SC TO-T

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

ENCYSIVE PHARMACEUTICALS INC.

(Name of Subject Company (Issuer))

EXPLORER ACQUISITION CORP.

(Offeror)

a wholly-owned subsidiary of

PFIZER INC.

(Parent of Offeror)

(Names of Filing Persons (identifying status as offeror, issuer or other person))

Common Stock, $0.005 par value per share

(Title of Class of Securities)

29256X107

(CUSIP Number of Class of Securities)

Margaret M. Foran, Esq.

Pfizer Inc.

235 East 42nd Street

New York, NY 10017

Phone (212) 573-2323

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

Copies to:

Raymond O. Gietz, Esq.

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

(212) 310-8000

CALCULATION OF FILING FEE

Transaction Valuation(1)	Amount of Filing Fee(2)
$210,165,550	$8,260

(1)	Estimated for purposes of calculating the filing fee only. The transaction valuation was calculated by adding the sum of (i) 80,962,765 shares of common stock, par value $0.005 per share, of Encysive Pharmaceuticals Inc. outstanding multiplied by the offer price of $2.35 per share, (ii) 777,079 shares of common stock, par value $0.005 per share, of Encysive Pharmaceuticals Inc., which were subject to issuance pursuant to the exercise of outstanding options that have an exercise price per share of less than $2.35, multiplied by $2.35 and (iii) 7,692,305 shares of common stock, par value $0.005 per share, of Encysive Pharmaceuticals Inc., which were subject to issuance pursuant to the exercise of outstanding warrants, multiplied by $2.35. The calculation of the filing fee is based on Encysive Pharmaceuticals Inc.’s representation of its capitalization as of February 15, 2008.
(2)	The filing fee was calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934 by multiplying the transaction value by 0.00003930.
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: None	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:

þ  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 (which, together with any amendments and supplements thereto, collectively constitute this “Schedule TO”) is filed by (i) Explorer Acquisition Corp., a Delaware corporation (the “Purchaser”), and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), and (ii) Pfizer. This Schedule TO relates to the offer (the “Offer”) by the Purchaser to purchase all of the outstanding shares of common stock, par value $0.005 per share (including the associated preferred stock purchase rights, the “Shares”), of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), at a purchase price of $2.35 per Share (the “Offer Price”) net to the seller in cash, without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 4, 2008 (which, together with any amendments and supplements thereto, collectively constitute 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).

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 Encysive Pharmaceuticals Inc., a Delaware corporation. Encysive’s principal executive offices are located at 4848 Loop Central Drive, Suite 700, Houston, Texas 77081. Encysive’s telephone number at such address is (713) 796-8822.

(b) This Schedule TO relates to the outstanding shares of common stock, par value $0.005 per share, of Encysive. Encysive has advised Pfizer that, on February 15, 2008, there were 80,962,765 Shares issued and outstanding, 7,866,067 Shares reserved and available for issuance upon or otherwise deliverable in connection with the exercise of outstanding options, 7,692,305 Shares reserved and available for issuance upon or otherwise deliverable in connection with the exercise of outstanding warrants and 9,322,001 Shares reserved and available for issuance upon conversion of Encysive’s 2.50% Convertible Notes due 2012.

(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.

This Schedule TO is filed by Pfizer and the Purchaser. The information set forth in the sections of the Offer to Purchase entitled “Certain Information Concerning Pfizer and the Purchaser” and in Schedule I are 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 Pfizer and the Purchaser,” “Background of the Offer; Past Contacts or Negotiations with Encysive,” “Purpose of the Offer; Plans for Encysive” and “The Merger Agreement,” respectively, 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,” “Certain Effects of the Offer,” “Purpose of the Offer; Plans for Encysive,” and “The Merger Agreement,” respectively, 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 Pfizer and the Purchaser,” “Purpose of the Offer; Plans for Encysive,” and “The Merger Agreement” 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 Pfizer and the Purchaser,” “Background of the Offer; Past Contacts or Negotiations with Encysive,” “Purpose of the Offer; Plans for Encysive” and “The Merger Agreement,” respectively, 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 Encysive,” “Certain Conditions of the Offer” and “Certain Legal Matters; Regulatory Approvals,” respectively, 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,” respectively, is incorporated herein by reference.

(a)(4) The information set forth in the sections of the Offer to Purchase entitled “Certain Effects of the Offer,” “Source and Amount of Funds” and “Certain Legal Matters; Regulatory Approvals,” respectively, 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 March 4, 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 Pfizer and Encysive on February 20, 2008, incorporated herein by reference to Exhibit 99.1 to the Schedule TO-C filed by Pfizer on February 20, 2008.
	(a)(5)(B)	Form of Summary Advertisement as published on March 4, 2008 in The Wall Street Journal.
	(a)(5)(C)	Joint Press Release issued by Pfizer and Encysive on March 4, 2008.

2

Exhibit		Exhibit Name
	(b)	Not applicable.
	(d)(1)	Agreement and Plan of Merger, dated as of February 20, 2008, by and among Encysive, Pfizer, and the Purchaser.
	(g)	Not applicable.
	(h)	Not applicable.

* Included in mailing to stockholders.

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

Not applicable.

3

SIGNATURE

After due inquiry and to the best of the knowledge and belief of each of the undersigned, each of the undersigned hereby certifies that the information set forth in this statement is true, complete and correct.

PFIZER INC.

By:  /s/  David Reid

Name:     David Reid

Title:  Assistant Secretary

EXPLORER ACQUISITION CORP.

By:  /s/  Lawrence Miller

Name:     Lawrence Miller

Title:  Vice President

Date: March 4, 2008

4

Exhibit		Exhibit Name
	(a)(1)(A)	Offer to Purchase dated March 4, 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 Pfizer and Encysive on February 20, 2008, incorporated herein by reference to Exhibit 99.1 to the Schedule TO-C filed by Pfizer on February 20, 2008.
	(a)(5)(B)	Form of Summary Advertisement as published on March 4, 2008 in The Wall Street Journal.
	(a)(5)(C)	Joint Press Release issued by Pfizer and Encysive on March 4, 2008.
	(b)	Not applicable.
	(d)(1)	Agreement and Plan of Merger, dated as of February 20, 2008, by and among Encysive, Pfizer, and the Purchaser.
	(g)	Not applicable.
	(h)	Not applicable.

* Included in mailing to stockholders.

5

EX-99.A.1.A

Exhibit (a)(1)(A)

Offer To Purchase For Cash

All Outstanding Shares of Common Stock

of

ENCYSIVE PHARMACEUTICALS INC.

at

$2.35 NET PER SHARE

by

EXPLORER ACQUISITION CORP.

a wholly-owned subsidiary of

PFIZER INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 31, 2008, UNLESS THE OFFER IS EXTENDED.

Explorer Acquisition Corp., a Delaware corporation (“Purchaser”) and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), is offering to purchase all of the outstanding shares of common stock, par value $0.005 per share (including the associated preferred stock purchase rights, the “Shares”), of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), at a purchase price of $2.35 per Share (the “Offer Price”), net to the seller in cash, without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with the Offer to Purchase, each as may be amended or supplemented from time to time, collectively constitute the “Offer”).

The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of February 20, 2008 (as it may be amended from time to time, the “Merger Agreement”), by and among Pfizer, the Purchaser and Encysive. The Merger Agreement provides, among other things, that following the consummation of the Offer and subject to certain conditions, the Purchaser will be merged with and into Encysive (the “Merger”) with Encysive continuing as the surviving corporation, wholly-owned by Pfizer. Each Share outstanding immediately prior to the effective time of the Merger (other than Shares held by Encysive, Pfizer or their wholly-owned subsidiaries, all of which will be cancelled and retired and shall cease to exist, or by stockholders who exercise appraisal rights under Delaware law), will be converted in the Merger into the right to receive $2.35 or any greater per Share price paid in the Offer, without interest thereon and less any required withholding taxes. Under no circumstances will interest be paid on the purchase price for the Shares, regardless of any extension of the Offer or any delay in making payment for the Shares.

The Offer is conditioned upon, among other things, (i) the satisfaction of the Minimum Tender Condition (as described below) and (ii) the expiration or termination of all statutory waiting periods (and any extensions thereof) applicable to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and any applicable foreign antitrust, competition or merger control laws (the “Regulatory Condition”). The Minimum Tender Condition requires that the number of Shares that has been validly tendered and not withdrawn prior to the expiration of the Offer represent more than 50% of the then issued and outstanding Shares (counting as issued and outstanding for these purposes the number of Shares for which then outstanding and unexercised warrants and in-the-money options may be exercised). The Offer also is subject to other conditions set forth in this Offer to Purchase. See Section 15 — “Certain Conditions of the Offer.”

The Encysive Board of Directors, among other things, has unanimously (i) approved and declared advisable, the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of Encysive and the stockholders of Encysive and (iii) recommended that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer and, if necessary, approve the Merger Agreement.

A summary of the principal terms of the Offer appears on pages S-i through S-vii. You should read this entire document carefully before deciding whether to tender your Shares in the Offer.

The Dealer Manager for the Offer is:

March 4, 2008

IMPORTANT

If you wish to tender all or a portion of your Shares in the Offer, you should either (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 your broker, dealer, commercial bank, trust company or other nominee to effect the transaction for you. If you hold Shares in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact that institution in order to tender your Shares.

If you wish 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 you cannot comply with the procedures for book-entry transfer on a timely basis, you may tender your Shares by following the guaranteed delivery procedures described in Section 3 — “Procedures for Accepting the Offer and Tendering Shares.”

Questions and requests for assistance should 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 related Letter of Transmittal, the related Notice of Guaranteed Delivery and other materials related to the Offer may also be obtained at our expense from the Information Agent or the Dealer Manager. Additionally, copies of this Offer to Purchase, the related Letter of Transmittal, the related Notice of Guaranteed Delivery and any other material related to the Offer may be found at www.sec.gov.

TABLE OF CONTENTS

		Page
SUMMARY TERM SHEET			S-i
INTRODUCTION			1
THE TENDER OFFER			2
1.	Terms of the Offer		2
2.	Acceptance for Payment and Payment for Shares		4
3.	Procedures for Accepting the Offer and Tendering Shares		5
4.	Withdrawal Rights		8
5.	Certain United States Federal Income Tax Consequences		9
6.	Price Range of Shares; Dividends		9
7.	Certain Information Concerning Encysive		10
8.	Certain Information Concerning Pfizer and the Purchaser		11
9.	Source and Amount of Funds		12
10.	Background of the Offer; Past Contacts or Negotiations with Encysive		13
11.	The Merger Agreement		16
12.	Purpose of the Offer; Plans for Encysive		24
13.	Certain Effects of the Offer		25
14.	Dividends and Distributions		26
15.	Certain Conditions of the Offer		27
16.	Certain Legal Matters; Regulatory Approvals		28
17.	Appraisal Rights		31
18.	Fees and Expenses		32
19.	Miscellaneous		32
SCHEDULE I: Directors and Executive Officers of Purchaser and Pfizer			I-1

i

SUMMARY TERM SHEET

The information contained in this summary term sheet is a summary only and is not meant to be a substitute for the more detailed description and information contained in the Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery. You are urged to read carefully the Offer of Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery in their entirety. Pfizer and the Purchaser have included cross-references in this summary term sheet to other sections of the Offer to Purchase where you will find more complete descriptions of the topics mentioned below. The information concerning Encysive (as defined below) contained herein and elsewhere in the Offer to Purchase has been provided to Pfizer and the Purchaser by Encysive or has been taken from or is based upon publicly available documents or records of Encysive on file with U.S. securities regulatory authorities or other public sources at the time of the Offer. Pfizer and the Purchaser have not independently verified the accuracy and completeness of such information. Pfizer and the Purchaser have no knowledge that would indicate that any statements contained herein relating to Encysive provided to Pfizer and the Purchaser or taken from or based upon such documents and records filed with the U.S. securities regulatory authorities are untrue or incomplete in any material respect.

Securities Sought	All issued and outstanding shares of common stock, par value $0.005 per share, of Encysive Pharmaceuticals Inc.
Price Offered Per Share	$2.35 in cash, without interest thereon and less any required withholding taxes.
Scheduled Expiration of Offer	12:00 midnight, New York City time, at the end of Monday, March 31, 2008, unless the Offer is otherwise extended. See Section 1 — “Terms of the Offer.”
Purchaser	Explorer Acquisition Corp., a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation.

Who is offering to buy my securities?

We are Explorer Acquisition Corp., a Delaware corporation, formed for the purpose of making this Offer. We are a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation. Pfizer Inc. is a research-based, global pharmaceutical company. Pfizer Inc. discovers, develops, manufactures and markets leading prescription medicines for humans and animals.

Unless the context indicates otherwise, in this Offer to Purchase, we use the terms “us,” “we” and “our” to refer to Explorer Acquisition Corp. and, where appropriate, Pfizer Inc. We use the term “Pfizer” to refer to Pfizer Inc. alone, the term “Purchaser” to refer to Explorer Acquisition Corp. alone and the terms “Encysive” or the “Company” to refer to Encysive Pharmaceuticals Inc.

See the “Introduction” to this Offer to Purchase and Section 8 — “Certain Information Concerning Pfizer and the Purchaser.”

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

We are offering to purchase all of the outstanding shares of common stock, par value $0.005 per share, of Encysive on the terms and subject to the conditions set forth in this Offer to Purchase. Unless the context otherwise requires, in this Offer to Purchase we use the term “Offer” to refer to this offer and the term “Shares” to refer to shares of Encysive common stock that are the subject of the Offer.

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 $2.35 per Share net to you, in cash, without interest thereon and less any required withholding taxes. We refer to this amount as the “Offer Price.” If you are the record owner of your Shares

S-i

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.

Is there an agreement governing the Offer?

Yes. The Purchaser, Pfizer and Encysive have entered into an Agreement and Plan of Merger dated as of February 20, 2008 (as may be amended from time to time, the “Merger Agreement”). The Merger Agreement provides, among other things, for the terms and conditions of the Offer and the subsequent merger of the Purchaser with and into Encysive (the “Merger”).

See Section 11 — “The Merger Agreement” and Section 15 — “Certain Conditions of the Offer.”

Do you have the financial resources to make payment?

Yes. We estimate that we will need approximately $200 million to purchase all of the Shares pursuant to the Offer and to consummate the Merger (which estimate includes payment in respect of outstanding in-the-money options), plus related fees and expenses. Pfizer, our parent company, will provide us with sufficient funds to purchase all Shares properly tendered in the Offer and to provide funding for the Merger with Encysive, 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 our ability to finance the purchase of Shares pursuant to the Offer. In addition, we expect that following completion of the Offer, Encysive may become obligated to pay an aggregate of approximately $144 million to holders of outstanding Encysive warrants and convertible notes pursuant to applicable change-of-control provisions. Pfizer expects to obtain the necessary funds from existing cash balances, cash equivalents and currently available sources of credit.

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, Pfizer, 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?

You will have until 12:00 midnight, New York City time, on Monday, March 31, 2008 (which is the end of the day on March 31, 2008), to tender your Shares in the Offer, unless we extend the Offer. In addition, if we decide to provide a subsequent offering period for the Offer as described below, you will have an additional opportunity to tender your Shares. We do not currently intend to provide a subsequent offering period, although we reserve the right to do so.

S-ii

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 Section 1 — “Terms of the Offer” and Section 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, subject to our rights to terminate the Merger Agreement in accordance with its terms:

•  If at the scheduled initial expiration date of the Offer, any one or more of the Minimum Tender Condition, the Regulatory Condition (each as described below) or certain other conditions (as set forth in paragraphs (a), (b), (e) or (f) of Section 15 — “Certain Conditions of the Offer”) are not satisfied, we must, at the request of Encysive, extend the Offer for a period of up to 10 business days.

•  If at any scheduled extended expiration date of the Offer, the Regulatory Condition or certain other conditions (as set forth in paragraphs (e) or (f) of Section 15 — “Certain Conditions of the Offer”) are not satisfied, we must, at the request of Encysive, extend the Offer for increments of not more than 10 business days until such time as such conditions are satisfied or waived, but in no event beyond August 20, 2008 (the “Outside Date”).

•  We may, without the consent of Encysive, extend the offer for a subsequent offering period of up to 20 business days in accordance with Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

•  We may, without the consent of Encysive, (i) extend the Offer, if at any scheduled expiration date of the Offer any of the conditions to our obligation to purchase the Shares have not been satisfied or waived, for one or more periods of not more than 10 business days each, until such time as such conditions are satisfied or waived, (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “SEC”) or the staff thereof applicable to the Offer, or (iii) extend the Offer for one or more periods for an aggregate period of not more than 20 business days beyond the latest expiration date that would otherwise be permitted if, on such expiration date, there have not been tendered and not withdrawn that number of Shares that, together with any shares then owned by us, would equal 90% or more of the issued and outstanding Shares. If we extend the Offer pursuant to clause (iii), we must waive during such extension certain conditions to our obligation to purchase the Shares (each condition set forth in Section 15 — “Certain Conditions of the Offer” other than the conditions in paragraphs (a), (b) and (f) thereof, the Minimum Tender Condition and the Regulatory Condition).

