavailable, the Federal court of the United States of America sitting in the State of Delaware) for the purposes of any suit, action or other proceeding arising out of the Transaction Agreements or any transaction contemplated by the Transaction Agreements (and agrees that no such action, suit or proceeding relating to the Transaction Agreements shall be brought by it or any of its Subsidiaries except in such courts). Each of the parties further agrees that, to the fullest extent permitted by applicable Law, service of any process, summons, notice or document by U.S. registered mail to such person's respective address set forth above shall be effective service of process for any action, suit or proceeding in the State of Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties hereto irrevocably and unconditionally waives (and agrees not to plead or claim) any objection to the laying of venue of any action, suit or proceeding arising out of the Transaction Agreements or the transactions contemplated by the Transaction Agreements in the Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in any Delaware State court or the Federal court of the United States of America sitting in the State of Delaware) or that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

SECTION 9.10. Waiver of Jury Trial. Each party hereto hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any suit, action or other proceeding directly or indirectly arising out of, under or in connection with the Transaction Agreements. Each party hereto (a) certifies that no Representative of any other party has represented, expressly or otherwise, that such party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement, by, among other things, the mutual waiver and certifications in this Section 9.10.

SECTION 9.11. Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in the Federal court of the United States of America sitting in the State of Delaware), this being in addition to any other remedy to which they are entitled at Law or in equity.

SECTION 9.12. Consents and Approvals. For any matter under this Agreement requiring the consent or approval of any party to be valid and binding on the parties hereto, such consent or

approval must be in writing and executed and delivered to the other parties by a person duly authorized by such party to do so.

SECTION 9.13. Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

SECTION 9.14. Obligation of Parent. Parent shall ensure that each of Sub and the Surviving Corporation duly performs, satisfies and discharges on a timely basis each of the covenants, obligations and liabilities of Sub and the Surviving Corporation under this Agreement.

IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above.

		BRISTOL-MYERS SQUIBB COMPANY
		by	/s/ JEREMY LEVIN
			Name: Dr. Jeremy Levin Title: Senior Vice President, External Science
		KB ACQUISITION CORP.
		by	/s/ JEREMY LEVIN
			Name: Dr. Jeremy Levin Title: President
		KOSAN BIOSCIENCES INCORPORATED
		by	/s/ HELEN S. KIM
			Name: Helen S. Kim Title: Present, CEO

EXHIBIT A

CONDITIONS OF THE OFFER

Notwithstanding any other term of the Offer or this Agreement, Sub shall not be required to, and Parent shall not be required to cause Sub to, accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Sub's obligation to pay for or return tendered shares of Company Common Stock promptly after the termination or withdrawal of the Offer), to pay for any shares of Company Common Stock tendered pursuant to the Offer unless:

(a) there shall have been validly tendered and not validly withdrawn prior to the expiration of the Offer (as it may have been extended pursuant to Section 1.01 of this Agreement) that number of shares of Company Common Stock that, considered together with all other shares of Company Common Stock (if any) beneficially owned by Parent and its affiliates, would represent at least a majority of the outstanding shares of Company Common Stock (determined on a fully diluted basis for all outstanding stock options, restricted stock units and any other rights to acquire Company Common Stock on the date of determination) (the "Minimum Tender Condition");

(b) any waiting period (and any extension thereof) applicable to the Offer under the HSR Act shall have been terminated or shall have expired;

(c) Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and chief financial officer of the Company to the effect that none of the matters set forth in paragraphs (ii) and (v) below shall have occurred.

Furthermore, notwithstanding any other term of the Offer or this Agreement, Sub shall not be required to, and Parent shall not be required to cause Sub to, accept for payment or, subject as aforesaid, to pay for any shares of Company Common Stock tendered pursuant to the Offer if, upon the expiration of the Offer (as it may have been extended pursuant to Section 1.01(a) of this Agreement) and before acceptance of such shares of Company Common Stock for payment, any of the following conditions exists and is continuing and has not resulted directly or indirectly from any breach by Parent or Sub of the Agreement:

(i) there shall be in effect any Legal Restraint that has the effect of preventing the consummation of the Offer or the Merger; provided, however, that prior to invoking this provision, each party shall use its commercially reasonable efforts to have any such Legal Restraint lifted;

(ii) (A) there shall be (I) any Uncured Inaccuracy in one or more of the representations and warranties of the Company contained in Sections 4.01(c)(i)-(iii), 4.01(c)(iv) (except for the first, second and fifth sentences thereof), 4.01(c)(vi), 4.01(d) (except for the fifth and sixth sentences thereof), 4.01(p), 4.01(q) and 4.01(r) of this Agreement (collectively, the "Company Specified Representations") that are qualified as to materiality or Material Adverse Effect or any material Uncured Inaccuracy in any other Company Specified Representation or (II) any Uncured Inaccuracy in one or more of the representations and warranties of the Company contained in the Agreement other than the Company Specified Representations (as such other representations and warranties would read, solely for purpose of this clause II, without any qualifications as to materiality or Material Adverse Effect included therein) that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect; or (B) the Company shall have failed to perform in all material respects all obligations required to be performed by it under this Agreement at or prior to the expiration of the Offer;

(iii) there shall be pending any suit, claim, action, investigation or proceeding brought or threatened by any Governmental Entity (A) challenging or seeking to restrain or prohibit the acceptance for payment of shares of Company Common Stock tendered pursuant to the Offer, the Merger or any of the other transactions contemplated by this Agreement, or (B) seeking to prohibit or impose any material limitations on Parent's or Sub's ownership or operation of the Company or any material portion of its business or assets;

(iv) there shall be in effect any Legal Restraint that would reasonably be expected to result, directly or indirectly, in any of the effects referred to in clauses (A) or (B) of paragraph (iii) above;

(v) since the date of this Agreement, a Material Adverse Effect on or with respect to the Company shall have occurred; or

(vi) this Agreement shall have been validly terminated in accordance with its terms.

The foregoing conditions shall be in addition to, and not a limitation of, the rights of Parent and Sub to extend, terminate and/or modify the Offer pursuant to the terms of this Agreement.

The foregoing conditions are for the sole benefit of Parent and Sub and may be asserted by Parent or Sub regardless of the circumstances giving rise to such condition or may be waived by Sub and Parent in whole or in part at any time and from time to time, in their sole discretion. The failure by Parent, Sub or any other affiliate of Parent at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

EXHIBIT B

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION

SURVIVING CORPORATION

ARTICLE I

The name of the corporation (hereinafter called the "Corporation") is [NAME OF CORPORATION].

ARTICLE II

The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware. The name of the registered agent at such address is The Corporation Trust Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE IV

The total number of shares of all classes of stock that the Corporation shall have authority to issue is 1,000 shares of Common Stock having the par value of $0.001 per share.

ARTICLE V

The number of directors of the Corporation shall be fixed from time to time by the Board of Directors of the Corporation.

ARTICLE VI

In furtherance and not in limitation of the powers conferred upon it by law, the Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation.

ARTICLE VII

Unless and except to the extent that the Bylaws of the Corporation so require, the election of directors of the Corporation need not be by written ballot.

ARTICLE VIII

To the fullest extent from time to time permitted by law, no director of the Corporation shall be personally liable to any extent to the Corporation or its stockholders for monetary damages for breach of his fiduciary duty as a director.

ARTICLE IX

Each person who is or was or had agreed to become a director or officer of the Corporation, and each such person who is or was serving or who had agreed to serve at the request of the Corporation as a director, officer, partner, member, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise (including the heirs, executor, administrators or estate of such person), shall be indemnified by the Corporation to the fullest extent permitted from time to time by applicable law. Any repeal or modification of this Article IX shall not adversely affect any right to indemnification of any person existing at the time of such repeal or modification with respect to any matter occurring prior to such repeal or modification.

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TABLE OF CONTENTS
ARTICLE I The Offer
ARTICLE II The Merger
ARTICLE III Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of Certificates
ARTICLE IV Representations and Warranties
ARTICLE V Covenants Relating to Conduct of Business
ARTICLE VI Additional Agreements
ARTICLE VII Conditions Precedent
ARTICLE VIII Termination, Amendment and Waiver
ARTICLE IX General Provisions
GLOSSARY
ARTICLE I The Offer
ARTICLE II The Merger
ARTICLE III Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of Certificates
ARTICLE IV Representations and Warranties
ARTICLE V Covenants Relating to Conduct of Business
ARTICLE VI Additional Agreements
ARTICLE VII Conditions Precedent
ARTICLE VIII Termination, Amendment and Waiver
ARTICLE IX General Provisions

EXHIBIT A

EXHIBIT B

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
ARTICLE I
ARTICLE II
ARTICLE III
ARTICLE IV
ARTICLE V
ARTICLE VI
ARTICLE VII
ARTICLE VIII
ARTICLE IX
EX-99.(D)(B) 11 a2185989zex-99_db.htm EXHIBIT 99(D)(B)
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EXECUTION COPY

STOCKHOLDER AGREEMENT (this "Agreement"), dated as of May 28, 2008, by and among Bristol-Myers Squibb Company, a Delaware corporation ("Parent"), KB Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"), and the individuals and other parties listed on Schedule A hereto (each a "Stockholder").

WHEREAS each Stockholder has beneficial ownership of the number of shares of common stock, par value $0.001 per share, of Kosan Biosciences Incorporated, a Delaware corporation (the "Company"), set forth opposite the name of such Stockholder on Schedule A (such class of stock sometimes referred to herein as the "Company Common Stock", and the shares of Company Common Stock, including such shares that are acquired as a result of a stock dividend, stock split, recapitalization, combination, reclassification, exercise of options, settlement of restricted stock units, exchange or change of such shares, or otherwise, that are, from time to time, beneficially owned by each Stockholder sometimes referred to herein as "such Stockholder's Shares");

WHEREAS, simultaneously with the execution and delivery hereof, Parent, Sub and the Company have entered into an Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date hereof, which Merger Agreement has been unanimously approved by the Board of Directors of the Company, and has been approved by the Boards of Directors of Parent and Sub. The directors of the Company unanimously voted in favor of (i) the adoption of the Merger Agreement and (ii) the recommendation that stockholders of the Company (x) tender their shares of Company Common Stock pursuant to the Offer (as defined below) to be commenced by Sub pursuant to the Merger Agreement and (y) if required under applicable Law, adopt the Merger Agreement;

WHEREAS, pursuant to the Merger Agreement, Sub will commence an offer (the "Offer") for all of the shares of outstanding Company Common Stock at the Offer Price (as defined in the Merger Agreement) in cash; and

WHEREAS, as a condition to entering into the Merger Agreement and commencing the Offer, Parent and Sub have required that each of the Stockholders enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, each of the Stockholders, severally and not jointly, agrees with Parent and Sub as follows:

Section 1. Capitalized Terms. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Merger Agreement.

Section 2. Representations and Warranties of Stockholders. Each Stockholder represents and warrants, solely with respect to such Stockholder and such Stockholder's Shares, to Parent and Sub as follows:

(a) Such Stockholder (if not an individual) has been duly organized and is validly existing and in good standing (in the jurisdictions that recognize the concept of good standing) under the laws of the jurisdiction of its incorporation or formation, as the case may be.

(b) Such Stockholder has the requisite power and authority, corporate or otherwise, to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.