See Section 1 — “Terms of the Offer” of this Offer to Purchase 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 Computershare Trust Company, N.A., which is 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.

If we must elect to provide or extend any subsequent offering period, a public announcement of such inclusion or extension will be made no later than 9:00 a.m., New York City time, on the next business day following the Expiration Date or date of termination of any prior subsequent offering period.

See Section 1 — “Terms of the Offer.”

S-iii

What are the most significant conditions to the Offer?

The Offer is conditioned upon, among other things:

•  the satisfaction of the Minimum Tender Condition. The Minimum Tender Condition requires that the number of Shares which have been validly tendered in accordance with the terms of the Offer and not withdrawn prior to the expiration of the Offer represents more than 50% of the then issued and outstanding Shares (counting as issued and outstanding for these purposes the number of Shares for which then outstanding and unexercised warrants and in-the-money options may be exercised);

•  the satisfaction of the Regulatory Condition. The Regulatory Condition requires the expiration or termination of all statutory waiting periods (and any extensions thereof) applicable to the purchase of Shares in the Offer under the HSR Act, and any applicable foreign antitrust, competition or merger control laws; and

•  since February 20, 2008, there not having occurred any event, change, or development of a state of facts that, individually or in the aggregate, has had or would reasonably be expected to have, a Company Material Adverse Effect (as defined in the Merger Agreement).

The Offer also is subject to a number of other conditions set forth in this Offer to Purchase. We expressly reserved the right to waive any such conditions, but we cannot, without Encysive’s consent, waive the Minimum Tender Condition or add to or modify the conditions to the Offer in any manner adverse to the holders of the Shares. There is no financing condition to the Offer.

See Section 15 — “Certain Conditions of the Offer.”

How do I tender my Shares?

If you hold your Shares directly as the registered owner, you can tender your Shares in the Offer by delivering the certificates representing your Shares, together with a completed and signed Letter of Transmittal and any other documents required by the Letter of Transmittal, to the Depositary, not later than the date and time the Offer expires. The Letter of Transmittal is enclosed with this Offer to Purchase.

If you hold your Shares in street name through a broker, dealer, commercial bank, trust company or other nominee, the institution that holds your Shares can tender your Shares on your behalf, and may be able to tender your Shares through the Depositary. You should contact the institution that holds your Shares for more details.

If you are unable to deliver everything that is required to tender your Shares to the Depositary by the expiration of the Offer, you may obtain a limited amount of additional time by having a broker, a bank or another fiduciary that is an eligible institution guarantee that the missing items will be received by the Depositary using the enclosed Notice of Guaranteed Delivery. To validly tender Shares in this manner, however, the Depositary must receive the missing items within the time period specified in the notice.

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. In addition, if we have not accepted your Shares for payment by May 2, 2008, you may withdraw them at any time after that date until we accept Shares for payment. This right to withdraw will not, however, 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.”

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What does the Encysive Board think of the Offer?

The Encysive Board of Directors, among other things, has unanimously (i) approved and declared advisable, the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of Encysive and the stockholders of Encysive and (iii) recommended that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer and, if necessary, approve the Merger Agreement.

A more complete description of the reasons of the Encysive Board’s approval of the Offer and the Merger is set forth in the Solicitation/Recommendation Statement on Schedule 14D-9 that is being mailed to you together with this Offer to Purchase.

If a majority of the Shares are tendered and accepted for payment, will Encysive 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, Encysive 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 Encysive’s common stock will no longer be eligible to be traded through the NASDAQ Global Market or other securities exchanges, there may not be an active public trading market for Encysive common stock, and Encysive 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 13 — “Certain Effects of the Offer.”

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

If the Offer is consummated and certain other conditions are satisfied, the Purchaser will merge with and into Encysive and all then outstanding Shares (other than those held by Encysive, Pfizer or their wholly-owned subsidiaries or by stockholders who exercise appraisal rights under Delaware law) will be cancelled and converted in the Merger into the right to receive an amount in cash equal to the highest price per Share paid pursuant to the Offer, without interest thereon and less any required withholding taxes. If we purchase Shares in the Offer, we will have sufficient voting power to approve the Merger without the affirmative vote of any other stockholder of Encysive. Furthermore, if pursuant to the Offer or otherwise we own in excess of 90% of the outstanding Shares, we may effect the Merger without any further action by the stockholders of Encysive.

See Section 11 — “The Merger Agreement.”

If the Merger is consummated, Encysive’s stockholders who do not tender their Shares in the Offer will, unless they validly exercise appraisal rights (as described below), receive the same amount of cash per Share that they would have received had they tendered their Shares in the Offer. Therefore, if the Offer and the Merger are consummated, the only differences to you between tendering your Shares and not tendering your Shares in the Offer are that (i) you will be paid earlier if you tender your Shares in the Offer and (ii) appraisal rights will not be available to you if you tender Shares in the Offer but will be available to you in the Merger. See Section 17 — “Appraisal Rights.” If the Offer is consummated but the Merger is not consummated, however, the number of Encysive’s stockholders and the number of Shares that are still in the hands of the public may be so small that there will no longer be an active public trading market (or, possibly, there may not be any public trading market) for the Shares. Also, as described below, Encysive may cease making filings with the SEC or otherwise may not be required to comply with the rules relating to publicly held companies.

See the “Introduction” to this Offer to Purchase and Section 13 — “Certain Effects of the Offer.”

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

On February 19, 2008, the last full day of trading before the public announcement of the terms of the Offer and the Merger, the reported closing sales price of the Shares on Nasdaq was $1.08 per Share. On

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February 29, 2008, the second to last full day of trading before the commencement of the Offer, the reported closing sales price of the Shares on Nasdaq was $2.30 per Share. The Offer Price represents a premium of 183% over Encysive’s volume weighted average share price for the 20 trading days immediately preceding the public announcement of the Offer and the Merger and a premium of 118% over the closing price on the last full day of trading before the public announcement of the Offer and the Merger.

We encourage you to obtain a recent quotation for Shares of Encysive common stock in deciding whether to tender your Shares.

See Section 6 — “Price Range of Shares; Dividends.”

What is the “Top-Up Option” and when will it be exercised?

Under the Merger Agreement, if we do not acquire at least 90% of the outstanding Shares in the Offer after our acceptance of, and payment for Shares pursuant to the Offer, we have the option, subject to certain limitations, to purchase from Encysive up to a number of additional Shares sufficient to cause us (including any of our subsidiaries) to own one share more than 90% of the Shares then outstanding at a price per Share equal to the Offer Price to enable us to effect a short-form merger. We refer to this option as the “Top-Up Option.”

Will I have appraisal rights in connection with the Offer?

No appraisal rights will be available to you in connection with the Offer. However, stockholders will be entitled to appraisal rights in connection with the Merger if they do not tender Shares in the Offer and do not vote in favor of the Merger, subject to and in accordance with Delaware law. Stockholders must properly perfect their right to seek appraisal under Delaware law in connection with the Merger in order to exercise appraisal rights.

See Section 17 — “Appraisal Rights.”

What will happen to my employee stock options in the Offer?

The Offer is made only for Shares and is not made for any employee stock options to purchase Shares that were granted under any Encysive stock plan (“Options”). Pursuant to the Merger Agreement, each Option that is outstanding immediately prior to the effective time of the Merger will be cancelled and terminated and converted at that time into the right to receive an amount in cash, without interest and less any required withholding taxes, equal to the excess of the Offer Price over the per Share exercise price of the Option for each Share subject to the Option. If the exercise price of the Option equals or exceeds the Offer Price, no cash payment will be due and owing.

What will happen to my Phantom Units in the Offer?

The Offer is made only for Shares and is not made for any Phantom Units granted under any Encysive stock plan (“Phantom Units”). Pursuant to the Merger Agreement, (i) each Phantom Unit will become fully vested and deemed earned in full effective as of the day immediately preceding the date of acceptance for payment of the Shares pursuant to the Offer, (ii) each holder of a Phantom Unit will thereafter become entitled to receive in cash (subject to amounts required to be withheld by law), within 30 days after the day immediately preceding the date of acceptance for payment of the Shares pursuant to the Offer, the amount payable thereunder to the holder thereof pursuant to the terms of such Phantom Unit and the related stock plan under which it was granted and (iii) any forfeiture provisions applicable to the Phantom Units will lapse as of the acceptance for payment of Shares pursuant to the Offer.

What are the material United States federal income tax consequences of tendering Shares?

The receipt of cash in exchange for your Shares in the Offer or the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, you will recognize capital gain or loss in an amount equal to the difference between the amount of cash you receive and your adjusted tax basis in the Shares sold pursuant

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to the Offer or exchanged for cash pursuant to the Merger. This capital gain or loss will be long-term capital gain or loss if you have held the Shares for more than one year as of the date of your sale or exchange of the Shares pursuant to the Offer or the Merger. See Section 5 — “Certain United States Federal Income Tax Consequences” for a more detailed discussion of the tax treatment of the Offer.

We urge you to consult with your own tax advisor as to the particular tax consequences to you of the Offer and the Merger.

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

You may call Georgeson Inc. at (800) 546-8249 (toll-free) or Lazard Frères & Co. LLC at (212) 632-1563. Georgeson Inc. is acting as the information agent (the “Information Agent”) and Lazard Frères & Co. LLC is acting as the dealer manager (the “Dealer Manager”) for our tender offer. See the back cover of this Offer to Purchase for additional contact information.

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To the Holders of Shares of
Common Stock of Encysive Pharmaceuticals Inc.:

INTRODUCTION

We, Explorer Acquisition Corp., a Delaware corporation (the “Purchaser”) and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), are offering to purchase for cash all outstanding shares of common stock, par value $0.005 per share (including the associated preferred stock purchase rights, the “Shares”), of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive” or the “Company”), at a price of $2.35 per Share (the “Offer Price”), net to the seller in cash, without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which collectively, as each may be amended or supplemented from time to time, constitute the “Offer”).

We are making the Offer pursuant to an Agreement and Plan of Merger, dated as of February 20, 2008 (as it may be amended from time to time, the “Merger Agreement”), by and among Pfizer, the Purchaser and Encysive. The Merger Agreement provides, among other things, for the making of the Offer and also provides that following the consummation of the Offer and subject to certain conditions, the Purchaser will be merged with and into Encysive (the “Merger”) with Encysive continuing as the surviving corporation, wholly-owned by Pfizer. 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 Shares held by Encysive, Pfizer or the Purchaser, or their wholly-owned subsidiaries, all of which will be cancelled and retired and shall cease to exist, and any Shares held by stockholders who validly exercise their appraisal rights in connection with the Merger as described in Section 17 — “Appraisal Rights”), will be converted into the right to receive an amount in cash equal to the highest price per Share paid in the Offer, without interest thereon and less any required withholding taxes. The Merger Agreement is more fully described in Section 11 — “The Merger Agreement,” which also contains a discussion of the treatment of employee stock options and phantom units.

Tendering stockholders who are record owners of their Shares and who tender directly to the Depositary (as defined below) 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 Encysive Board of Directors, among other things, has unanimously (i) approved and declared advisable, the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of Encysive and the stockholders of Encysive and (iii) recommended that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer and, if necessary, approve the Merger Agreement.

The Offer is conditioned upon, among other things, (i) the satisfaction of the Minimum Tender Condition (as described below), (ii) the expiration or termination of all statutory waiting periods (and any extensions thereof) applicable to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and any applicable foreign laws regulating antitrust, competition or merger control (the “Regulatory Condition”) and (iii) since February 20, 2008, there not having occurred any event, change, or development of a state of facts that, individually or in the aggregate, has had or would reasonably be expected to have, a Company Material Adverse Effect (as defined in the Merger Agreement). The Minimum Tender Condition requires that the number of Shares which have been validly tendered and not withdrawn prior to the expiration of the Offer represent more than 50% of the then issued and outstanding Shares (counting as issued and outstanding for these purposes the number of Shares for which then outstanding and unexercised warrants and in-the-money options may be exercised). The Offer also is subject to other conditions set forth in this Offer to Purchase. See Section 15 — “Certain Conditions of the Offer.”

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Encysive has advised Pfizer that Morgan Stanley & Co. Incorporated (“Morgan Stanley”), Encysive’s financial advisor, rendered its opinion to Encysive’s Board of Directors to the effect that, as of February 20, 2008 and based upon and subject to the factors and assumptions set forth therein, the Offer Price to be received by the holders of Shares in the Offer and the Merger was fair from a financial point of view to such holders. The full text of Morgan Stanley’s written opinion, dated as of February 20, 2008, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex I to Encysive’s Solicitation/Recommendation Statement on Schedule 14D-9 to be filed with the Securities and Exchange Commission (the “SEC”) and which will be mailed to Encysive’s stockholders with this Offer to Purchase. Morgan Stanley provided its opinion for the information and assistance of Encysive’s Board of Directors in connection with its consideration of the Offer and the Merger. The Morgan Stanley opinion does not constitute a recommendation as to whether or not you should tender Shares in connection with the Offer or how you should vote with respect to the Merger or the adoption of the Merger Agreement or any other matter.

Consummation of the Merger is conditioned upon, among other things, the adoption of the Merger Agreement by the requisite vote of stockholders of Encysive, if required by Delaware law. Under Delaware law, the affirmative vote of a majority of the outstanding Shares is the only vote of any class or series of Encysive’s capital stock that would be necessary to adopt the Merger Agreement at any required meeting of Encysive’s stockholders. If we purchase Shares in the Offer, we will have sufficient voting power to approve the Merger without the affirmative vote of any other stockholder of Encysive. In addition, Delaware law provides that if a corporation owns at least 90% of the outstanding shares of each class of a subsidiary corporation, the corporation holding such stock may merge such subsidiary into itself, or itself into such subsidiary, without any action or vote on the part of the Board of Directors or the stockholders of such other corporation. Under the Merger Agreement, if, after the expiration of the Offer or the expiration of any subsequent offering period, the Purchaser and Pfizer, taken together, own at least 90% of the outstanding Shares (including Shares issued pursuant to the Top-Up Option), Pfizer and Encysive are required to take all necessary and appropriate action to cause the Merger to become effective, without a meeting of the holders of Shares, in accordance with Section 253 of the Delaware General Corporation Law (“DGCL”).

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.

The Purchaser is offering to purchase all of the outstanding Shares of Encysive. According to Encysive, as of February 15, 2008, there were 80,962,765 Shares issued and outstanding, options to purchase 5,032,753 Shares issued and outstanding, 7,866,067 Shares reserved and available for issuance upon or otherwise deliverable in connection with the grant of awards under Encysive’s stock plans or the exercise of options and 7,692,305 Shares reserved and available for issuance upon or otherwise deliverable with the exercise of outstanding warrants.

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), we will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not properly withdrawn as permitted under Section 4 — “Withdrawal Rights.” The term “Expiration Date” means 12:00 midnight, New York City time, at the end of Monday, March 31, 2008, unless we, in accordance with the Merger Agreement, extend 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, among other things, the satisfaction of the Minimum Tender Condition and the other conditions described in Section 15 — “Certain Conditions of the Offer.”

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The Merger Agreement provides that we may, without the consent of Encysive, (i) extend the Offer, if at any scheduled Expiration Date any of the conditions to our obligation to purchase the Shares have not been satisfied or waived, for one or more periods up to 10 business days each until such time as such conditions are satisfied or waived, (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer, or (iii) extend the Offer for one or more periods for an aggregate period of not more than 20 business days beyond the latest Expiration Date that would otherwise be permitted if, on such Expiration Date, there have not been tendered and not withdrawn that number of Shares that, together with any Shares then owned by Pfizer, would equal more than 90% of the issued and outstanding Shares. If we extend the Offer pursuant to clause (iii), the Merger Agreement requires us to waive during such extension certain conditions to our obligation to purchase the Shares (each condition set forth in Section 15 — “Certain Conditions of the Offer” other than the conditions in paragraphs (a), (b) and (f) thereof, the Minimum Tender Condition and the Regulatory Condition). Notwithstanding the foregoing, the Merger Agreement provides that we may, without the consent of Encysive, make available a subsequent offering period (a “Subsequent Offering Period”) in accordance with Rule 14d-11 of the Exchange Act of 1934, as amended (the “Exchange Act”), for up to 20 business days. In addition, subject to our right to terminate the Merger Agreement (described herein under Section 11 — “The Merger Agreement”) in accordance with its terms, (i) if at the initially scheduled Expiration Date, any one or more of the Minimum Tender Condition, the Regulatory Condition or certain other conditions set forth in paragraphs (a), (b), (e) or (f) of Section 15 — “Certain Conditions of the Offer”) are not satisfied, we will, at the request of Encysive, extend the Offer for up to 10 business days and (ii) if at any extended Expiration Date, the Regulatory Condition or certain other conditions (as set forth in paragraphs (e) or (f) of Section 15 — “Certain Conditions of the Offer”) are not satisfied, we will, at the request of Encysive, extend the Offer for increments of not more than 10 business days until such time as such conditions are satisfied or waived but in no event beyond August 20, 2008 (the “Outside Date”).