(c) The execution, delivery and performance of this Agreement by such Stockholder and the consummation of the transactions contemplated hereby have been duly and validly authorized by such Stockholder, and no other proceedings, corporate or otherwise, on the part of such Stockholder are necessary to authorize this Agreement or to consummate the transactions so contemplated. Without limiting the generality of the foregoing, if such Stockholder is a trustee, no trust of which such Stockholder is a trustee requires the consent of any beneficiary to the execution and delivery of this Agreement or to the consummation of the transactions contemplated hereby.

(d) This Agreement has been duly and validly executed and delivered by such Stockholder and, assuming this Agreement constitutes a valid and binding obligation of each of Parent and Sub, constitutes a legal, valid and binding agreement of such Stockholder enforceable against such Stockholder in accordance with its terms (subject to bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies). If such Stockholder is married and such Stockholder's Shares constitute community property or the transfer thereof otherwise requires spousal or other approval to be legal, valid and binding, this Agreement has been duly authorized, executed and delivered by, and constitutes a valid and binding agreement of, such Stockholder's spouse, enforceable against such spouse in accordance with its terms (subject to bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies).

(e) The execution, delivery and performance by such Stockholder of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene or conflict with such Stockholder's (if not an individual) certificate of incorporation, bylaws or other organizational documents; (ii) assuming that all consents, authorizations and approvals contemplated by subsection (f) below have been obtained and all filings described therein have been made, contravene or conflict with or constitute a violation of any provision of any Law or Judgment binding upon or applicable to such Stockholder or such Stockholder's Shares; (iii) conflict with, or result in the breach or termination of or constitute a default (with or without the giving of notice or the lapse of time or both) under, or give rise to any right of termination or cancellation or any loss of any benefit to which such Stockholder is entitled under any provision of any Contract binding upon such Stockholder or any of its Subsidiaries (if not an individual), affiliates or properties, or allow the acceleration of the performance of any obligation of such Stockholder under any Contract to which such Stockholder is a party or by which any of such Stockholder's Subsidiaries (if not an individual), affiliates or properties is bound; or (iv) result in the creation or imposition of any Lien on any asset of such Stockholder, except in the case of clauses (ii), (iii) and (iv) for any such contraventions, conflicts, violations, breaches, terminations, defaults, cancellations, losses, accelerations and Liens which would not individually or in the aggregate be reasonably expected to prevent, materially delay or materially impair the consummation by such Stockholder of the transactions contemplated by this Agreement.

(f) The execution, delivery and performance by such Stockholder of this Agreement and the consummation of the transactions contemplated hereby by such Stockholder require no filings, notices, declarations, consents or other actions to be made by such Stockholder with, nor are any approvals or other confirmations or consents required to be obtained by such Stockholder from, any Governmental Entity (except those the failure of which to make, give or obtain, individually or in the aggregate, would not reasonably be expected to prevent, materially delay or materially impair such Stockholder's ability to consummate the transactions contemplated hereby), other than filings, notices, approvals, confirmations, consents, declarations or decisions (i) required by the HSR Act or any other applicable competition, merger control, antitrust or similar Law; (ii) required by Section 203 of the DGCL; and (iii) required by the Exchange Act in connection with this Agreement and the transactions contemplated hereby.

(g) As of the date hereof, there is no action, suit, claim, investigation or proceeding pending or, to the knowledge of such Stockholder, threatened against such Stockholder or any of its Subsidiaries (if not an individual), affiliates or properties before any Governmental Entity which challenges or seeks to prevent, enjoin, alter or delay the Offer or the Merger or any of the other transactions contemplated hereby or by the Merger Agreement. As of the date hereof, such Stockholder is not and none of its Subsidiaries (if not an individual), affiliates or properties is subject to any Judgment which could prevent or delay the consummation of the transactions contemplated hereby or by the Merger Agreement.

(h) Such Stockholder has, and on the date Sub becomes obligated to accept for payment, and pay for, such Stockholder's Shares and at any Option Closing (as defined below) hereunder such Stockholder will have, good and valid title to such Stockholder's Shares, free and clear of any Liens, proxies, voting trusts or agreements, understandings or arrangements, except for any Liens or proxies arising hereunder.

(i) There are no options or rights to acquire, or any agreements to which such Stockholder is a party relating to, such Stockholder's Shares, other than this Agreement.

(j) The transfer of such Stockholder's Shares hereunder will transfer to Sub good and valid title to such Stockholder's Shares, free and clear of any Liens, proxies, voting trusts or agreements, understandings or arrangements.

(k) As of the date hereof, such Stockholders' Shares described in Schedule A represent all of the shares of Company Common Stock beneficially owned (within the meaning of Rule 13d-3(a) under the Exchange Act) by such Stockholder.

Section 3. Representations and Warranties of Parent and Sub. Each of Parent and Sub represents and warrants to the Stockholders as follows:

(a) Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.

(b) Each of Parent and Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.

(c) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by each of Parent and Sub, and no other corporate proceedings on the part of Parent or Sub are necessary to authorize this Agreement or to consummate the transactions so contemplated.

(d) This Agreement has been duly and validly executed and delivered by each of Parent and Sub and, assuming this Agreement constitutes a valid and binding obligation of each Stockholder, constitutes a legal and binding agreement of each of Parent and Sub enforceable against each of Parent and Sub in accordance with its terms (subject to bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the rights of creditors generally and the availability of equitable remedies).