We have agreed in the Merger Agreement that, without the consent of Encysive, we will not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) waive the Minimum Tender Condition, (iv) add to or modify the conditions to the Offer (as set forth in Section 15 — “Certain Conditions of the Offer”) in any manner adverse to the holders of Shares, (v) extend the Offer, except as described above, (vi) change the form of the consideration payable in the Offer or (vii) otherwise amend the Offer in a manner adverse to the holders of Shares.

If we extend the Offer, are delayed in our acceptance for payment of or payment (whether before or after our acceptance for payment for Shares) for Shares or are unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may retain tendered Shares on our behalf, 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, our ability to delay the payment for Shares that we have accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires us to pay the consideration offered or return the securities deposited by or on behalf of stockholders promptly after the termination or withdrawal of the Offer.

Except as set forth above, and subject to the applicable rules and regulations of the SEC, we expressly reserve the right to waive any condition to the Offer (other than the Minimum Tender Condition, which may not be waived without Encysive’s prior consent), increase the Offer Price and/or modify the other terms of the Offer. Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, and 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. Without limiting the manner in which we may choose to make any public announcement, we currently intend to make announcements regarding the Offer by issuing a press release and making any appropriate filing with the SEC.

If we make a material change in the terms of the Offer or the information concerning the Offer or if we waive a material condition of the Offer, we will disseminate additional tender offer materials and extend the Offer if and to the extent required by Rules 14d-4(d)(1), 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

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or information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information changes. In the SEC’s view, an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to stockholders, and with respect to a change in price or a change in percentage of securities sought, a minimum ten business day period generally is required to allow for adequate dissemination to stockholders and investor response.

If, on or before the Expiration Date, we increase the consideration being paid for Shares accepted for payment in the Offer, such increased consideration will be paid to all stockholders whose Shares are purchased in the Offer, whether or not such Shares were tendered before the announcement of the increase in consideration.

We expressly reserve the right, in our sole discretion, subject to the terms and conditions of the Merger Agreement and the applicable rules and regulations of the SEC, not to accept for payment any Shares if, at the expiration of the Offer, any of the conditions to the Offer have not been satisfied or upon the occurrence of any of the events set forth in Section 15 — “Certain Conditions of the Offer.” Under certain circumstances, we may terminate the Merger Agreement and the Offer.

After the expiration of the Offer and acceptance of the Shares tendered in, and not withdrawn from, the Offer, we may, but are not obligated to, provide one or more subsequent offering periods. A subsequent offering period, if included, will be an additional period of up to 20 business days beginning on the next business day following the Expiration Date, during which any remaining stockholders may tender, but not withdraw, their Shares and receive the Offer Price. If we include a subsequent offering period, we will immediately accept and promptly pay for all Shares that were validly tendered during the initial offering period. During a subsequent offering period, tendering stockholders will not have withdrawal rights, and we will immediately accept and promptly pay for any Shares tendered during the subsequent offering period.

We do not currently intend to provide a subsequent offering period for the Offer, although we reserve the right to do so. If we elect to provide or extend any subsequent offering period, a public announcement of such inclusion or extension will be made no later than 9:00 a.m., New York City time, on the next business day following the Expiration Date or date of termination of any prior subsequent offering period.

Under the Merger Agreement, if we do not acquire at least 90% of the outstanding Shares in the Offer after our acceptance of, and payment for Shares pursuant to the Offer, we have the option (the “Top-Up Option”), exercisable upon the terms and conditions set forth in the Merger Agreement, to purchase from Encysive up to that number of Shares equal to a number of Shares that, when added to the number of Shares directly or indirectly owned by Pfizer at the time of such exercise, will constitute one share more than 90% of the Shares outstanding immediately after exercise of the Top-Up Option at a price per Share equal to the Offer Price.

Encysive has provided us with Encysive’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 Encysive’s stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons 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.

Subject to the satisfaction or waiver of all the conditions to the Offer set forth in Section 15 — “Certain Conditions of the Offer,” we will accept for payment and pay for Shares validly tendered and not withdrawn pursuant to the Offer on or after the Expiration Date. If we commence a subsequent offering period in connection with the Offer, we will immediately accept for payment and pay as soon as possible for all additional Shares tendered during such subsequent offering period, subject to and in compliance with the requirements of Rule 14d-11(e) under the Exchange Act. Subject to compliance with Rule 14e-1(c) under the

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Exchange Act, we expressly reserve 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 and any applicable foreign antitrust, competition or merger control laws. See Section 16 — “Certain Legal Matters; Regulatory Approvals.”

In all cases, we will pay for Shares accepted for payment pursuant to the Offer 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 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, we will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn as, if and when we give oral or written notice to the Depositary of our 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 us and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. If we extend the Offer, are delayed in our acceptance for payment of Shares or are unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may retain tendered Shares on our behalf, 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. Under no circumstances will we pay interest on the purchase price for Shares by reason of any extension of the Offer or any delay in making such payment.

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, or (ii) the

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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, 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.

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 us, 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 (3) 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.

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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. Our acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and us 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 us, in our sole discretion, which determination shall be final and binding on all parties. We reserve the absolute right to reject any and all tenders determined by us not to be in proper form or the acceptance for payment of which may, in the opinion of our counsel, be unlawful. We also reserve 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 our satisfaction. 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 tenders or incur any liability for failure to give any such notification. Our 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 as set forth above, the tendering stockholder will irrevocably appoint designees of the Purchaser as such stockholder’s attorneys-in-fact and 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, we accept 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 Encysive’s stockholders, actions by written consent in lieu of any such meeting or otherwise, as they in their sole discretion deem proper. We reserve the right to require that, in order for Shares to be deemed validly tendered, immediately upon the our 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.

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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 May 2, 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 properly 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.

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

We will determine, in our sole discretion, all questions as to the form and validity (including time of receipt) of any notice of withdrawal and our 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.

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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 Encysive 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 Encysive. 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 Encysive 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 Encysive 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 currently trade on the NASDAQ Global Market (“Nasdaq”) under the symbol “ENCY.” According to Encysive, as of February 15, 2008, there were 80,962,765 Shares issued and outstanding; Options to purchase 5,032,753 Shares; 7,866,067 Shares reserved for issuance under the Stock Plans (including upon exercise of the Options); outstanding Warrants exercisable for 7,692,305 Shares and such number of Shares were reserved for issuance upon exercise of the Warrants; $130,000,000 outstanding in aggregate principal amount of Encysive’s 2.50% Convertible Notes due 2012 convertible into 9,322,001 Shares and such number of Shares were reserved for issuance upon conversion of the Notes.

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The following table sets forth, for the periods indicated, the high and low sale prices per Share for each quarterly period within the three preceding fiscal years, as reported by Nasdaq based on published financial sources.

	High		Low
Year Ended December 31, 2005
First Quarter	$	11.80	$	8.73
Second Quarter		11.21		9.42
Third Quarter		13.03		10.67
Fourth Quarter		11.53		7.00
Year Ended December 31, 2006
First Quarter	$	9.88	$	4.60
Second Quarter		7.01		3.37
Third Quarter		7.01		3.69
Fourth Quarter		6.88		4.17
Year Ending December 31, 2007
First Quarter	$	4.04	$	2.59
Second Quarter		4.78		1.71
Third Quarter		2.11		1.47
Fourth Quarter		1.63		0.60
Year Ending December 31, 2008
First Quarter (through February 29, 2008)	$	2.31	$	0.60

On February 19, 2008, the last full day of trading before the public announcement of the terms of the Offer and the Merger, the reported closing sales price of the Shares on Nasdaq was $1.08 per Share. On February 29, 2008, the second to last full day of trading before the commencement of the Offer, the reported closing sales price of the Shares on Nasdaq was $2.30 per Share. The Offer Price represents a premium of 183% over Encysive’s volume weighted average share price for the 20 trading days immediately preceding the public announcement of the Offer and the Merger and a premium of 118% over the closing price on the last full day of trading before the public announcement of the Offer and the Merger. Encysive has never paid any dividends on the Shares. Stockholders are urged to obtain a current market quotation for the Shares.

7.  Certain Information Concerning Encysive.

Except as specifically set forth herein, the information concerning Encysive contained in this Offer to Purchase has been taken from or is based upon information furnished by Encysive or its representatives or upon publicly available documents and records on file with the SEC and other public sources. The summary information set forth below is qualified in its entirety by reference to Encysive’s public filings with the SEC (which may be obtained and inspected as described below) and should be considered in conjunction with the more comprehensive financial and other information in such reports and other publicly available information. We have no knowledge that would indicate that any statements contained herein based on such documents and records are untrue. However, we do not assume any responsibility for the accuracy or completeness of the information concerning Encysive, whether furnished by Encysive or contained in such documents and records, or for any failure by Encysive to disclose events which may have occurred or which may affect the significance or accuracy of any such information but which are unknown to us.

General.  Encysive is a Delaware corporation with its principal offices located at 4848 Loop Central Drive, Suite 700, Houston, Texas, 77081 USA. The telephone number for Encysive is (713) 796-8822. According to Encysive’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007, Encysive is a global biopharmaceutical company that engages in the discovery, development and commercialization of novel, synthetic, small molecule compounds to address unmet medical needs. Encysive’s research and development programs focus predominantly on the treatment and prevention of interrelated diseases of the

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vascular endothelium with expertise in the area of the intravascular inflammatory process and vascular diseases.

Available Information.  The Shares are registered under the Exchange Act. Accordingly, Encysive 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. Information as of particular dates concerning Encysive’s directors and officers, their remuneration, stock options granted to them, the principal holders of Encysive’s securities, any material interests of such persons in transactions with Encysive and other matters is required to be disclosed in proxy statements, the last one having been filed with the SEC on March 27, 2007 and distributed to the Encysive’s stockholders. Such information also will be available in Encysive’s Solicitation/Recommendation Statement on Schedule 14D-9 and the Information Statement. Such reports, proxy statements and other information are available for inspection at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Copies of such information may be obtainable by mail, upon payment of the SEC’s customary charges, by writing to the SEC at 100 F Street, N.E., Washington, D.C. 20549-0213. The SEC also maintains a web site on the Internet at http://www.sec.gov that contains reports, proxy statements and other information regarding registrants, including Encysive, that file electronically with the SEC.

Summary Financial Information.  Set forth below is certain summary financial information for Encysive and its consolidated subsidiaries excerpted from Encysive’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007, and its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006. More comprehensive financial information is included in such reports and other documents filed by Encysive 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.

	Nine Months Ended						Year Ended
	September 30,						December 31,
	2007			2006			2006			2005
	(In thousands, except per share amounts)
Operating Data
Total revenues		23,130			13,555			18,995			14,006
Loss from operations		(77,827	)		(83,873	)		(109,390	)		(76,212	)
Net loss		(86,303	)		(83,589	)		(109,283	)		(74,877	)
Basic and diluted net loss per share:		(1.28	)		(1.43	)		(1.86	)		(1.31	)

	September 30,						December 31,
	2007			2006			2006			2005
	(In thousands)
Balance Sheet Data
Total assets		77,232			69,387			63,137			146,702
Total liabilities		213,834			157,104			156,854			157,437
Stockholder’s equity		(136,602	)		(87,717	)		(93,717	)		(10,735	)

8.  Certain Information Concerning Pfizer and the Purchaser.

Pfizer is a Delaware corporation. Pfizer’s principal executive offices are located at 235 East 42nd Street, New York, New York, 10017 USA. The telephone number of Pfizer’s principal executive offices is (212) 573-2323. Pfizer is a research-based, global pharmaceutical company. Pfizer discovers, develops, manufactures and markets leading prescription medicines for humans and animals.

Purchaser is a Delaware corporation and a wholly-owned subsidiary of Pfizer. Purchaser was organized by Pfizer to acquire Encysive and has not conducted any unrelated activities since its organization. All outstanding shares of the capital stock of the Purchaser are wholly-owned by Pfizer. The Purchaser’s principal

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executive offices are located at the same address as Pfizer’s principal executive office listed above, and its telephone number at that address is the same telephone number as Pfizer’s telephone number listed above.

The name, citizenship, business address, present principal occupation or employment and five-year employment history of each of the directors and executive officers of Purchaser and Pfizer are listed in Schedule I to this Offer to Purchase.

During the last five years, none of Purchaser, Pfizer or, to the best knowledge of Purchaser and Pfizer, any of the persons listed in Schedule I to this Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was 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 such laws.

Except as described in this Offer to Purchase and in Schedule I hereto, (i) none of Pfizer, the Purchaser or, to the best knowledge of Pfizer and the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase or any associate or majority-owned subsidiary of Pfizer 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 Pfizer, the Purchaser or, to the best knowledge of Pfizer and the Purchaser, any of the persons or entities referred to in Schedule I hereto 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 as otherwise described in this Offer to Purchase, none of Pfizer, the Purchaser or, to the best knowledge of Pfizer 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 Encysive, 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 Pfizer, the Purchaser or, to the best knowledge of Pfizer and the Purchaser, any of the persons listed on Schedule I hereto, has had any business relationship or transaction with Encysive 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 Pfizer or any of its subsidiaries or, to the best knowledge of Pfizer, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and Encysive 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 (5) years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

Available Information.  Pfizer is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports and other information with the SEC relating to its business, financial condition and other matters. Such reports and other information are available for inspection and copying at the offices of the SEC in the same manner as set forth with respect to Encysive in Section 7 — “Certain Information Concerning Encysive.”

9.  Source and Amount of Funds.

The Purchaser estimates that it will need approximately $200 million to purchase all of the Shares pursuant to the Offer and to consummate the Merger (which estimate includes payment in respect of outstanding in-the-money options), plus related fees and expenses. Pfizer will provide the Purchaser with sufficient funds to purchase all Shares properly tendered in the Offer and to provide funding for our Merger with Encysive, 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 Pfizer’s or the Purchaser’s ability to finance the purchase of Shares pursuant to the Offer. In addition, Pfizer expects that following

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completion of the Offer, Encysive may become obligated to pay an aggregate of approximately $144 million to holders of outstanding Encysive warrants and convertible notes pursuant to applicable change-of-control provisions. Pfizer expects to obtain the necessary funds from existing cash balances, cash equivalents and currently available sources of credit.

The Purchaser does not think its financial condition is relevant to a decision by the 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, Pfizer, will have sufficient funds available to purchase all Shares successfully tendered in the Offer in light of Pfizer’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 Encysive.

•  On September 11, 2007, representatives of Morgan Stanley contacted Pfizer to ascertain whether Pfizer was interested in considering a possible transaction involving Encysive. At this time, Morgan Stanley provided Pfizer with a draft form of a confidentiality agreement and a two-page informational document on Encysive.

•  On October 3, 2007, representatives of Morgan Stanley again contacted Pfizer for purposes of considering whether Pfizer would have an interest in considering a possible acquisition of or other transaction involving Encysive.

•  On October 9, 2007, Pfizer executed a confidentiality agreement for purposes of receiving detailed information about Encysive, including its proprietary product portfolio.

•  Shortly after the execution of the confidentiality agreement, Morgan Stanley provided Pfizer with a copy of a confidential information memorandum from Encysive containing information about Encysive, its product portfolio, research and development programs, its financial condition and its operations.

•  On October 17, 2007, Pfizer received a letter from Morgan Stanley outlining the procedures for submissions of non-binding indications of interest relating to Encysive, which were to be due on November 20, 2007.

•  On November 2, 2007, Pfizer engaged Lazard Frères & Co. LLC (“Lazard”) to be its financial advisor with respect to a potential transaction involving Encysive.

•  On November 2, 2007, Pfizer submitted to Morgan Stanley technical questions relating to Thelin and TBC-3711 arising from Pfizer’s review of the confidential information memorandum provided by Encysive.

•  On November 7, 2007, representatives of Pfizer spoke by telephone with representatives of Encysive and Morgan Stanley regarding the technical questions previously submitted by Pfizer.

•  On November 16, 2007, Morgan Stanley informed Pfizer that the deadline for the non-binding initial indications of interest involving Encysive would be postponed from November 20 until December 7, 2007.

•  On December 11, 2007, Pfizer submitted a non-binding preliminary indication of interest to acquire 100% of the outstanding capital stock of Encysive at a price of $1.25 per Share. The indication of interest was, among other things, subject to satisfactory completion of due diligence, negotiation of a mutually-acceptable agreement and plan of merger, and approval by Pfizer’s Board of Directors.