(e) The execution, delivery and performance by each of Parent and Sub of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene or conflict with the Amended and Restated Certificate of Incorporation or Bylaws of Parent or the Certificate of Incorporation or Bylaws of Sub; (ii) assuming that all consents, authorizations and approvals contemplated by subsection (f) below have been obtained and all filings described therein have been made, contravene or conflict with or constitute a violation of any provision of any Law or Judgment binding upon or applicable to Parent or Sub or any of their respective Subsidiaries or properties; (iii) conflict with, or result in the breach or termination of any provision of or constitute a default (with or without the giving of notice or the lapse of time or both) under, or give rise to any right of termination or cancellation or any loss of any benefit to which Parent or Sub or any of their respective Subsidiaries is entitled under any provision of any Contract binding upon Parent or Sub, any of their respective Subsidiaries or any of their respective properties, or allow the acceleration of the performance of any obligation of Parent or Sub or any of their respective Subsidiaries under any Contract to which Parent or Sub or any of their respective Subsidiaries is a party or by which Parent or Sub or any of their respective Subsidiaries or any of their respective assets or properties is bound; or (iv) result in the creation or imposition of any Lien on any asset of Parent or Sub or any of their respective Subsidiaries, except in the case of clauses (ii), (iii) and (iv) for any such contraventions, conflicts, violations, breaches,

terminations, defaults, cancellations, losses, accelerations and Liens which would not individually or in the aggregate be expected to prevent, materially delay or materially impair the consummation by Parent or Sub of the transactions contemplated by this Agreement.

(f) The execution, delivery and performance by Parent and Sub of this Agreement and the consummation of the transactions contemplated hereby by Parent and Sub require no filings, notices, declarations, consents or other actions to be made by Parent or Sub with, nor are any approvals or other confirmations or consents required to be obtained by Parent or Sub from, any Governmental Entity (except those the failure of which to make, give or obtain, individually or in the aggregate, would not reasonably be expected to prevent, materially delay or materially impair Parent's or Sub's ability to consummate the transactions contemplated hereby), other than filings, notices, approvals, confirmations, consents, declarations or decisions (i) required by the HSR Act or any other applicable competition, merger control, antitrust or similar Law; and (ii) required by the Exchange Act in connection with this Agreement and the transactions contemplated hereby.

Section 4. Agreement to Tender. (a) Each Stockholder, other than any Excluded Stockholder (as defined in Section 4(c) below), agrees that, promptly after receipt of the Offer Documents, such Stockholder will accept the Offer and tender all of such Stockholder's Shares pursuant to the Offer and will not withdraw such Stockholder's Shares from the Offer unless and until the Offer expires without Sub having accepted for payment shares of Company Common Stock tendered in the Offer (it being understood that the obligation contained in this Section is unconditional, subject to Section 18).

(b) Parent and Sub will ensure that each Stockholder receives the same Offer Price received by other stockholders of the Company in the Offer with respect to the shares of Company Common Stock tendered by it in the Offer in accordance with the terms of the Offer.

(c) For purposes of this Agreement, an "Excluded Stockholder" shall mean any Stockholder that acquired beneficial ownership (within the meaning of Section 16 of the Exchange Act and the rules thereunder) of any shares of Company Common Stock in a transaction not exempt from Section 16(b) of the Exchange Act at any time during the period commencing on the date six (6) months and one (1) day prior to the date of this Agreement and ending on the date of this Agreement.

Section 5. Agreement to Vote; Proxy. (a) Each Stockholder agrees, to the extent such Stockholder continues to own, or have legal rights in respect of, such Stockholder's Shares, with, and covenants to, Parent and Sub as follows:

(i) At the Stockholders Meeting called for the purpose of obtaining the Stockholder Approval or any other meeting of stockholders of the Company called to vote upon the Merger, the Merger Agreement or the other transactions contemplated by the Merger Agreement or upon which a vote, consent or other approval with respect to the Merger, the Merger Agreement or the other transactions contemplated by the Merger Agreement is sought, such Stockholder shall vote (or cause to be voted) or shall consent, execute a consent or cause to be executed a consent in respect of such Stockholder's Shares in favor of granting the Stockholder Approval or otherwise in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval of the terms thereof and each of the other transactions contemplated by the Merger Agreement.

(ii) At any meeting of stockholders of the Company or at any adjournment thereof or in any other circumstances upon which their vote, consent or other approval is sought, such Stockholder shall vote (or cause to be voted) such Stockholder's Shares against (x) any Takeover Proposal or any action which is a component of any Takeover Proposal, (y) the adoption of any Acquisition Agreement or (z) any amendment of the Company Certificate or the Company Bylaws which amendment would prevent, impede, interfere with or delay the Merger, any provision of the Merger Agreement or this Agreement or any of the other

transactions contemplated by the Merger Agreement or this Agreement (each of the foregoing in clause (x), (y) or (z) above, a "Competing Transaction").

(iii) In furtherance and not in derogation of the foregoing, such Stockholder agrees with, and covenants to, Parent and Sub that at the request of Parent, such Stockholder shall use all commercially reasonable efforts, and shall cooperate in all respects with Parent, Sub and the Company, to satisfy any legal, regulatory or other stock exchange requirements that apply to approving the Merger, the Merger Agreement and the other transactions contemplated by the Merger Agreement or this Agreement.

(b) Each Stockholder hereby grants to, and appoints, Dr. Jeremy Levin and Sandra Leung, or any of them, and any other individual who is designated by Parent, until the termination of this Agreement pursuant to Section 18, an irrevocable proxy, coupled with an interest, and attorney-in-fact (with full power of substitution), for and in the name, place and stead of such Stockholder, with respect to all such Stockholder's Shares, to vote such Stockholder's Shares, or grant or execute a consent or approval, in the complete discretion of Parent or Sub, as the case may be, at the Stockholders Meeting called for the purpose of obtaining the Stockholder Approval or any other meeting of stockholders of the Company or at any adjournment thereof or in any other circumstances upon which their vote, consent or other approval is sought (i) in favor of granting the Stockholder Approval or otherwise in favor of the Merger and any transactions contemplated by, or necessary or desirable to consummate the transactions contemplated by, the Merger Agreement and the adoption of the Merger Agreement and (ii) against any Competing Transaction. Each Stockholder hereby affirms that the irrevocable proxy set forth in this Section 5(b) is given in connection with the execution of the Merger Agreement and that such irrevocable proxy is given to secure the performance of the duties of such Stockholder under this Agreement. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the DGCL and it may under no circumstances be revoked. Each Stockholder hereby represents that any proxies heretofore given in respect of such Stockholder's Shares with respect to the matters covered by this Section 5(b), if any, are revocable, and hereby revokes such proxies. Each Stockholder agrees that this Agreement, including the provisions of this Section 5, will be recorded in the books and records of the Company.

Section 6. Purchaser's Option. The parties further agree as follows:

(a) Each Stockholder, other than any Excluded Stockholder, does hereby grant to Sub an irrevocable option (collectively, with respect to all the Stockholders' Shares, the "Option") to purchase from time to time any or all of such Stockholder's Shares, subject to the terms and conditions of this Section 6 and Section 18.

(b) The exercise price for each share of such Stockholder's Shares shall be the Offer Price.

(c) If the outstanding shares of Company Common Stock are changed into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction, then the exercise price for such Stockholder's Shares shall be adjusted appropriately so that the total amount to be paid upon exercise in whole of the Option with respect to such Stockholder's Shares would remain unchanged.

(d) The Option may be exercised in whole or in part prior to the termination of this Agreement specified in Section 18 in the event that the Offer has expired or has otherwise been terminated and any Stockholder has failed to tender all of such Stockholder's Shares in accordance with Section 4 or has withdrawn any of such Stockholder's Shares tendered in the Offer prior to such expiration or termination of the Offer.

(e) In the event Sub wishes to exercise the Option with respect to any Stockholder's Shares, Sub shall send a written notice (the "Notice") to such Stockholder specifying a date (not sooner than two nor later than ten business days from the date the Notice is given) for the closing of such

purchase of any or all of such Stockholder's Shares (the "Option Closing"). The Option Closing will take place at such location in New York, New York, as Sub shall specify in the Notice. At the Option Closing, payment for such Stockholder's Shares then being purchased as indicated in the Notice shall be made to such Stockholder by wire transfer in immediately available funds in the amount of the aggregate exercise price, less any applicable withholding taxes, against delivery to Sub of (i) a certificate or certificates registered in its name evidencing such Stockholder's Shares duly endorsed for transfer and (ii) a properly executed IRS Form W-9 or W-8BEN. Such Stockholder's Shares will be imprinted with any legends required by applicable securities laws.

(f) The obligations of such Stockholder to deliver, and of Sub to purchase and pay for, such Stockholder's Shares, or any portion thereof, at an Option Closing after exercise of the Option are subject to the conditions that (i) no Legal Restraint prohibiting the delivery of such Stockholder's Shares shall be in effect, (ii) any waiting period (and any extension thereof) applicable to the Offer or the Merger under the HSR Act shall have been terminated or shall have expired, and any other approval or waiting period under any other applicable competition, merger control, antitrust or similar Law shall have been obtained or terminated or shall have expired, and (iii) the filings required by the Exchange Act to be made by the Company, Parent or Sub in connection with this Agreement and the transactions contemplated hereby shall been so made; provided that the condition set forth in clause (iii) may not be asserted by any Stockholder with respect to any filings required to be made by such Stockholder. In the event that any of the aforesaid conditions (i), (ii) or (iii) has not been satisfied at or prior to the scheduled time of Option Closing, the Option Closing shall be delayed for such period as shall be necessary in order for such conditions to be satisfied.

(g) The obligation of Sub to purchase and pay for such Stockholder's Shares, or any portion thereof, upon exercise of the Option is also subject to the fulfillment, or waiver by Sub, of the conditions (which may be waived by Sub in its sole discretion) that (i) such Stockholder's representations and warranties contained in this Agreement shall be true and correct on and as of the date of the Option Closing, as though such representations and warranties were made on such date, (ii) such Stockholder shall have performed in all material respects all of its covenants and agreements under this Agreement required to be performed at or prior to the Option Closing hereunder and (iii) such Stockholder shall have delivered to Parent and Sub on the date of the Option Closing a certificate to such effect.

Section 7. Additional Covenants. Except pursuant to this Agreement, no Stockholder shall, without the prior written consent of Parent, directly or indirectly (i) during the term of this Agreement grant any proxies or enter into any voting trust, power of attorney or other agreement or arrangement with respect to the voting of such Stockholder's Shares, (ii) during the term of this Agreement sell, tender, assign, transfer, encumber or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the direct or indirect sale, assignment, transfer, encumbrance or other disposition of any of such Stockholder's Shares (other than pursuant to Section 4) or (iii) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby. Each Stockholder hereby waives, and agrees not to exercise or assert, any appraisal rights under Section 262 of the DGCL in connection with the Merger. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall prohibit a transfer of any shares of Company Common Stock by a Stockholder (A) if such Stockholder is an individual (1) to any member of such Stockholder's immediate family or to a trust for the benefit of such Stockholder or any member of such Stockholder's immediate family or (2) upon the death of such Stockholder or (B) if such Stockholder is a partnership or limited liability company, to one or more partners or members of such Stockholder or to an affiliated corporation under common control with such Stockholder; provided, however, that a transfer referred to in this sentence shall be permitted only if, as a precondition to such transfer, the transferee agrees in a writing, reasonably satisfactory in form and substance to Parent, to be bound by all of the terms of this Agreement.

Section 8. No Solicitations. Each Stockholder and its affiliates (other than the Company and its Subsidiaries) will immediately cease any existing discussions or negotiations with any third parties conducted prior to the date hereof with respect to any Takeover Proposal. Each Stockholder agrees that it will not, directly or indirectly, take any action that the Company is prohibited from taking pursuant to Section 5.02 of the Merger Agreement.