•  On December 12, 2007, Morgan Stanley notified Lazard that on the basis of its indication of interest, Pfizer would be admitted to the second round of the auction process. This initial notification was

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followed by a teleconference among representatives of Pfizer, Lazard and Morgan Stanley to outline envisioned next steps.

•  On December 12, 2007, Pfizer received a process letter from Morgan Stanley outlining the procedures for the submission of second-round bids due on January 14, 2008.

•  On December 13, 2007, Pfizer formed an internal team to formally initiate Pfizer’s due diligence and approval process to acquire Encysive. This meeting marked the commencement of Pfizer’s formal internal analysis and strategic review of Encysive.

•  On December 13, 2007, Encysive made an electronic data room available to Pfizer’s representatives and over the next several weeks until signing of the merger agreement, Pfizer conducted documentary and other due diligence of materials made available from time to time in the electronic data room and through numerous telephone conferences and e-mail correspondence with Encysive and its representatives.

•  On December 17, 2007, representatives of Pfizer, Lazard and Morgan Stanley held a teleconference to discuss the process for the submission of second round bids.

•  On December 18 and 21, 2007, representatives of Pfizer conducted scientific due diligence in London, England by assessing electronic data provided by Encysive at the offices of Encysive’s legal advisor, Covington & Burling LLP (“Covington”). Representatives of Encysive were not present.

•  On December 19, 2007, representatives of Pfizer attended a scientific due diligence session in London, England where certain members of Encysive’s senior management team presented a technical overview of Thelin and ongoing clinical and pre-clinical programs.

•  On December 30, 2007, Morgan Stanley informed Pfizer that the deadline for second-round bids, together with a marked-up form of merger agreement, would be extended to January 31, 2008 for all parties.

•  On January 4, 15 and 16, 2008, representatives of Pfizer conducted a scientific due diligence session in London by assessing electronic data provided by Encysive at Covington’s offices. Representatives of Encysive were not present.

•  On January 7 and 14, 2008, telephonic meetings were held between the patent counsel of each of Pfizer and Encysive to review Encysive’s patent portfolio.

•  On January 14, 2008, Morgan Stanley sent Pfizer a draft merger agreement for purposes of Pfizer’s submission of its second-round final bid due on January 31, 2008.

•  On January 16, 2008, representatives of Pfizer, Lazard, Weil, Gotshal & Manges LLP (“Weil,” Pfizer’s legal advisor), Encysive, Morgan Stanley, and Covington convened at Covington’s offices in New York for a corporate overview presented by Encysive’s management. Separate detailed commercial, technical, financial and legal diligence sessions also took place on that date.

•  On January 17, 2008, representatives of Pfizer conducted a scientific due diligence session by assessing electronic data provided by Encysive at Covington’s offices in New York. Representatives of Encysive were not present.

•  On January 22, 2008, Pfizer and Encysive supplemented their confidentiality agreement to provide Pfizer with access to additional confidential information about Encysive.

•  On January 22, 2008, representatives of Pfizer spoke by telephone with representatives of Encysive and Morgan Stanley to discuss drug regulatory matters.

•  On January 23, 24 and 25, 2008, representatives of Pfizer visited Encysive’s third-party contract manufacturing organizations for purposes of Pfizer’s due diligence review.

•  On January 25, 2008, representatives of Pfizer spoke by telephone with representatives of Encysive and Morgan Stanley to discuss scientific matters.

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•  On January 31, 2008, Pfizer submitted its second-round proposal reaffirming its prior indication of interest to acquire Encysive for $1.25 per Share by way of a cash tender offer. The proposal was subject to, among other things, completion of outstanding due diligence, negotiation of a mutually acceptable merger agreement, and approval by the Pfizer Board of Directors. The bid submission included Pfizer’s comments to Encysive’s proposed form of the merger agreement and a list of outstanding due diligence items.

•  On February 1, 2008, Morgan Stanley informed Lazard and Pfizer that it had received several offers but that it contemplated that only two would be considered further by the Encysive Board of Directors: Pfizer’s and a bid for the European assets of Encysive (“European Asset Bid”). Morgan Stanley communicated to Lazard and Pfizer that the cash component of the European Asset Bid provided greater overall value for Encysive’s stockholders.

•  On February 5, 2008, representatives of Pfizer and Lazard again spoke with representatives of Morgan Stanley regarding Pfizer’s proposal. Subsequent to this conversation, Pfizer increased its bid to $1.65 per Share in advance of the Encysive Board of Directors meeting scheduled to take place the following day.

•  On February 7, 2008, Morgan Stanley informed Lazard and Pfizer that the Encysive Board of Directors had directed Encysive to pursue negotiation of the European Asset Bid as the Pfizer bid was still not competitive with the value offered pursuant to the European Asset Bid. Pfizer requested guidance from Morgan Stanley for the price at which Encysive’s Board of Directors would be willing to consider pursuing a transaction with Pfizer involving the sale of all of Encysive as opposed to the European Asset Bid.

•  On February 8, 2008, Morgan Stanley informed Pfizer and Lazard that Pfizer would be required to raise its offer to an amount no less than $2.00 per Share to be competitive with the European Asset Bid.

•  On February 10, 2008, Pfizer increased its bid to $2.00 per Share and was informed by Morgan Stanley that Encysive was prepared to negotiate Pfizer’s proposal, and that the European Asset Bid was no longer under consideration. Later that day, Covington sent a revised draft of the merger agreement to Pfizer and Weil.

•  On February 12, 2008, Morgan Stanley informed Lazard that Encysive had received a bid from another party (but which was subject to certain conditions, including further due diligence) and indicated that yet another bidder had orally committed to raising its bid. Morgan Stanley communicated Encysive’s willingness to proceed in negotiations with Pfizer.

•  On February 13-15, 2008, merger agreement negotiations took place among representatives of Pfizer, Lazard, Weil, Encysive, Morgan Stanley and Covington.

•  On February 16, 2008, Morgan Stanley informed Lazard that Encysive had received a revised offer from a competing party (“Competing Party”) for 100% of the share capital of Encysive at a value greater than $2.00 per Share with more favorable merger agreement terms than those of Pfizer. Morgan Stanley informed Lazard that all bidders had until the evening of Monday, February 18 to submit best and final bids. Lazard requested that the deadline for best and final offers be pushed back to February 19, in light of the holiday on February 18. In a subsequent conversation, Morgan Stanley confirmed to Lazard that both Pfizer and the Competing Party would have until 5:00 pm on February 19 to submit best and final offers.

•  On February 17, 2008, Covington submitted a revised draft merger agreement to Weil.

•  On February 18, 2008, negotiations on the merger agreement and disclosure schedules among representatives of Pfizer, Encysive, Weil, and Covington continued.

•  On February 19, 2008, the Pfizer Board of Directors met and authorized Pfizer to submit a bid at $2.35 per Share and approved the merger agreement and transactions contemplated thereby. Pfizer submitted a revised bid to Morgan Stanley and Encysive. Pfizer’s proposal indicated that it was Pfizer’s expectation to sign and announce the transaction before the open of business the following day. After a

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meeting of the Encysive Board of Directors, Morgan Stanley informed Lazard that the Encysive Board of Directors had accepted Pfizer’s bid. Representatives of Pfizer, Weil, Encysive, and Covington then held numerous telephone conferences to finalize documents for signing.

•  On the morning of February 20, 2008, the Encysive Board of Directors approved the merger and representatives of Pfizer, Explorer Acquisition Corp. and Encysive executed the definitive merger agreement. Shortly thereafter, Pfizer and Encysive issued a joint press release announcing the transaction.

11.  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 filed 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 Merger Agreement is not intended to provide you with any other factual information about Pfizer, the Purchaser or Encysive. Such information can be found elsewhere in this Offer to Purchase.

The Offer.  The Merger Agreement provides for the commencement of the Offer as promptly as reasonably practicable, but in no event later than ten business days after the date of the Merger Agreement, which was February 20, 2008. The obligations of the Purchaser to (and the obligations of Pfizer to cause the Purchaser to) commence the Offer and to accept for payment, and pay for, Shares tendered pursuant to the Offer are subject to the satisfaction or waiver of certain conditions that are described in Section 15 — “Certain Conditions of the Offer.” The Purchaser expressly reserves the right to increase the Offer Price and to extend the Offer to the extent required by law in connection with such increase, to waive any condition to the Offer and/or modify the terms of the Offer, except that without the consent of Encysive, the Purchaser shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) waive the Minimum Tender Condition, (iv) add to or modify the conditions to the Offer (as set forth in Section 15 — “Certain Conditions of the Offer”) in any manner adverse to the holders of Shares, (v) extend the Offer, except as described herein, (vi) change the form of the consideration payable in the Offer or (vii) otherwise amend the Offer in a manner adverse to the holders of Shares.

The Merger Agreement provides that the Purchaser may, without the consent of Encysive, (i) extend the Offer, if at the scheduled Expiration Date any of the conditions to the obligation to purchase the Shares have not been satisfied or waived, for one or more periods up to 10 business days each until such time as such conditions are satisfied or waived, (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer, or (iii) extend the Offer for one or more periods for an aggregate period of not more than 20 business days beyond the latest expiration date that would otherwise be permitted if, on such Expiration Date, there have not been tendered and not withdrawn that number of Shares that, together with any Shares then owned by Pfizer, would equal more than 90% of the issued and outstanding Shares. If the Purchaser extends the Offer pursuant to clause (iii), the Merger Agreement requires the Purchaser to waive during such extension certain conditions to its obligation to purchase the Shares (each condition set forth in Section 15 — “Certain Conditions of the Offer” other than the conditions in paragraphs (a), (b) and (f) thereof, the Minimum Tender Condition and the Regulatory Condition). Notwithstanding the foregoing, the Merger Agreement provides that Pfizer and the Purchaser may, without the consent of Encysive, make available a subsequent offering period (a “Subsequent Offering Period”) in accordance with Rule 14d-11 of the Exchange Act for up to 20 business days. In addition, subject to Pfizer’s right to terminate the Merger Agreement (described herein under Section 11 — “The Merger Agreement”) in accordance with its terms, (i) if at the initially scheduled Expiration Date, any one or more of the Minimum Tender Condition, the Regulatory Condition or certain other conditions set forth in paragraphs (a), (b), (e) or (f) of Section 15 — “Certain Conditions of the Offer” are not satisfied, the Purchaser shall, at the request of Encysive, extend the Offer for up to 10 business days and (ii) if at any extended expiration date of the Offer, the Regulatory Condition or certain other conditions (as set forth in paragraphs (e) or (f) of Section 15 — “Certain Conditions of the Offer”) are not satisfied, at the request of Encysive, Purchaser shall,

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and Pfizer shall cause Purchaser to, extend the Offer for increments of not more than 10 business days until such time as such conditions are satisfied or waived, but in no event beyond August 20, 2008 (the “Outside Date”).

Top-Up Option.  Encysive granted the Purchaser an assignable and irrevocable option to purchase from Encysive the number of newly issued shares of Encysive common stock (the “Top-Up Option Shares”) equal to the number of Shares, when added to the number of Shares owned by Pfizer and its subsidiaries immediately following consummation of the Offer, constitutes one share more than 90% of the number of Shares then outstanding (after giving effect to the issuance of the Top-Up Option Shares) for a cash purchase price per Top-Up Option Share equal to the Offer Price. The maximum number of Shares subject to the Top-Up option shall not exceed the number of Shares equal to 19.9% of the Shares outstanding immediately prior to the issuance of the Top-Up Option Shares. The exercise of the Top-Up Option by Purchaser is subject to certain conditions set forth in Section 2.7 of the Merger Agreement.

The Merger.  The Merger Agreement provides that, at the effective time of the Merger (the “Effective Time”), the Purchaser will be merged with and into Encysive with Encysive being the surviving corporation (the “Surviving Corporation”). Following the Merger, the separate existence of the Purchaser will cease, and Encysive will continue as the Surviving Corporation, wholly-owned by Pfizer. The directors of the Purchaser immediately prior to the Effective Time will be the directors of the Surviving Corporation.

Pursuant to the Merger Agreement, at the Effective Time, each Share that is held by Encysive, Pfizer, the Purchaser or by their wholly-owned subsidiaries, shall automatically be canceled and retired and shall cease to exist, and no cash or other consideration shall be delivered in exchange therefor.

Each Share issued and outstanding immediately prior to the Effective Time (other than Shares to be canceled in accordance with the foregoing sentence and Appraisal Shares (as defined below)) shall be canceled and converted into the right to receive the highest price per Share paid pursuant to the Offer, without interest thereon and less any required withholding taxes (the “Merger Consideration”). As of the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration, without interest.

Shares outstanding immediately prior to the Effective Time held by a holder (if any) who is entitled to demand, and who properly demands, appraisal for such Shares in accordance with Section 262 of the DGCL (“Appraisal Shares”) shall not be converted into a right to receive the Merger Consideration unless such holder fails to perfect or shall have effectively withdrawn or otherwise lost such holder’s right to appraisal, if any. Such stockholders shall be entitled to receive payment of the fair value of such Shares held by them in accordance with the provisions of Section 262 of the DGCL.

Encysive Options, Phantom Units, Restricted Stock and Warrants.  The Merger Agreement provides, that prior to the Effective Time, Encysive will take all actions necessary to provide that each Option (as defined herein) to purchase Shares pursuant to the Stock Plans (as defined herein) outstanding immediately prior to the Effective Time (whether or not then vested or exercisable) will be cancelled and terminated and converted at the Effective Time into the right to receive a cash amount equal to the Option Consideration (as defined herein) for each Share then subject to the Option (without interest and less applicable withholding taxes) or if the Option Consideration is a negative number, no such cash payment will be due and owing. Option Consideration means, with respect to each Share under a particular Option, an amount equal to (i) the Merger Consideration per Share, less (ii) the exercise price payable in respect of each Share under such Option. Options means any option granted, and, immediately before the Effective Time not exercised, expired or terminated, to a current or former employee, director or independent contractor of Encysive or any of its subsidiaries or any former subsidiary or predecessor thereof to purchase Shares pursuant to the Stock Plans. Stock Plans means Encysive’s Amended and Restated 1990 Incentive Stock Option Plan, Amended and Restated 1992 Incentive Stock Option Plan, Amended and Restated 1995 Stock Option Plan, Amended and Restated 1995 Non-Employee Director Stock Option Plan, Amended and Restated 1999 Stock Inventive Plan and 2007 Incentive Plan, as amended. Prior to the Effective Time, Encysive will take all actions necessary to terminate all of the Stock Plans, effective at or before the Effective Time.

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The Merger Agreement further provides that as soon as practicable following the date of the Merger Agreement, Encysive’s Board of Directors (or a committee thereof) shall adopt resolutions or take such other actions required so that, subject to the terms of the Stock Plans and the grants thereunder, (i) each Phantom Unit will become fully vested and deemed earned in full effect as of the day immediately preceding the date of acceptance for payment of the Shares pursuant to the Offer, (ii) each holder of a Phantom Unit will thereafter be entitled to receive cash (less any applicable withholding taxes), within 30 days of the day immediately preceding the date of acceptance for Shares pursuant to the Offer, equal to the amount payable to the holder pursuant to the terms of the Phantom Unit and the related Stock Plan under which it was granted and (iii) any forfeiture provisions applicable to such Phantom Unit will lapse as of the acceptance for payment of Shares pursuant to the Offer. The foregoing is subject to conditions set forth in Section 2.4(b) of the Merger Agreement.

The Merger Agreement further provides that as soon as practicable following the date of the Merger Agreement, Encysive’s Board of Directors (or a committee thereof) shall adopt resolutions or take such other actions required to provide for the lapse as of the acceptance for payment of Shares pursuant to the Offer of all forfeiture provisions applicable to any shares of Restricted Stock (as defined herein) and to permit cashless or net vesting of such shares of Restricted Stock. Each holder of Restricted Stock shall be treated as a holder of the corresponding number of Shares issued and outstanding as of immediately prior to the acceptance for payment of Shares pursuant to the Offer. Restricted Stock means restricted Shares outstanding immediately prior to the Effective Time with respect to which restrictions have not lapsed, and which award shall not have expired or terminated, to a current or former employee, director or independent contractor of Encysive or one of its subsidiaries or any predecessor thereof pursuant to any applicable Stock Plan or any other contract or agreement entered into by Encysive or any of its subsidiaries.

The Merger Agreement further provides that prior to the Effective Time, subject to conditions set forth in Section 6.12 thereof, each outstanding warrant to purchase Shares issued by Encysive pursuant to the Securities Purchase Agreement dated as of August 20, 2007 (the “Warrant”) shall be converted into the right to receive an amount in cash (without interest and less any withholding taxes) equal to the product of (x) the number of Shares for which such Warrant may be exercised and (y) the Merger Consideration.

Representations and Warranties.  In the Merger Agreement, Encysive has made customary representations and warranties to Pfizer and the Purchaser, including representations relating to: organization and authorization of Encysive; Encysive’s capitalization; organization, existence and good standing of Encysive’s subsidiaries; no conflicts with or consents required in connection with the Merger Agreement; Encysive’s public information; no material adverse change; legal proceedings; material contracts; taxes; commissions and fees; employee benefit plans and employment matters; regulatory compliance; intellectual property; insurance; real property; environmental matters; opinion of financial advisor; information supplied; Encysive’s rights agreement; no liquidated damages event; and state takeover statutes.

In the Merger Agreement, Pfizer and the Purchaser have made customary representations and warranties to Encysive, including representations relating to: organization, existence and capitalization; authorization with respect to the Merger Agreement; no conflicts with or consents required in connection with the Merger Agreement; commissions and fees; information supplied; availability of funds; and no additional representations.

Operating Covenants.  The Merger Agreement provides that, from the date of the Merger Agreement to the Effective Time, except as contemplated by the Merger Agreement (including in Encysive’s disclosure schedule) or as required by law, and unless Pfizer otherwise consents in writing, Encysive and its subsidiaries shall (i) conduct their operations according to their ordinary and usual course of business and consistent with past practice (ii) use commercially reasonable efforts to maintain and preserve intact their business organizations and their significant business relationships and (iii) use commercially reasonable efforts to retain the services of their present officers and key employees and to comply in all material respects with all applicable laws and the requirements of all contracts that are material to Encysive and its subsidiaries, taken as a whole, in each case, to the end that their goodwill and ongoing business shall be unimpaired at the Effective Time.

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Between the date of the Merger Agreement and the Effective Time, Encysive is subject to customary operating covenants and restrictions, including restrictions relating to the issuance, sale or pledge of stock; split, combination, subdivision, reclassification, redemption or purchase of outstanding stock and other securities; declaration, setting aside or payment of dividends; purchase, sale or encumbrance of material property or material assets; acquisitions, mergers, consolidations and asset purchases; amendment of charter documents and bylaws; compensation of directors, officers and employees; employee benefits plans; indebtedness; changes in the fiscal year and financial accounting methods; tax issues; lease or sublease of real property; expenditures; contracts; payment, discharge, settlement and satisfaction of liabilities or obligations; collective bargaining agreements or other labor union contracts; discharge or satisfactions of liens; insurance coverage; bankruptcy, liquidation, dissolution or similar proceedings; creation of subsidiaries; and engagement of new business activities.

Stockholders Meeting; Company Recommendation.  The Merger Agreement provides that Encysive will, if the approval of the Merger Agreement by Encysive’s stockholders is required by law, as soon as practicable following expiration of the Offer, hold a meeting of its stockholders for the purpose of approving the Merger Agreement. Pfizer and Purchaser agree to cause all Shares then owned by them and their subsidiaries to be voted in favor of the approval and adoption of the Merger Agreement and the transactions contemplated thereby. Notwithstanding the foregoing, under the Merger Agreement, if Pfizer, Purchaser and any other Pfizer subsidiary shall collectively acquire at least 90% of the then outstanding Shares, the parties shall take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a stockholders’ meeting in accordance with Section 253 of the DGCL.

Pursuant to the Merger Agreement, the Encysive Board shall not (i) withdraw or modify, or propose publicly to withdraw or modify, in a manner adverse to Pfizer, the recommendation by the Encysive Board that its stockholders accept the Offer, tender their Shares to Purchaser pursuant to the Offer and adopt the Merger Agreement (the “Company Recommendation”) or the approval or declaration of the advisability by the Encysive Board of the Merger Agreement and the transactions contemplated thereby (including the Offer and the Merger) or (ii) approve or recommend, or propose publicly to approve or recommend, any Takeover Proposal (as defined below). Any action described in clause (i) or (ii) shall constitute a “Company Adverse Recommendation Change” and shall only be made in accordance with conditions set forth in Section 6.8(c) of the Merger Agreement.

However, the Encysive Board may (i) withdraw or modify the Company Recommendation, (ii) recommend a Takeover Proposal that constitutes a Superior Proposal (as defined below) or (iii) to the extent permitted under the terms of the Merger Agreement, enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal, if the Encysive Board determines in good faith, after consultation with and receiving the advice from outside counsel, that such withdrawal, modification, recommendation or agreement is necessary in order for the Encysive Board to comply with its fiduciary duties to its stockholders under Delaware law. The Merger Agreement further provides that no Company Adverse Recommendation Change may be made in the absence of a Superior Proposal unless such change is based upon an event that is unknown the Encysive Board as of February 20, 2008 but becomes known prior to the acceptance for payment of Shares pursuant to the Offer.

No Solicitation Provisions.  The Merger Agreement provides that Encysive and its subsidiaries, as well as their respective officers, directors, agents and representatives, shall not directly or indirectly, (i) solicit, initiate, or take any action to facilitate or encourage (including by way of furnishing non-public information) the submission of, any Takeover Proposal, (ii) approve or recommend any Takeover Proposal, enter into any agreement, agreement-in- principle or letter of intent with respect to any Takeover Proposal (or resolve to or publicly propose to do any of the foregoing), or (iii) participate or engage in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to, or knowingly take any action to facilitate any inquiries or the making of any proposal that constitutes, or would reasonably be expected to lead to any Takeover Proposal.

However, the Merger Agreement also provides that Encysive may refer any third party to Section 6.8 of the Merger Agreement and if in response to an unsolicited, bona fide written Takeover Proposal made after the

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date of the Merger Agreement, the Encysive Board reasonably determines in good faith (after receiving advice from its financial advisor) that such Takeover Proposal constitutes or is reasonably likely to lead to, a Superior Proposal and with respect to which the Encysive Board determines in good faith, after consultation with and receiving advice from outside counsel, that the taking of such action is necessary in order for the Encysive Board to comply with its fiduciary duties to its stockholders under Delaware law, (i) furnish information with respect to Encysive and its subsidiaries to the person making such Takeover Proposal (and its representatives) that makes such Takeover Proposal but only pursuant to a confidentiality agreement in customary form that is no less favorable to Encysive than the confidentiality agreement with Pfizer (except that such confidentiality agreement shall contain additional provisions that expressly permit Encysive to comply with certain provisions of the Merger Agreement), provided that (A) it may not include any provision calling for an exclusive right to negotiate with Encysive, (2) Encysive provides Pfizer with not less than 24 hours notice of its intention to enter into such confidentiality agreement and (3) Encysive advises Pfizer of all such non-public information delivered to such person concurrently with its delivery to such person and concurrently with its delivery to such person Encysive delivers to Pfizer all such information not previously provided to Pfizer, (ii) conduct discussions or negotiations with such person regarding such Takeover Proposal and (iii) to the extent permitted under the terms of the Merger Agreement, enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal.

The Merger Agreement contains a provision that Encysive shall provide Pfizer with oral and written notice, in no event later than 24 hours after receipt, if any proposal, offer, inquiry or other contact is received by, any information is requested from, or any discussions or negotiations are sought to be initiated or continued with, Encysive with respect of any Takeover Proposal, that indicates the identity of the person making such proposal, offer, inquiry or other contact and the terms and conditions thereof (and shall include with such notice copies of any written materials received from or on behalf of such person relating thereto), and thereafter shall keep Pfizer reasonably informed of all material developments affecting the status and terms of such proposals, offers, inquiries or requests (and Encysive shall provide Pfizer with copies of any additional written materials received therewith) and of the status of such discussions or negotiations.

The Merger Agreement further contains a provision that the Encysive Board may comply with Rule 14d-9 or 14e-2(a) of the Exchange Act or Item 1012(a) of Regulation M-A promulgated under the Exchange Act with regard to an Takeover Proposal if in their good faith judgment (after consultation with outside legal counsel), if the taking of such position or the making of such disclosure is necessary for the Encysive Board to comply with its fiduciary duties under Delaware law. However, the Encysive Board shall not make an Company Adverse Recommendation Change (as described above) unless they determine in their good faith judgment, after consultation with and advice from outside legal counsel, that such withdrawal, modification, recommendation or agreement is necessary to comply with its fiduciary duties to its stockholders under Delaware law.

As used in the Merger Agreement, a “Takeover Proposal” means any inquiry, proposal or offer from any person (other than Pfizer, Purchaser or any of their affiliates) or “group” (as defined in Section 13(d) of the Exchange Act) relating to (A) the direct or indirect acquisition (whether in a single transaction or a series of related transactions) of assets of Encysive and Encysive’s subsidiaries (including securities of Encysive’s subsidiaries) equal to 20% or more of the Encysive’s consolidated assets or to which 20% or more of the Encysive’s revenues or earnings on a consolidated basis are attributable, (B) the direct or indirect acquisition (whether in a single transaction or a series of related transactions) of 20% or more of any class of equity securities of the Encysive, (C) a tender offer or exchange offer that if consummated would result in any person or “group” (as defined in Section 13(d) of the Exchange Act) beneficially owning 15% or more of any class of equity securities of the Encysive or (D) a merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Encysive or any of Encysive’s subsidiaries, in each case, other than the transactions contemplated by the Offer, the Merger and the other transactions contemplated by the Merger Agreement.

As used in the Merger Agreement, a “Superior Proposal” means any bona fide written offer obtained after the date of the Merger Agreement and not in breach of the Merger Agreement to acquire, directly or indirectly, for consideration consisting of cash and/or securities, more than 50% of the outstanding voting equity

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securities of the Encysive or all or substantially all of the assets of the Encysive and the Encysive’s subsidiaries on a consolidated basis, and is on terms that the Encysive Board determines in its good faith judgment (after receipt of the advice of its financial advisor of nationally recognized reputation and outside counsel), taking into account all relevant factors, (A) would, if consummated, result in a transaction that is more favorable to the holders of Encysive common stock from a financial point of view than the transactions contemplated by the Offer, the Merger and the other transactions contemplated by the Merger Agreement (including the terms of any proposal by Pfizer to modify the terms of such transactions) and (B) is reasonably capable of being completed on the terms proposed.

Employment and Employee Benefits.  Pfizer will, until the first anniversary of the closing, provide to employees of Encysive (or its subsidiaries) who are located in the United States (including employees of Encysive or its United States subsidiaries who have been seconded to non-United States incorporated subsidiaries of Encysive (“US Seconded Employees”)) who are retained by Pfizer with employee benefits (excluding equity and change in control plans, programs and arrangements) that are substantially comparable, in the aggregate, to the those benefits provided to them immediately prior to the closing.

Pfizer agreed in the Merger Agreement to honor in accordance with their terms all employment and severance agreements that are disclosed by Encysive in the schedules to the Merger Agreement or filed as exhibits to Encysive’s SEC filings and all accrued benefits vested thereunder; provided that, nothing therein shall prevent Pfizer from amending or terminating any such contract, agreement, plan or commitment in accordance with its terms and applicable law.

Pursuant to the Merger Agreement, for the purposes of all employee benefit plans, programs and arrangements maintained by or contributed to by Pfizer and its subsidiaries (including, after the closing, the Surviving Corporation), Pfizer shall, or shall cause its subsidiaries to, cause each such plan, program or arrangement to treat the prior service with Encysive and its affiliates of each person who is an employee or former employee of Encysive or its subsidiaries immediately prior to the closing who is located in the United States (including US Seconded Employees) as service rendered to Pfizer or its subsidiaries, to the extent permitted by law and applicable tax qualification requirements, for purposes of eligibility to participate and vesting thereunder (but not for any other purpose including, without limitation, for purposes of benefit accrual). However, none of the provisions contained in the Merger Agreement operate to duplicate any benefit or the funding of any such benefit.

Indemnification and Insurance.  The Merger Agreement provides that Pfizer and the Surviving Corporation will indemnify, defend and hold harmless each director or officer who is now, or who has been at any time prior to the date of the Merger Agreement or who becomes prior to the Effective Time an officer or director of Encysive (and its subsidiaries) (the “Indemnified Parties”) against all losses, claims, damages, liabilities, fees, expenses, judgments and fines arising in whole or in part out of actions or omissions in their capacities as such occurring at or prior to the Effective Time, and shall reimburse each Indemnified Party in connection with investigating or defending any such losses, claims, damages, liabilities, fees, expenses, judgments and fines as such expenses are incurred to the fullest extent permitted by applicable law (subject to any limitations on a corporation’s ability to indemnify a director or officer under Delaware law, notwithstanding that such limitations may not otherwise be applicable), for a period of six years after the date of the Effective Time.

Pfizer and the Surviving Corporation agree that all rights to indemnification now existing in favor of the Indemnified Parties as provided in the respective charters or by-laws or pursuant to any other agreements in effect as of the date of the Merger Agreement shall survive the Merger and shall continue in full force and effect until for a period of not less than six years after the Effective Time.

The Merger Agreement also provides that for a period of not less than six years after the Effective Time, the current policies of directors’ and officers’ (D&O) liability insurance maintained by Encysive with respect to claims arising from facts or events which occurred before the Effective Time will be maintained in effect. However, Pfizer or the Surviving Corporation is not required to expend more than an amount per year equal to 200% of current annual premiums paid by Encysive for such insurance to maintain or procure insurance coverage. If the amount of the annual premiums necessary to maintain or procure such insurance coverage

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exceeds such amount, Pfizer and the Surviving Corporation will procure and maintain for such six-year period as much coverage as reasonably practicable for such amount. Pfizer has the right to cause coverage to be extended under Encysive’s D&O insurance by obtaining a six-year “tail” policy on terms and conditions no less advantageous than Encysive’s existing D&O insurance.

Commercially Reasonable Effort to Cause the Merger to Occur.  Each of the parties to the Merger Agreement agrees to use its commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the Offer, the Merger and all other transactions contemplated by the Merger Agreement in the most expeditious manner practicable including, obtaining all consents, approvals and authorizations required for or in connection with the consummation by the parties hereto of the transactions contemplated by the Merger Agreement, the execution of any additional instruments necessary to consummate the transactions contemplated hereby.

Hart-Scott-Rodino (HSR) and other Antitrust Approvals.  The Merger Agreement requires that each of Pfizer, Purchaser and Encysive, as promptly as practicable (and in any event within 10 business days) after the date of the Merger Agreement, make all filings required by each of them under the HSR Act, and any applicable foreign antitrust or competition laws with respect to the Offer, the Merger and the transactions contemplated hereby, and to cooperate with each other in connection with the making of all such filings. Pfizer and Encysive agree to use commercially reasonable efforts to obtain all permits, authorizations, consents, expiration or termination of waiting periods, and approvals from third parties and any federal, state, local or foreign governmental or regulatory authority (“Governmental Entity”) necessary to consummate the Offer, the Merger and the transactions contemplated hereby; provided, however, the parties are not required to defend, contest or otherwise resist any administrative or judicial action or proceeding, including any proceeding by a Governmental Authority or private party, challenging any of the transactions contemplated by the Merger Agreement as violative of any antitrust law.

Directors and Officers.  The Merger Agreement provides that the directors of the Purchaser immediately prior to the Effective Time will become the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation. The officers of the Purchaser immediately prior to the Effective Time shall be the officers of the Surviving Corporation, each to hold office in accordance with the laws of the State of Delaware, the Certificate of Incorporation and Bylaws of the Surviving Corporation. If requested by Pfizer prior to the Effective Time, Encysive will use commercially reasonable efforts to cause each director and officer of each subsidiary of Encysive to execute and deliver a letter effectuating his or her resignation as a director or officer, as the case may be, effective upon the Effective Time.

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 waiver at or prior to the Effective Time of the following conditions:

•  there shall not be any judgment, law or other legal restraint or prohibition in effect which would make the Merger illegal or otherwise prevent or prohibit the consummation thereof; and

•  if required by law, the Merger Agreement and the Merger shall have been approved and adopted by the requisite vote of the holders of Shares.

In addition, the obligations of Pfizer and Purchaser to effect the Merger are subject to the condition that the Purchaser shall have purchased all Shares validly tendered and not withdrawn pursuant to the Offer.