Section 9. Actions by Board; Company Breach. No action taken by the Board of Directors of the Company and no breach by the Company of any of its representations, warranties, agreements or covenants set forth in the Merger Agreement shall modify, alter, change or otherwise affect the obligations of the Stockholders hereunder.

Section 10. Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Laws thereof.

Section 11. Consent to Jurisdiction; Service of Process; Venue. Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the Delaware Court of Chancery (and if jurisdiction in the Delaware Court of Chancery shall be unavailable, the Federal court of the United States of America sitting in the State of Delaware) for the purposes of any suit, action or other proceeding arising out of the Transaction Agreements or any transaction contemplated by the Transaction Agreements (and agrees that no such action, suit or proceeding relating to the Transaction Agreements shall be brought by it or any of its Subsidiaries (if not an individual) or affiliates except in such courts). Each of the parties further agrees that, to the fullest extent permitted by applicable Law, service of any process, summons, notice or document by U.S. registered mail to such person's respective address set forth below shall be effective service of process for any action, suit or proceeding in the State of Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties hereto irrevocably and unconditionally waives (and agrees not to plead or claim) any objection to the laying of venue of any action, suit or proceeding arising out of the Transaction Agreements or the transactions contemplated by the Transaction Agreements in the Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in the Federal court of the United States of America sitting in the State of Delaware) or that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 12. Waiver of Jury Trial. Each party hereto hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any suit, action or other proceeding directly or indirectly arising out of, under or in connection with the Transaction Agreements. Each party hereto (a) certifies that no Representative of any other party has represented, expressly or otherwise, that such party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement, by, among other things, the mutual waiver and certifications in this Section 12.

Section 13. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and shall be deemed given when so delivered by hand or sent by facsimile, or if mailed, three days after mailing

(one business day in the case of express mail or overnight courier service), as follows (or at such other address for a party as shall be specified by notice given in accordance with this Section 13):

if to Parent or Sub, to:

Bristol-Myers Squibb Company
345 Park Avenue
New York, NY 10154-0037
Facsimile: (212) 546-9562
Attention: General Counsel

with a copy to:

Bristol-Myers Squibb Company
Route 206 and Province Line Road
Princeton, NJ 08543-4000
Facsimile: (609) 252-7680
Attention: Vice President, Corporate Development

and with a copy to:

Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019

Facsimile: (212) 474-3700
Attention: Susan Webster, Esq.
Ronald Cami, Esq.

If to any Stockholder, to such
Stockholder at the address set
forth on Schedule A hereto

Section 14. Entire Agreement; No Third-Party Beneficiaries; Amendments. This Agreement (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and (b) is not intended to confer upon any person other than the parties thereto (and their respective successors and assigns) any rights (legal, equitable or otherwise) or remedies, whether as third party beneficiaries or otherwise. This Agreement may be amended only by a written instrument duly executed by Parent, Sub and the holders of all the Stockholders' Shares.

Section 15. Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise without the prior written consent of Parent and Sub, on the one hand, or the applicable Stockholder, on the other hand, as applicable, except that Parent or Sub may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly-owned Subsidiary of Parent; but no such assignment shall relieve either Parent or Sub of any of its obligations hereunder. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable against (i) as to each Stockholder, such Stockholder and such Stockholder's beneficiaries or successors, and (ii) Parent and Sub and their successors and permitted assigns. Each Stockholder agrees that this Agreement and the obligations of such Stockholder hereunder shall attach to such Stockholder's Shares and shall be binding upon any person or entity to

which legal or beneficial ownership of such Stockholder's Shares shall pass, whether by operation of law or otherwise, including such Stockholder's heirs, guardians, administrators or successors, as applicable.

Section 16. Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

Section 17. Further Action. From time to time, at the request of Parent or Sub and without further consideration, each Stockholder shall execute and deliver to Parent and Sub such documents and take such action as Parent or Sub may reasonably request in order to consummate the transactions contemplated hereby, including vesting in Sub good and valid title to such Stockholder's Shares.

Section 18. Termination. This Agreement, including the Option, shall terminate and be of no further force and effect upon the earliest to occur of (a) the Effective Time, (b) a date selected by Parent, at its option, by written notice to the Stockholders or (c) the termination of the Merger Agreement pursuant to its terms.

Section 19. Survival. None of the representations, warranties, covenants and other agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations and warranties (other than those made in Section 2(j)), covenants and other agreements, shall survive the termination of this Agreement, except for those covenants and agreements contained herein and therein that by their terms apply or are to be performed in whole or in part after such termination, and this Section 19 and Sections 10, 11, 12, 13, 15, 17, 22 and 23.

Section 20. Counterparts. This Agreement may be executed in one or more counterparts (including by facsimile), all of which shall be considered one and the same agreement, and shall become effective when one or more of such counterparts have been signed by each of the parties and delivered to the other parties.

Section 21. Announcements. So long as this Agreement has not been terminated, except as required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system, the parties hereto and their Representatives shall not issue or cause the publication of any press release, public announcement or other public statement, with respect to the transactions contemplated by this Agreement without the prior consent of the other parties hereto, which consent shall not be unreasonably withheld or delayed; provided, however, that nothing in this Agreement shall restrict, limit or otherwise affect Parent's or Sub's ability to issue or cause the publication of any press release, public announcement or other public statement permitted by, or in accordance with the provisions of, Section 6.07 of the Merger Agreement.

Section 22. Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in the Federal court of the United States of America sitting in the State of Delaware), this being in addition to any other remedy to which they are entitled at Law or in equity.

Section 23. Expenses. Whether or not the Option is exercised, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees and expenses; provided that the Company shall pay the legal expenses of the Stockholders associated with the negotiation and preparation, but not the enforcement, of this Agreement.

Section 24. Stockholder Capacity. Each Stockholder signs solely in its capacity as the record holder and beneficial owner of shares of Company Common Stock and nothing herein shall limit or affect any actions taken by any officer or director of the Company or its Subsidiaries in his or her capacity as an officer or director of the Company and no such actions shall be deemed to constitute a breach of or a default under any provision of this Agreement.

Section 25. Parent Actions. Parent shall ensure that Sub duly performs, satisfies and discharges on a timely basis each of the covenants, obligations and liabilities of Sub under this Agreement.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its representatives thereunto duly authorized, all as of the day and year first above written.

		BRISTOL-MYERS SQUIBB COMPANY,
		by	/s/ JEREMY LEVIN
			Name: Dr. Jeremy Levin Title: Senior Vice President, External Science
		KB ACQUISITION CORP.,
		by	/s/ P. JOSEPH CAMPISI, JR.
			Name: P. Joseph Campisi, Jr. Title: Vice President

		CHRISTOPHER WALSH, PH.D.
			/s/ CHRISTOPHER WALSH, PH.D.

		CHAITAN KHOSLA, PH.D.
			/s/ CHAITAN KHOSLA, PH.D.

		JEAN DELEAGE, PH.D.
			/s/ JEAN DELEAGE, PH.D.

		PETER DAVIS, PH.D.
			/s/ PETER DAVIS, PH.D.

		BRUCE A. CHABNER, M.D.
			/s/ BRUCE A. CHABNER, M.D.

		KEVAN CLEMENS, PH.D.
			/s/ KEVAN CLEMENS, PH.D.

		HELEN S. KIM
			/s/ HELEN S. KIM

		GARY S. TITUS
			/s/ GARY S. TITUS

		PETER J. LICARI, PH.D.
			/s/ PETER J. LICARI, PH.D.

		JONATHAN WRIGHT
			/s/ JONATHAN WRIGHT

		PIETER B.M.W.M. TIMMERMANS, PH.D.
			/s/ PIETER B.M.W.M. TIMMERMANS, PH.D.

		PAMELA COHEN M.D.
			/s/ PAMELA COHEN M.D.

		ALTA EMBARCADERO BIOPHARMA PARTNERS II, LLC

		By:	/s/ HILARY STRAIN
			Name: Hilary Strain Title: Vice President of Finance & Administration
		ALTA BIOPHARMA PARTNERS II, L.P. By: Alta Biopharma Management, LLC
			/s/ HILARY STRAIN
			Name: Hilary Strain Title: Vice President of Finance & Administration

SCHEDULE A

Name and address of Stockholder		Number of Shares
Christopher Walsh, Ph.D. c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		60,000
Chaitan Khosla, Ph.D. c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		1,513,027
Jean DeLeage, Ph.D. c/o Alta Partners One Embarcadero Center, Suite 4050 San Francisco, Ca 94111-3734		58,968
Peter Davis, Ph.D. c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		4,000
Bruce A. Chabner, M.D. c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		—
Kevan Clemens, Ph.D. c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		—
Helen S. Kim c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		16,000
Gary S. Titus c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		21,530
Peter J. Licari, Ph.D. c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		9,905
Jonathan Wright c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		2,800
Pieter B.M.W.M. Timmermans, Ph.D. c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		—

Pamela Cohen, M.D. c/o Kosan Biosciences Incorporated 3832 Bay Center Place Hayward, CA 94545		—
Alta BioPharma Partners II L.P. One Embarcadero Center Suite 3700 San Francisco, CA 94111		1,527,778
Alta Embarcadero BioPharma Partners II LLC One Embarcadero Center Suite 3700 San Francisco, CA 94111		66,820

Total		3,280,828

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EXECUTION COPY

SCHEDULE A
EX-99.(D)(C) 12 a2185989zex-99_dc.htm EXHIBIT 99(D)(C)
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STANDSTILL AGREEMENT

This Standstill Agreement (this "Agreement") is entered into as of May 15, 2008 in connection with the Mutual Nondisclosure Agreement (the "Confidentiality Agreement") dated as of April 9, 2008 between BRISTOL-MYERS SQUIBB COMPANY ("BMS"), and KOSAN BIOSCIENCES INCORPORATED (the "Company").

In order to facilitate the exchange of confidential information under the Confidentiality Agreement, and without any obligation of either party hereto to negotiate or enter into any additional agreement or transaction, the parties hereto agree as follows:

1. Standstill. BMS agrees that for the period from the date of this Agreement until the date which is one (1) year after the date hereof (the "Standstill Period"), neither BMS nor any of its controlled affiliates will, directly or indirectly, without the prior written consent of the Company or its Board of Directors:

(a): acquire, offer to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, any securities of the Company entitled to vote in the election of the Company's directors ("Voting Securities") (or direct or indirect rights or options to acquire any Voting Securities);
(b): seek or propose by any action not permitted under this Agreement to influence or control, along or in concert with others, the management, Board of Directors or policies of the Company, or make or in any way participate, directly or indirectly, in any "solicitation" of "proxies" (as such terms are used in the rules of the U.S. Securities and Exchange Commission) to vote any Voting Securities;
(c): make any public announcement with respect to, or submit a proposal for or offer of any merger, recapitalization, reorganization, business combination, tender offer, exchange offer, liquidation, dissolution or other extraordinary transaction involving the Company or any Voting Securities;
(d): take any action that would reasonably be expected to require the Company under applicable law, rule or regulation to make a public announcement regarding any of the types of matters set forth in clauses "(a)", "(b)" or "(c)" above; or
(e): enter into any discussions, negotiations, arrangements or understandings with any third party (other than bona fide advisers) with respect to any of the foregoing, or otherwise form, join or in any way engage in discussions relating to the formation of, or participate in, a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in connection with any of the foregoing; or
(f): make any public announcement requesting or propose by means of a public announcement that the Company amend, waive or consider the amendment or waiver of any provisions set forth in this Section 1.