Termination.  The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the Merger Agreement has been adopted by Encysive’s stockholders:

(a) by mutual written consent of the parties;

(b) by either Pfizer or Encysive if (i) the Offer has not been consummated on or before August 20, 2008 or (ii) the Offer is terminated or withdrawn pursuant to its terms and the terms of the Merger Agreement without any Shares being purchased, except that the right to terminate the Merger Agreement

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under either clause (i) or (ii) shall not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of or resulted in the event specified in such clause;

(c) by either Pfizer or Encysive, if any judgment, ruling, order, writ, injunction or decree of any Governmental Authority (“Judgment”) issued by a court of competent jurisdiction or by a Governmental Entity, or law or other legal restraint or prohibition in each case making the Merger illegal or permanently restraining, enjoining or otherwise preventing the consummation thereof shall be in effect and shall have become final and non-appealable; provided that the party seeking the right to terminate the Merger Agreement pursuant to the foregoing shall have used commercially reasonable efforts to resist, lift or resolve such Judgment, law or other legal restraint and the right to terminate pursuant to the foregoing shall not be available if the issuance of such legal restraint or prohibition was primarily due to the failure of such party to perform any of its obligations under the Merger Agreement;

(d) by Pfizer prior to the acceptance of Shares for payment in the Offer, if:

(i) due to a circumstance or occurrence that would result in a failure to satisfy one or more conditions to the Offer (as set forth in Section 15 — “Certain Conditions of the Offer”), Purchaser has failed to commence the Offer;

(ii) (A) a Company Adverse Recommendation Change (as defined above) shall have occurred, (B) the Encysive Board or any committee thereof shall not have rejected any tender or exchange offer that is commenced or a Takeover Proposal (replacing “20%” and “15%” in the definition thereof with 50%) that is made in writing to the Encysive Board and publicly disseminated within 10 business days after the commencement or public dissemination thereof (including, for these purposes, by taking no position with respect to the acceptance by Encysive’s stockholders of a tender offer or exchange offer within such period, which shall constitute a failure to reject such offer) or (C) Encysive shall have willfully violated or breached in any material respect any of its obligations under Section 6.8 of the Merger Agreement entitled “No Solicitation”; or

(iii) if (A) there shall have occurred any event, change, or development of a state of facts that, individually or in the aggregate, has had or would reasonably be expected to have, a Company Material Adverse Effect (as defined in the Merger Agreement) or (B) Encysive shall have breached any of its representations or warranties or failed to perform in any material respect any of its covenants or other agreements, which breach or failure to perform (x) would give rise to the failure of a condition set forth in paragraphs (e) or (f) of Section 15 — “Certain Conditions to the Offer,” and (y) is not curable or has not been cured by Encysive within the later of (I) 15 business days after written notice to Encysive and (II) the next scheduled expiration date of the Offer pursuant to the terms of the Merger Agreement;

(e) by Encysive, if Pfizer shall have breached any of its representations or warranties or failed to perform in any material respect any of its covenants or other agreements in each case contained in this Agreement, which breach or failure to perform (A) has had or would reasonably be expected to have a Parent Material Adverse Effect (as defined in the Merger Agreement), and (B) is not curable or has not been cured by Pfizer within 15 business days after written notice to Pfizer;

(f) by Encysive, if prior to the acceptance of Shares for payment in the Offer, (A) Encysive is in compliance with its obligations under Section 6.8 of the Merger Agreement entitled “No Solicitation,” (B) the Encysive Board has received a Takeover Proposal that it has determined in good faith, after consultation with its financial advisor, constitutes a Superior Proposal, (C) Encysive has notified Pfizer in writing that it intends to enter into a definitive agreement implementing such Superior Proposal, attaching the most current version of such agreement (including any amendments, supplements or modifications) to such notice (a “Superior Proposal Notice”), (D) during the three business day period following Pfizer’s receipt of a Superior Proposal Notice, (1) Encysive shall have offered to negotiate with (and, if accepted, negotiated in good faith with), and shall have caused its respective financial and legal advisors to offer to negotiate with (and, if accepted, negotiate in good faith with), Pfizer in making adjustments to the terms and conditions of this Agreement and (2) Encysive Board shall have determined in good faith, after the

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end of such three business day period, and after considering the results of such negotiations and the revised proposals made by Pfizer, if any, that the Superior Proposal giving rise to such notice continues to be a Superior Proposal; provided that any amendment, supplement or modification to the financial terms or other material terms of any Takeover Proposal shall be deemed a new Takeover Proposal and Encysive may not terminate the Merger Agreement unless Encysive has complied with the requirements of the Merger Agreement with respect to such new Takeover Proposal, including sending a Superior Proposal Notice with respect to such new Takeover Proposal and offering to negotiate for three Business Days from such new Superior Proposal Notice, (E) Encysive prior to, or concurrently with, such termination pays to Pfizer the required fee in accordance with the terms of the Merger Agreement, and (F) Encysive Board concurrently approves, and Encysive concurrently enters into, a definitive agreement providing for the implementation of such Superior Proposal.

Termination Fee.  The Merger Agreement contemplates that a termination fee of $7,700,000 (the “Termination Fee”) will be payable by Encysive to Pfizer under any of the following circumstances in accordance with the terms set forth therein:

•  (i) (A) a Takeover Proposal shall have been made to Encysive or shall have been made directly to its stockholders generally and thereafter, (B) the Merger Agreement is terminated by Encysive or Pfizer pursuant to a cause of termination set forth above in paragraph (b) and (C) Encysive enters into a definitive agreement with respect to, or consummates a transaction contemplated by, any Takeover Proposal (replacing “20%” and “15%” in the definition thereof with “50%”) within 12 months of February 20, 2008 is terminated (so long as, in the case of a transaction that has not been consummated within such period, such transaction is thereafter consummated);

•  (ii) (A) a Takeover Proposal shall have been made to Encysive or shall have been made directly to its stockholders generally and thereafter, (B) the Merger Agreement is terminated by Pfizer pursuant to a cause of termination set forth above in paragraph (d)(iii)(B) as a result of a willful breach by Encysive and (C) Encysive enters into a definitive agreement with respect to, or consummates a transaction contemplated by any Takeover Proposal (replacing “20%” and “15%” in the definition thereof with “50%”) within 12 months of February 20, 2008 is terminated (so long as, in the case of a transaction that has not been consummated within such period, such transaction is thereafter consummated);

•  (iii) the Merger Agreement is terminated by Pfizer pursuant to a cause of termination set forth above in paragraph (d)(ii) (or by Pfizer or Encysive pursuant to a cause of termination set forth above in paragraph (b) or by Pfizer pursuant to a cause of termination set forth above in paragraph (d)(i) or (iii) following any time at which Pfizer was entitled to terminate the Merger Agreement pursuant to a cause of termination set forth above in paragraph (d)(ii)(A) or (B)); or

•  (iv) the Merger Agreement is terminated by Encysive pursuant to a cause of termination set forth above in paragraph (f).

Amendment.  The Merger Agreement may be amended by the parties to the agreement at any time before or after approval of the Merger Agreement by the holders of the Shares; provided, however, after approval of the Merger Agreement by the stockholders of Encysive, there may not be made any amendment that pursuant to Section 251(d) of DGCL 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.

12.  Purpose of the Offer; Plans for Encysive.

Purpose of the Offer.  The purpose of the Offer is for Pfizer, through the Purchaser, to acquire control of, and the entire equity interest in, Encysive. The Offer, as the first step in the acquisition of Encysive, is intended to facilitate the acquisition of all outstanding Shares. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. If the Offer is successful, the Purchaser intends to consummate the Merger as promptly as practicable.

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If you sell your Shares in the Offer, you will cease to have any equity interest in Encysive or any right to participate in its earnings and future growth. If you do not tender your Shares, but the Merger is consummated, you also will no longer have an equity interest in Encysive. Similarly, after selling your Shares in the Offer or the subsequent Merger, you will not bear the risk of any decrease in the value of Encysive.

Short-form Merger.  The DGCL provides that if a parent company owns at least 90% of each class of stock of a subsidiary, the parent company 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, the Top-Up Option or otherwise, Purchaser directly or indirectly owns at least 90% of the Shares, Pfizer and the Purchaser anticipate to effect the Merger without prior notice to, or any action by, any other stockholder of Encysive if permitted to do so under the DGCL. Even if Pfizer and Purchaser do not own 90% of the outstanding Shares following consummation of the Offer, Pfizer and Purchaser could seek to purchase additional Shares in the open market, from Encysive or otherwise in order to reach the 90% threshold and effect a short-form merger. The consideration per Share paid for any Shares so acquired, other than Shares acquired pursuant to the Top-Up Option, may be greater or less than that paid in the Offer.

Plans for Encysive.  Except as otherwise provided herein, it is expected that, initially following the Merger, the business and operations of Encysive will, except as set forth in this Offer to Purchase, be continued substantially as they are currently being conducted. Pfizer will continue to evaluate the business and operations of Encysive during the pendancy of the Offer and after the consummation of the Offer and the Merger and will take such actions as it deems appropriate under the circumstances then existing. Thereafter, Pfizer intends to review such information as part of a comprehensive review of Encysive’s business, operations, capitalization and management with a view to optimizing development of Encysive’s potential in conjunction with Pfizer’s existing business.

Assuming we purchase Shares pursuant to the Offer, Pfizer intends to promptly upon the acceptance for payment of, and payment by the Purchaser for, any Shares pursuant to the Offer (and from time to time thereafter as Shares are acquired by Pfizer or the Purchaser) to designate a number of directors that is the same proportion as the percentage of Shares then beneficially owned by Pfizer with respect to the number of Shares then outstanding, subject to applicable law and Nasdaq rules applicable to Encysive. Under the terms of the Merger Agreement, Encysive is required to use its commercially reasonable efforts to either increase the size of Encysive’s Board of Directors or obtain the resignation of such number of incumbent directors as is necessary to enable Pfizer’s director designees to be elected or appointed to Encysive’s Board of Directors. Encysive also agreed to cause individuals designated by Parent to have the same proportionate representation on (i) each committee of the Encysive’s Board of Directors and (ii) each board of directors and each committee thereof of each subsidiary of Encysive. Following the election or appointment of Pfizer’s designees to the Board of Directors of Encysive and until the Effective Time of the Merger, the approval of a majority of the directors on Encysive’s Board of Directors who were not designated by Pfizer and are not employees of Encysive will be required for approval of certain actions relating to the Merger.

Except as set forth in this Offer to Purchase, the Purchaser and Pfizer have no present plans or proposals that would relate to or result in (i) any extraordinary corporate transaction involving Encysive or any of its subsidiaries (such as a merger, reorganization, liquidation, relocation of any operations or sale or other transfer of a material amount of assets), (ii) any sale or transfer of a material amount of assets of Encysive or any of its subsidiaries, (iii) any material change in Encysive’s capitalization or dividend policy, or (iv) any other material change in Encysive’s corporate structure or business.

13.  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. We 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.

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Stock Quotation.  Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements for continued listing on Nasdaq. According to the published guidelines of The Nasdaq Stock Market, LLC (the “Nasdaq Stock Market”), the Nasdaq Stock Market would consider disqualifying the Shares for listing on Nasdaq (though not necessarily for listing on The Nasdaq Capital Market) if, among other possible grounds, the number of publicly held Shares falls below 750,000, the total number of beneficial holders of round lots of Shares falls below 400, the market value of publicly held Shares over a 30 consecutive business day period is less than $5 million, there are fewer than two active and registered market makers in the Shares over a ten consecutive business day period, Encysive has stockholders’ equity of less than $10 million, or the bid price for the Shares over a 30 consecutive business day period is less than $1. Furthermore, the Nasdaq Stock Market would consider delisting the Shares from Nasdaq altogether if, among other possible grounds, (i) the number of publicly held Shares falls below 500,000, (ii) the total number of beneficial holders of round lots of Shares falls below 300, (iii) the market value of publicly held Shares over a 30 consecutive business day period is less than $1 million, (iv) there are fewer than two active and registered market makers in the Shares over a ten consecutive business day period, (v) the bid price for the Shares over a 30 consecutive business day period is less than $1, or (vi) (A) Encysive has stockholders’ equity of less than $2.5 million, (B) the market value of Encysive’s listed securities is less than $35 million over a ten consecutive business day period, and (C) Encysive’s net income from continuing operations is less than $500,000 for the most recently completed fiscal year and two of the last three most recently completed fiscal years. Shares held by officers or directors of Encysive, or by any beneficial owner of more than 10% of the Shares, will not be considered as being publicly held for this purpose. According to Encysive, as of February 15, 2008, there were 80,962,765 Shares outstanding. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares are either no longer eligible for Nasdaq or are delisted from Nasdaq altogether, the market for Shares will be adversely affected.

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 Encysive 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 Encysive to its stockholders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to Encysive, 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 Encysive and persons holding “restricted securities” of Encysive 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. We intend and will cause Encysive 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. If registration of the Shares is not terminated prior to the Merger, the registration of the Shares under the Exchange Act will be terminated following the consummation of the Merger.

14.  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 Pfizer, Encysive will not, and will not allow its subsidiaries to, declare, set

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aside, make or pay any dividends on or make any distribution payable in cash, capital stock, property or otherwise with respect to Encysive Shares to any holder of Encysive Shares.

15.  Certain Conditions of the Offer.

For the purposes of this Section 15, capitalized terms used but not defined herein will have the meanings set forth in the Merger Agreement. Notwithstanding any other provision of the Offer, the Purchaser shall not be required to accept for payment or, subject to the applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, pay for any Shares tendered pursuant to the Offer, unless (i) the Minimum Tender Condition shall have been satisfied; (ii) the Regulatory Condition shall have been satisfied; (iii) the Purchaser shall have received prior to the expiration of the Offer a certificate signed by the Chief Executive Officer and the principal accounting officer of Encysive, dated as of the date of the scheduled expiration date of the Offer, to the effect that none of the conditions set forth in paragraphs (e) or (f) below exist; and (iv) at the then effective date of the expiration of the Offer, none of the following conditions shall exist:

(a) there shall be any injunction, judgment, ruling, order, decree, action, proceeding or litigation instituted, issued, entered, commenced or pending by any Governmental Authority that would or that seeks or is reasonably likely to (i) restrain, enjoin, prevent, prohibit or make illegal the acceptance for payment, payment for or purchase of some or all of the Shares by Purchaser or Pfizer or the consummation of the Transactions, (ii) impose limitations on the ability of Purchaser, Pfizer or any of their Affiliates effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by them on all matters properly presented to Encysive’s stockholders on an equal basis with all other stockholders (including, without limitation, the adoption of the Merger Agreement and approval of the Transactions), (iii) restrain, enjoin, prevent, prohibit or make illegal, or impose material limitations on, Pfizer’s, Purchaser’s or any of their Affiliates’ ownership or operation of all or substantially all of the businesses and assets of Encysive and Encysive’s Subsidiaries, taken as a whole, or, as a result of the Transactions, of Pfizer and Encysive’s Subsidiaries, taken as a whole, (iv) compel Pfizer, Purchaser or any of their Affiliates to dispose of any Shares or, as a result of the Transactions, compel Pfizer, Purchaser or any of their Affiliates to dispose of or hold separate any material portion of the businesses or assets of Encysive and Encysive’s Subsidiaries taken as a whole, or of Pfizer and its Subsidiaries, taken as a whole, or (v) impose material damages on Pfizer, Encysive or any of their respective Subsidiaries as a result of the Transactions;

(b) there shall be any Law enacted, issued, promulgated, amended or enforced by any Governmental Authority applicable to (i) Pfizer, Encysive or any of their respective Affiliates or (ii) the Transactions (other than the routine application of applicable waiting periods) that results directly or indirectly, in any of the consequences referred to in paragraph (a) above;

(c) (A) since February 20, 2008, there shall have occurred any event, change, or development of a state of facts that, individually or in the aggregate, has had or would reasonably be expected to have, a Company Material Adverse Effect or (B) Encysive or any Ensysive subsidiary shall have become subject to Voluntary Bankruptcy or Involuntary Bankruptcy. Involuntary Bankruptcy means, with respect to Encysive or an Encysive subsidiary, without the consent or acquiescence of Encysive or such Encysive subsidiary, respectively, the entering of an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar Law, or the filing of any such petition against Encysive or such Encysive subsidiary, respectively, or, without the consent or acquiescence of Encysive or an Encysive subsidiary, respectively, the entering of an order appointing a trustee, custodian, receiver or liquidator of Encysive or such Encysive subsidiary, respectively, or of all or substantially all of the property of Encysive or such Encysive subsidiary, respectively, in each case where such petition or order shall remain unstayed or shall not have been stayed or dismissed within 90 days from the entry thereof. Voluntary Bankruptcy means, with respect to Encysive or an Encysive subsidiary, (i) a general assignment by Encysive or such Encysive subsidiary, respectively, for the benefit of creditors, (ii) the filing of any petition or answer by the Encysive or an

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Encysive subsidiary, respectively, seeking to adjudicate itself as bankrupt or insolvent, or seeking for itself any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of Encysive or such Encysive subsidiary, respectively, or its debts under any bankruptcy, insolvency, receivership, winding up, liquidation, reorganization, examination, relief of debtors or other similar Law now or hereafter in effect, or seeking, consenting to or acquiescing in the entry of an order for relief in any case under any such Law, or the appointment of or taking possession by a receiver, trustee, custodian, liquidator, examiner, sequestrator or other similar official for Encysive or an Encysive subsidiary, respectively, or for all or substantially all of its property, or (iii) corporate or other entity action taken by Encysive or an Encysive subsidiary, respectively, to authorize any of the actions set forth above;

(d) a Company Adverse Recommendation Change shall have occurred;

(e) (A) the representations and warranties of Encysive set forth in the Merger Agreement (other than the representations and warranties of Encysive set forth in Sections 3.2(a)-(c), 3.3(a), 3.3(b), 3.9, or 3.11 thereto ) shall not be true and correct as of the date of the Merger Agreement and as of such time, except to the extent such representations and warranties expressly relate to an earlier time (in which case on and as of such earlier time), without regard to materiality or Company Material Adverse Effect qualifiers contained therein, other than for such failures to be true and correct that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect or (B) the representations and warranties of Encysive set forth in Sections 3.2(a)-(c), 3.3(a), 3.3(b), or 3.9 or 3.11 of the Merger Agreement shall not be true and correct in all material respects as of the date of the Merger Agreement and as of such time;

(f) Encysive shall have failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of Encysive to be performed or complied with by it under the Merger Agreement prior to such time; or

(g) the Merger Agreement shall have been terminated in accordance with its terms;

which, in the sole and reasonable judgment of Purchaser or Pfizer, in any such case, makes it inadvisable to proceed with such acceptance for payment or payment.