Notwithstanding anything in this Agreement to the contrary, (i) BMS and its controlled affiliates shall be permitted to communicate directly or indirectly with the Company and its Representatives (as defined in the Confidentiality Agreement) on a confidential basis during the Standstill Period as contemplated by, and in accordance with the terms of, the Confidentiality Agreement and (ii) neither BMS nor any of its controlled affiliates shall be prohibited from acquiring Voting Securities as passive investments by or through (a) a diversified mutual or pension fund managed by an independent investment adviser or pension plan established for the benefit of BMS' or its controlled affiliates' employees, (b) any of BMS' or its controlled affiliates' employee benefit plans or (c) any stock portfolios not controlled by BMS or any of its controlled affiliates which make passive investments in the Company among other companies.

Further, nothing herein shall prevent BMS or any of its controlled affiliates from acquiring securities of, or from entering into any merger or other business combination with, another company or other person (a "BMS Acquired Person") which beneficially owns Voting Securities provided that

(i) neither BMS nor any of its controlled affiliates assisted, induced or encouraged the BMS Acquired Person to acquire beneficial ownership of any Voting Securities and (ii) such BMS Acquired Person acquired beneficial ownership of all of the Voting Securities beneficially owned by such BMS Acquired Person prior to the commencement of negotiations or discussions with respect to any transaction or series of related transactions in connection with which such BMS Acquired Person became a BMS Acquired Person.

The restrictions set forth in this Section 1 shall terminate immediately in the event of any third party publicly commences (or publicly announces its intention to commence) any attempt to acquire at least thirty five percent (35%) of the outstanding Voting Securities. In addition, the restrictions contemplated by this Section 1 shall be terminated and BMS or any of its controlled affiliates shall be permitted to take any of the actions described in clauses (a) through (and including) (e) of this Section 1 (A) if the Company specifically invites BMS or any of its controlled affiliates in writing to take such actions or (B) if the Company shall have entered into a definitive agreement providing for an Acquisition Transaction (as defined below). For purposes of this Agreement, "Acquisition Transaction" means (1) any direct or indirect divestiture or sale by the Company or any subsidiary of assets, in one or a series of related transactions, for an aggregate consideration equal to at least thirty five percent (35%) of the market capitalization of the Company immediately prior to entering into such transaction or at least thirty five percent (35%) of the Voting Securities or other equity interests in the Company, (2) any tender offer or exchange offer that if consummated could result in any person or group beneficially owning at least thirty five percent (35%) of any class of Voting Securities, or (3) any merger, consolidation, business combination, recapitalization or similar transaction involving the Company representing at least thirty five percent (35%) of the market capitalization of the Company or at least thirty five percent (35%) of the Voting Securities or other equity interests in the Company (other than the issuance of new securities by the Company solely in connection with a bona fide capital raising transaction).

If the Company has entered into, or subsequently enters into, an agreement similar to this Agreement with a third party considering an Acquisition Transaction, and such agreement contains restrictions on such third party that are less restrictive than the restrictions set forth in this Section 1 (or contains no restrictions similar to the restrictions set forth in this Section 1), then (x) the Company shall promptly notify BMS in writing and (y) BMS shall automatically be bound to the restrictions set forth above only to such lesser extent and for such lesser period that such third party is restricted.

The expiration of the Standstill Period will not terminate or otherwise affect any provisions of the Confidentiality Agreement.

2. No Waiver. No failure or delay by the Company or any of its Representatives in exercising any right, power or privilege under this Agreement will operate as a waiver thereof, and no single or partial exercise of any such right, power or privilege will preclude any other or future exercise thereof or the exercise of any other right, power or privilege under this Agreement. Except as otherwise provided in this Agreement, no provision of this Agreement can be waived except by means of a written instrument that is validly executed on behalf of the Company and that refers specifically to the particular provision or provisions being waived or amended.

3. Remedies. BMS shall indemnify and hold harmless the Company and the Company's Representatives against and from, and shall compensate and reimburse the Company and the Company's Representatives for, any damage, loss, claim, liability or expense (including legal fees and the cost of enforcing the Company's rights under this Agreement) arising directly or indirectly out of or resulting directly or indirectly from any breach of this Agreement. BMS acknowledges that money damages may not be a sufficient remedy for any breach of this Agreement by BMS or any of BMS's Representatives and that the Company may suffer irreparable harm as a result of any such breach. Accordingly, the Company will also be entitled to seek equitable relief, including injunction and specific performance, as a remedy for any breach or threatened breach of this Agreement. The indemnification and equitable remedies referred to above will not be deemed to be the exclusive remedies for a breach

of this Agreement, but rather will be in addition to all other remedies available at law or in equity to the Company.

4. Confidentiality Agreement. Sections 9, 12 (first sentence), and 14 through 16 of the Confidentiality Agreement shall apply to this Agreement and each of the parties hereto as if included herein in their entirety.

5. Entire Agreement. This Agreement and the Confidentiality Agreement constitute the entire agreement between BMS and the Company regarding the subject matter hereof and supersede all previous written or oral representations, agreements or understandings between the parties with respect to the subject matter hereof. This Agreement may not be changed, modified, amended or supplemented except by a written instrument signed by both parties.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date written above.

BRISTOL-MYERS SQUIBB COMPANY		KOSAN BIOSCIENCES INCORPORATED
By:	/s/ CHARLES H. SIMMONS	By:	/s/ JONATHAN K. WRIGHT
Charles H. Simmons (Printed Name)		Jonathan K. Wright (Printed Name)
Vice President, Corp. Development (Title)		SVP–General Counsel (Title)

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STANDSTILL AGREEMENT
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