The foregoing conditions are for the sole benefit of Pfizer and the Purchaser and may be asserted by either of them regardless or the circumstances giving rise to such conditions or may be waived by Pfizer or the Purchaser, in whole or in part at any time and from time to time in the sole discretion of Pfizer or the Purchaser (except for any condition which, pursuant to Section 1.1 of the Merger Agreement, may only be waived with Encysive’s consent). The failure by Pfizer, the Purchaser or any other affiliate of Pfizer 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.

16.  Certain Legal Matters; Regulatory Approvals.

General.  We are not aware of any pending legal proceeding relating to the Offer. Except as described in this Section 16, based on our examination of publicly available information filed by Encysive with the SEC and other information concerning Encysive, we are not aware of any governmental license or regulatory permit that appears to be material to Encysive’s business that might be adversely affected by our 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 Pfizer as contemplated herein. Should any such approval or other action be required, we currently contemplate that, except as described below under “State Takeover Statutes,” such approval or other action will be sought. While we do 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

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result to Encysive’s business, any of which under certain conditions specified in the Merger Agreement, could cause us to elect to terminate the Offer without the purchase of Shares thereunder under certain conditions. See Section 15 — “Certain Conditions of the Offer.”

Antitrust Compliance.  Under the HSR Act, and the related rules and regulations that have been issued by the Federal Trade Commission (the “FTC”), certain transactions may not be consummated until specified information and documentary material (“Premerger Notification and Report Forms”) have been furnished to the FTC and the Antitrust Division of the Department of Justice (the “Antitrust Division”) and certain waiting period requirements have been satisfied. These requirements of the HSR Act apply to the acquisition of Shares in the Offer and the Merger.

Under the HSR Act, our purchase of Shares in the Offer may not be completed until the expiration of a 15 calendar day waiting period following the filing by Pfizer, as the ultimate parent entity of the Purchaser, of a Premerger Notification and Report Form concerning the Offer with the FTC and the Antitrust Division, unless the waiting period is earlier terminated by the FTC and the Antitrust Division. Pfizer expects to file Premerger Notification and Report Forms with the FTC and the Antitrust Division in connection with the purchase of Shares in the Offer and the Merger on March 4, 2008. Accordingly, 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 March 19, 2008, unless earlier terminated by the FTC and the Antitrust Division or unless the FTC or the Antitrust Division issues a request for additional information and documentary material (a “Second Request”) prior to that time. If within the 15 calendar day waiting period either the FTC or the Antitrust Division issues a Second Request, the waiting period with respect to the Offer and the Merger would be extended until 10 calendar days following the date of substantial compliance by Pfizer with that request, unless the FTC or the Antitrust Division terminates the additional waiting period before its expiration. After the expiration of the 10 calendar day waiting period, the waiting period could be extended only by court order or with Pfizer’s consent. In practice, complying with a Second Request can take a significant period of time. Although Encysive is required to file certain information and documentary material with the FTC and the Antitrust Division in connection with the Offer, neither Encysive’s failure to make those filings nor a request for additional documents and information issued to Encysive from the FTC or the Antitrust Division will extend the waiting period with respect to the purchase of Shares in the Offer and the Merger. The Merger will not require an additional filing under the HSR Act if Purchaser owns more than 50 percent of the outstanding Shares at the time of the Merger or if the Merger occurs within one year after the HSR Act waiting period applicable to the Offer expires or is terminated.

The FTC and the Antitrust Division will scrutinize the legality under the antitrust laws of Purchaser’s proposed acquisition of Encysive. At any time before or after Purchaser’s acceptance for payment of Shares pursuant to the Offer, if the Antitrust Division or the FTC believes that the Offer would violate the US federal antitrust laws by substantially lessening competition in any line of commerce affecting US consumers, the FTC and the Antitrust Division have the authority to challenge the transaction by seeking a federal court order enjoining the transaction or, if shares have already been acquired, requiring disposition of such Shares, or the divestiture of substantial assets of Purchaser, Encysive, or any of their respective subsidiaries or affiliates or requiring other conduct relief. US state attorneys general and private persons may also bring legal action under the antitrust laws seeking similar relief or seeking conditions to the completion of the Offer. While Pfizer believes that consummation of the Offer would not violate any antitrust laws, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if a challenge is made, what the result will be. If any such action is threatened or commenced by the FTC, the Antitrust Division or any state or any other person, Purchaser may not be obligated to consummate the Offer or the Merger. See Section 15 — “Certain Conditions of the Offer.”

German Merger Control Law.  Under German merger control law, the purchase of Shares in the Offer must not be completed until the expiration of a one-month waiting period following the Federal Cartel Office (FCO)’s receipt of a complete filing by Pfizer as the ultimate parent company of the Purchaser without any decision of the FCO to enter into an in-depth investigation (Hauptprüfverfahren) has been passed or a clearance has been obtained. Pfizer filed a merger control notification on March 4, 2008 with the FCO. Accordingly, the required waiting period with respect to the Offer and the Merger will expire at 12.00 pm

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CET, on April 4, 2008 unless clearance has been obtained earlier or the FCO has entered into an in-depth investigation prior to that time. If the latter is the case, the waiting period with respect of the Offer and the Merger would be extended until the expiration of four months following the FCO’s receipt of the complete notification, unless clearance has been obtained. After expiration of the four-month waiting period, the waiting period could be extended only with the consent of Encysive and Pfizer.

As long as no clearance has been obtained, it is illegal and subject to administrative fines, to consummate the Offer and the Merger. Agreements concluded under German law would be deemed to be invalid. Within its investigation, the FCO determines whether the Merger would result in the formation or strengthening of a market dominant position of the parties in a relevant market. Should the FCO come to the conclusion that this is the case, it may prohibit the Merger or impose remedies which regularly consist of divestitures of certain businesses or parts of those. If the latter is the case, the Merger may be consummated upon the issuance of the clearance decision (in case of non-conditional remedies which have to be fulfilled later on within a certain time frame) or upon the complete fulfillment of all respective conditions (in case of conditional remedies).

Other Foreign Laws.  Encysive and Pfizer 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. Certain of such filings or approvals, if required or desirable, may not be made or obtained prior to the expiration of the Offer. Pfizer and Encysive are analyzing the applicability of any such laws and currently intend to take such action as may be required or desirable. If any foreign governmental entity takes an action prior to the completion of the Offer that might have certain adverse effects, Purchaser may not be obligated to accept for payment or pay for any Shares tendered. See Section 15 — “Certain Conditions of the Offer.”

State Takeover Laws.  Encysive is incorporated under the laws of the State of Delaware. In general, Section 203 of the DGCL prevents a Delaware corporation from engaging in a “business combination” (defined to include mergers and certain other actions) with an “interested stockholder” (including a person who owns or has the right to acquire 15 percent or more of a corporation’s outstanding voting stock) for a period of three years following the date such person became an “interested stockholder” unless, among other things, the “business combination” is approved by the board of directors of such corporation before such person became an “interested stockholder.” Encysive has elected not to be governed by Section 203 of the DGCL and, therefore, Section 203 of the DGCL is inapplicable to the Merger Agreement and the transactions contemplated therein.

A number of states have adopted laws and regulations applicable to attempts to acquire securities of corporations that are incorporated, or have substantial assets, stockholders, principal executive offices or principal places of business, or whose business operations otherwise have substantial economic effects, in such states. In 1982, 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 acquiror from voting shares of a target corporation without the prior approval of the remaining stockholders where, among other things, the corporation is incorporated, and has a substantial number of stockholders, in the state. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a U.S. federal district court in Oklahoma ruled that the Oklahoma statutes were unconstitutional as applied to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a U.S. 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. In December 1988, a U.S. federal district court in Florida held in Grand Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated Transactions Act and the Florida Control Share Acquisition Act were unconstitutional as applied to corporations incorporated outside of Florida. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of stockholders in the state and were incorporated there.

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Encysive, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws. We do not know whether any of these laws will, by their terms, apply to the Offer or the Merger and have not attempted to comply with any such laws. Should any person seek to apply any state takeover law, we will take such action as then appears desirable, which may include challenging the validity or applicability of any such statute in appropriate court proceedings. In the event any person asserts that the takeover laws of any state are 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, we may be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, we may be unable to accept for payment any Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer and the Merger. In such case, we may not be obligated to accept for payment any Shares tendered in the Offer. See Section 15 — “Certain Conditions of the Offer.”

17.  Appraisal Rights.

No appraisal rights are available with respect to Shares tendered and accepted for purchase in the Offer. However, if the Merger is consummated, stockholders who do not tender their Shares in the Offer will have certain rights under the DGCL to dissent and demand appraisal of, and to receive payment in cash of the fair value of, their Shares. Such rights to dissent, if the statutory procedures are met, could lead to a judicial determination of the fair value of the Shares, as of the day prior to the date on which the stockholders’ vote or other action was taken approving the Merger (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. In addition, such dissenting stockholders would be entitled to receive payment of a fair rate of interest from the date of consummation of the Merger on the amount determined to be the fair value of their Shares. In determining the fair value of the Shares, the court is required to take into account all relevant factors. Accordingly, such determination could be based upon considerations other than, or in addition to, the market value of the Shares, including, among other things, asset values and earning capacity. In Weinberger v. UOP, Inc. , the Delaware Supreme Court stated, among other things, that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered in an appraisal proceeding. Therefore, the value so determined in any appraisal proceeding could be the same as, or more or less than, the Offer Price or the Merger Consideration.

In addition, several decisions by Delaware courts have held that, in certain circumstances, a controlling stockholder of a company involved in a merger has a fiduciary duty to other stockholders that requires that the merger be fair to such other stockholders. In determining whether a merger is fair to minority stockholders, Delaware courts have considered, among other things, the type and amount of consideration to be received by the stockholders and whether there was fair dealing among the parties. The Delaware Supreme Court stated in Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy ordinarily available to minority stockholders in a cash-out merger is the right to appraisal described above. However, a damages remedy or injunctive relief may be available if a merger is found to be the product of procedural unfairness, including fraud, misrepresentation or other misconduct.

If any holder of Shares who demands appraisal under Delaware law fails to perfect, or effectively withdraws or loses his rights to appraisal as provided under Delaware law, each Share of such stockholder will be converted into the right to receive the Offer Price. A stockholder may withdraw his demand for appraisal by delivering to Encysive a written withdrawal of his, her or its demand for appraisal and acceptance of the Merger.

The foregoing discussion is not a complete statement of law pertaining to appraisal rights under Delaware law and is qualified in its entirety by reference to Delaware law.

You cannot exercise appraisal rights at this time. The information set forth above is for informational purposes only with respect to your alternatives if the Merger is consummated. If you are entitled to appraisal rights in connection with the Merger, you will receive additional information concerning appraisal rights and the procedures to be followed in connection therewith, including the text of the relevant provisions of Delaware law, before you have to take any action relating thereto.

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If you sell your Shares in the Offer, you will not be entitled to exercise appraisal rights with respect to your Shares but, rather, will receive the Offer Price therefor.

18.  Fees and Expenses.

Lazard is acting as Dealer Manager in connection with the Offer and has provided certain financial advisory services to Pfizer in connection with the proposed acquisition of Encysive, for which services Lazard will receive customary compensation. Pfizer and the Purchaser have agreed to reimburse Lazard for its reasonable fees and expenses, including the reasonable fees and disbursements of Lazard’s counsel, incurred in connection with Lazard’s engagement, and to indemnify Lazard, and certain related parties against specified liabilities, including liabilities under the federal securities laws. In the ordinary course of business, Lazard and its affiliates may actively trade or hold securities or loans of Pfizer and Encysive for their own accounts or for the accounts of customers and, accordingly, Lazard and/or its affiliates may at any time hold long or short positions in these securities or loans.

Pfizer and the Purchaser have retained Georgeson Inc. to be the Information Agent and Computershare Trust Company, N.A. 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 Pfizer 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. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. 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 the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by the Purchaser.

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 the Dealer Manager or 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 Pfizer 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.

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The Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, together with exhibits furnishing certain additional information with respect to the Offer, and may file amendments thereto. In addition, Encysive 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 Encysive 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 Encysive” above.

Explorer Acquisition Corp.

March 4, 2008

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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PFIZER

1.   DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.

The name, business address, present principal occupation or employment and material occupations, positions, offices or employment for the past five years of each of the directors and executive officers of Explorer Acquisition Corp. are set forth below. The business address and phone number of each such director and executive officer is c/o Pfizer Inc., 235 East 42nd Street, New York, New York 10017, (212) 733-2323. Unless otherwise noted, all directors and executive officers listed below are citizens of the United States.

NAME AND POSITION	PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND EMPLOYMENT HISTORY
David Reid Director	Senior Vice President and Managing Director, Pfizer Inc.’s Legal Division. Mr. Reid has lead the Licensing, Mergers and Acquisitions and Antitrust Center of Excellence in Pfizer’s Legal Division since 2003 and oversees a number of other functions. Prior to joining Pfizer in 1997, he was a partner at the law firm of Allen & Overy.
Douglas E. Giordano President	Vice President, Worldwide Business Development, Pfizer Inc. since April 2007; Vice President, US Planning and Business Development, Pfizer Inc., July 2005-March 2007; Senior Director/Team Leader, US Planning and Business Development, Pfizer Inc., January 2003-June 2005; Director/Team Leader, US Planning and Business Development, Pfizer Inc., January 2000-December 2002.
Lawrence R. Miller Director Vice President	Assistant General Counsel, Licensing and Business Development, Pfizer Inc., since June 2006; Vice President and General Counsel, Enzon Pharmaceuticals, Inc., July 2005- May 2006; Senior Corporate Counsel, Pfizer Inc., November 2002-July 2005; Corporate Counsel, Pfizer Inc., October 2000-November 2002.
Joanne Smith-Farrell Vice President	Senior Director, Business Development, Pfizer Inc. since September 2007; Senior Vice President, Business Development and Licensing, Gene Logic Inc., February 2007-August 2007; Vice President, Corporate Development and Strategy, Gene Logic Inc., December 2004-February 2007; Senior Director, Strategic Marketing, Gene Logic Inc., November 2003-December 2004; President and CEO, emGene, Inc., August 2001-November 2003.
Susan Glimcher Vice President	Tax Counsel, Pfizer Inc., since October 2001.
Susan Grant Secretary	Senior Manager-Corporate Governance, Pfizer Inc. since April 2006. Assistant Secretary of Pfizer since April 2003. Employed by Pfizer since June 2000 in various positions of increasing responsibility within the Corporate Governance group.
Kathleen R. O’Connell Vice President Treasurer	Director, International Treasury, Pfizer Inc since 1995; Director, Cash Management, Pfizer Inc 1993-1995; Manager & Senior Manager, International Treasury, Pfizer Inc. 1988-1993; Senior Auditor, Pfizer Inc, 1986-1988.

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2.   DIRECTORS AND EXECUTIVE OFFICERS OF PFIZER

The name, business address, present principal occupation or employment and material occupations, positions, offices or employment for the past five years of each of the directors and executive officers of Pfizer are set forth below. The business address and phone number of each such director and executive officer is Pfizer Inc., 235 East 42nd Street, New York, New York 10017, (212) 733-2323. All directors and executive officers listed below are citizens of the United States.

NAME AND POSITION	PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND EMPLOYMENT HISTORY
Dennis A. Ausiello, M.D. Director	The Jackson Professor of Clinical Medicine at Harvard Medical School and Chief of Medicine at Massachusetts General Hospital since 1996. President of the Association of American Physicians since 2006. Member of the Institute of Medicine of the National Academy of Sciences and a Fellow of the American Academy of Arts and Sciences. Director of MicroCHIPS (drug delivery technology) and Advisor to the Chairman of the Board of TIAX (formerly Arthur D. Little). A Director of Pfizer Inc. since December 2006.
Michael S. Brown, M.D. Director	Distinguished Chair in Biomedical Sciences from 1989 and Regental Professor from 1985 at the University of Texas Southwestern Medical Center at Dallas. Co-recipient of the Nobel Prize in Physiology or Medicine in 1985 and the National Medal of Science in 1988. Member of the National Academy of Sciences, the Institute of Medicine and Foreign Member of the Royal Society (London). Director of Regeneron Pharmaceuticals, Inc. A Director of Pfizer Inc. since 1996.
M. Anthony Burns Director	Chairman Emeritus since May 2002, Chairman of the Board from May 1985 to May 2002, Chief Executive Officer from January 1983 to November 2000, and President from December 1979 to June 1999 of Ryder System, Inc., a provider of transportation and logistics services. Director of The Black & Decker Corporation, J.C. Penney Company, Inc. and J.P. Morgan Chase & Co. Trustee of the University of Miami. A director of Pfizer Inc. since 1988.
Robert N. Burt Director	Retired Chairman and Chief Executive Officer of FMC Corporation, a company that manufactures chemicals and FMC Technologies, Inc., a company that manufactures machinery. Mr. Burt was Chairman of the Board of FMC Corporation from 1991 to December 2001, its Chief Executive Officer from 1991 to August 2001 and a member of its Board of Directors since 1989. He was Chairman of the Board of FMC Technologies, Inc., from June 2001 to December 2001 and its Chief Executive Officer from June 2001 to August 2001. Director of Phelps Dodge Corporation and Janus Capital Group, Inc. Life Trustee of the Rehabilitation Institute of Chicago and Chicago Symphony Orchestra, and Director of the Chicago Public Education Fund. A director of Pfizer Inc. since June 2000.
W. Don Cornwell Director	Chairman of the Board and Chief Executive Officer since 1988 of Granite Broadcasting Corporation, a group broadcasting company. Director of Avon Products, Inc. and CVS Corporation. Also a Director of Wallace-Reader’s Digest Funds and the Telecommunications Development Fund. Trustee of Big Brothers/Sisters of New York

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NAME AND POSITION PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND EMPLOYMENT HISTORY

	and Mt. Sinai University Medical Center. A director of Pfizer Inc. since February 1997.
William H. Gray III Director	President and Chief Executive Officer of The College Fund/UNCF, an educational assistance organization, since 1991. Mr. Gray served as a Congressman from the Second District of Pennsylvania from 1979 to 1991, and at various times during his tenure, served as Budget Committee Chair and House Majority Whip. Director of Dell Computer Corporation, Electronic Data Systems Corporation, J.P. Morgan Chase & Co., Prudential Financial, Inc., Rockwell Automation Inc., Viacom Inc. and Visteon Corporation. A director of Pfizer Inc. since June 2000.
Constance J. Horner Director	Guest Scholar since 1993 at The Brookings Institution, an organization devoted to nonpartisan research, education and publication in economics, government and foreign policy and the social sciences. Commissioner of the U.S. Commission on Civil Rights from 1993 to 1998. Served at the White House as Assistant to President George H.W. Bush and as Director of Presidential Personnel from August 1991 to January 1993. Deputy Secretary, U.S. Department of Health and Human Services from 1989 to 1991. Director of the U.S. Office of Personnel Management from 1985 to 1989. Director of Ingersoll-Rand Company Limited and Prudential Financial, Inc.; Fellow, National Academy of Public Administration; Trustee, Annie E. Casey Foundation; Director of National Association of Corporate Directors, Member of the Board of Trustees of the Prudential Foundation, Member, U.S. Department of Defense Advisory Committee on Women in the Services. A director of Pfizer Inc. since 1993.
William R. Howell Director	Chairman Emeritus of J.C. Penney Company, Inc., a provider of consumer merchandise and services through department stores, catalog departments and the Internet, since 1997. Chairman of the Board and Chief Executive Officer of J.C. Penney Company, Inc. from 1983 to 1997. Director of American Electric Power Company, Deutsche Bank Trust Company Americas, ExxonMobil Corporation, Halliburton Company, The Williams Companies, Inc. and Viseon, Inc. A director of Pfizer Inc. since June 2000.
Suzanne Nora Johnson Director	Retired Vice Chairman, Goldman Sachs Group, Inc., since January 2007. During her 21 year tenure with Goldman Sachs, Mrs. Johnson served in various leadership roles, including Head of the firm’s Global Healthcare Business, Head of Global Research and Chair of the Global Markets Institute. Director of Intuit and VISA. Board member of the American Red Cross, Brookings Institution, the Carnegie Institution of Washington and the University of Southern California. A Director of Pfizer Inc. since September 2007.
James M. Kilts Director	Founding Partner, Centerview Partners Management, LLC, a financial advisory firm, since 2006. Vice Chairman, The Procter & Gamble Company, 2005-2006. Chairman and Chief Executive Officer, The Gillette Company, 2001-2005 and President, The Gillette Company, 2003-2005. President and Chief Executive Officer, Nabisco

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NAME AND POSITION PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND EMPLOYMENT HISTORY

	Group Holdings Corporation, January 1998 until it’s acquisition by Philip Morris Companies, now Altria, in December 1999. Director of The New York Times Company, Metropolitan Life Insurance Company and Meadwestvaco Corporation. Trustee of Knox College and the University of Chicago, and a member of the Board of Overseers of Weill Cornell Medical College. A Director of Pfizer Inc. since September 2007 and a member of our Compensation Committee.
George A. Lorch Director	Chairman Emeritus of Armstrong Holdings, Inc., a global company that manufactures flooring and ceiling materials, since August 2000. Chairman and Chief Executive Officer of Armstrong Holdings, Inc. from May 2000 to August 2000, and its President and Chief Executive Officer from September 1993 to May 1994. Chairman of Armstrong World Industries, Inc. from May 1994 to May 2000, its President and Chief Executive Officer from September 1993 to May 2000, and a Director from 1988 to November 2000. On December 6, 2000, Armstrong World Industries Inc. filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. Director of Autoliv, Inc., Household International, Inc. and The Williams Companies. A director of Pfizer Inc. since June 2000.
Dana G. Mead Director	Chairman of Massachusetts Institute of Technology since July 1, 2003. Retired Chairman and Chief Executive Officer of Tenneco, Inc. Chairman and Chief Executive Officer of Tenneco, Inc. from 1994 to 1999. Chairman of two of the successor companies of the Tenneco conglomerate, Tenneco Automotive Inc. and Pactiv Corporation, global manufacturing companies with operations in automotive parts and packaging, from November 1999 to March 2000. Director of Zurich Financial Services. Chairman of the Board of the Ron Brown Award for Corporate Leadership. Chairman of the Massachusetts Institute of Technology Corporation and a Lifetime Trustee of the Association of Graduates, U.S. Military Academy, West Point. Former Chairman of the Business Roundtable and of the National Association of Manufacturers. A director of Pfizer Inc. since 1998.
William C. Steere, Jr. Director	Chairman Emeritus of Pfizer Inc. since July 2001. Chairman of Pfizer’s Board from 1992 to April 2001 and Pfizer’s Chief Executive Officer from February 1991 to December 2000. Director of Dow Jones & Company, Inc., Health Management Associates, Inc., MetLife, Inc. and Minerals Technologies Inc. Director of the New York University Medical Center and the New York Botanical Garden. Member of the Board of Overseers of Memorial Sloan-Kettering Cancer Center. A director of Pfizer Inc. since 1987.
Jeffrey B. Kindler Chief Executive Officer and Chairman	Chairman of the Board and Chief Executive Officer of Pfizer Inc. since 2006. Mr. Kindler was previously Senior Vice President and General Counsel of Pfizer Inc. from January 2002 to 2006. Prior to joining Pfizer, Mr. Kindler served as Chairman of Boston Market Corporation, a food service company owned by McDonald’s Corporation, from 2000 to 2001, and President of Partner Brands, also

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NAME AND POSITION PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND EMPLOYMENT HISTORY

	owned by McDonald’s, during 2001. He was Executive Vice President, Corporate Relations and General Counsel of McDonald’s Corporation from 1997 to 2001, and from 1996 to 1997 served as that company’s Senior Vice President and General Counsel. Mr. Kindler was elected to the Board of Directors and appointed Chairman of the Executive Committee effective July 31, 2006.
Frank A. D’Amelio Senior Vice President and Chief Financial Officer	Senior Vice President and Chief Financial Officer of Pfizer Inc. since September 2007. Mr. D’Amelio served as Chief Administrative Officer and Senior Executive Vice President Integration of Alcatel-Lucent since December 2006; Chief Operating Officer of Lucent Technologies from January 2006 through November 2006; and Executive Vice President, Administration, and Chief Financial Officer of Lucent Technologies from May 2001 until January 2006. Mr. D’Amelio began his career in 1979 at Bell Labs, where he held a variety of financial, accounting and general management positions.
Ian C. Read Senior Vice President; President, Worldwide Pharmaceutical Operations	Senior Vice President; President, Worldwide Pharmaceutical Operations, since August 2006. Mr. Read has held various positions of increasing responsibility in pharmaceutical operations. He previously served as Area President, Europe, Canada, Africa and Middle East, Senior Vice President of the Pfizer Pharmaceuticals Group, and Executive Vice President of Europe and Canada. In July 2002 he was appointed President-Europe and Canada. Mr. Read served as President of the Latin American region and was elected a Vice President of Pfizer Inc. in April 2001. Mr. Read, a member of the Pfizer Executive Leadership Team, joined Pfizer Inc. in 1978.
Allen Waxman Senior Vice President and General Counsel	Senior Vice President and General Counsel of Pfizer Inc. since August 2006. Mr. Waxman joined Pfizer Inc. in 2003 as Senior Assistant General Counsel and Chief of Litigation. He was promoted to Associate General Counsel in 2005 and to General Counsel in 2006. Prior to joining Pfizer, Mr. Waxman was a partner at Williams & Connolly, LLP in Washington, D.C., since 1995, and during that same period was an adjunct professor of law at Georgetown University Law Center.
Richard H. Bagger Senior Vice President, Worldwide Public Affairs and Policy	Senior Vice President, Worldwide Public Affairs and Policy, since August 2006. Since joining Pfizer in 1993, Mr. Bagger has held various positions of increasing responsibility in Pfizer’s Corporate Affairs Division. He was promoted to Vice President, Government Relations in 2002 and to Senior Vice President, Government Relations in 2003. He assumed additional responsibility for Public Affairs and Policy in 2005. Prior to joining Pfizer, he was Assistant General Counsel of Blue Cross and Blue Shield of New Jersey and previously practiced law with the firm of McCarter and English. Mr. Bagger also served in both houses of the New Jersey legislature.
Joseph M. Feczko Senior Vice President and Chief Medical Officer	Senior Vice President and Chief Medical Officer of Pfizer Inc. since August 2006. Dr. Feczko has held various positions of increasing responsibility in research and development and medical and regulatory operations. After four years as Medical Director at Glaxo’s

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NAME AND POSITION PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND EMPLOYMENT HISTORY

	Research & Development headquarters in London, Dr. Feczko returned to Pfizer in 1996 and was promoted to the position as Senior Vice President, Medical and Regulatory Operations for Global Pharmaceuticals. He became Chief Medical Officer in 2002. Dr. Feczko, who is board-certified in Internal Medicine and a specialist in infectious diseases, originally joined Pfizer in 1982.
Martin Mackay Senior Vice President; President, Pfizer Global Research & Development	Senior Vice President; President of Pfizer Global Research & Development since October 2007. Early in 2007, he was named Vice President, Pfizer Global Research & Development, Head of Worldwide Development. In 2003, he held the position of Senior Vice President, Head of Worldwide Research and Technology. In 1999, he was the Senior Vice President, Head of Worldwide Discovery. In 1998, he held the position of Vice President, UK Discovery and, in 1997, he was the Senior Director, Head of Biology. Dr. Mackay joined Pfizer in 1995.
Mary McLeod Senior Vice President, Worldwide Human Resources	Senior Vice President of Pfizer’s Worldwide Human Resources, since April 2007. Ms. McLeod served in this role on an interim basis from January to April while she was a consultant at Korn Consulting Group. Prior to that, she led Human Resources for Symbol Technologies from 2005 to 2007 and was the head of Human Resources for Charles Schwab, from 2001 to 2004. From 1999 to 2001, she was Vice President-Human Resources for Cisco Systems and prior to that, Vice President of Human Resources for General Electric Company from 1992 to 1997.
Natale S. Ricciardi Senior Vice President; President, Pfizer Global Manufacturing	Senior Vice President; President, Pfizer Global Manufacturing since October 2004. He held a number of positions of increasing responsibility in manufacturing before being named U.S. Area Vice President/Team Leader for Pfizer Global Manufacturing in 1999. Mr. Ricciardi joined us in 1972. He is a Director of Mediacom Communications Corp.
Sally Susman Senior Vice President - Worldwide Communications, and Chief Communications Officer	Senior Vice President - Worldwide Communications and Chief Communications Officer since February 2008. Prior to joining Pfizer, Ms. Susman held senior level positions at The Estee Lauder Companies, including Executive Vice President from December 2004 to January 2008 and Senior Vice President — Global Communications from September 2000 through November 2004. Earlier in her career, Ms. Susman was responsible for all of American Express International’s internal communications and governmental affairs and spent eight years in government service focused on international trade issues.

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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 Offer is:

If delivering by mail:	If delivering by hand or courier:
Computershare Trust Company, N.A.	Computershare Trust Company, N.A.
c/o Computershare Shareholder Services, Inc.	c/o Computershare Shareholder Services, Inc.
P.O. Box 43011	250 Royall Street
Providence, RI 02940-3014	Canton, MA 02021
Attn: Corporate Actions Voluntary Department	Attn: Corporate Actions Voluntary Department

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 this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or the Dealer Manager. Stockholders may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer.

The Information Agent for the Offer is:

199 Water Street, 26th Floor
New York, NY 10038

Banks and Brokerage Firms, Please call:

(212) 440-9800

Stockholders and All Others Call Toll-Free

(800) 546-8249

The Dealer Manager for the Offer is:

Lazard Frères & Co. LLC
30 Rockefeller Plaza
New York, NY 10020

(212) 632-1563

EX-99.A.1.B

Exhibit (a)(1)(B)

LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
ENCYSIVE PHARMACEUTICALS INC.
at
$2.35 NET PER SHARE
Pursuant to the Offer to Purchase dated March 4, 2008
by
EXPLORER ACQUISITION CORP.
a wholly-owned subsidiary of
PFIZER INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 31, 2008, UNLESS THE
OFFER IS EXTENDED.

The Depositary for the Offer is:

If delivering by mail:	If delivering by hand or courier:
Computershare Trust Company, N.A. c/o	Computershare Trust Company, N.A. c/o
Computershare Shareholder Services, Inc.	Computershare Shareholder Services, Inc.
P.O. Box 43011	250 Royall Street
Providence, RI 02940-3014	Canton, MA 02021
Attn: Corporate Actions Voluntary Department	Attn: Corporate Actions Voluntary Department

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 BELOW, WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE SUBSTITUTE 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.

DESCRIPTION OF SHARES TENDERED
Name(s) and Address(es) of Registered Holder(s)
(Please fill in, if blank, exactly as name(s) appear(s) on certificate(s))
(Attach additional signed list if necessary)	Shares Tendered
		Total Number	Total
		of Shares	Number of
	Certificate	Represented by	Shares
	Number(s)(1)	Certificate(s)(1)	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.

This Letter of Transmittal is to be used by stockholders of Encysive Pharmaceuticals Inc. (“Encysive”), 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

If any Share Certificate you are tendering with this Letter of Transmittal has been lost, stolen, destroyed or mutilated you should contact The Bank of New York Mellon, as Transfer Agent at (877) 295-8607 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.

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Ladies and Gentlemen:

The undersigned hereby tenders to Explorer Acquisition Corp., a Delaware corporation (the “Purchaser”) and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), the above described shares of common stock, par value $0.005 per share (including the associated preferred stock purchase rights, the “Shares”) of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), pursuant to the Purchaser’s offer to purchase (the “Offer”) all outstanding Shares, at a purchase price of $2.35 per Share (the “Offer Price”), net to the seller in cash, without interest and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 4, 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 Computershare Trust Company, N.A. (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 Encysive 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 Allen Waxman and Margaret Foran, 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 Encysive’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 Encysive’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 withhold the entire

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purchase price of the Shares tendered hereby or deduct from such purchase price 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 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 W-9 Below)

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IMPORTANT

STOCKHOLDER: SIGN HERE

(Please complete and return the attached Substitute Form W-9 below)

Signature(s) of Holder(s) of Shares

Dated: ­ ­ , ­ ­

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) ­ ­

(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.)

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: ­ ­ , ­ ­

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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 Exchange Act (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 tender offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated.

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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

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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’s counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the tender offer (other than the Minimum Tender Condition (as defined in the Offer to Purchase) which may only be waived with the consent of Encysive) and any defect or irregularity in the tender of any particular Shares, and the Purchaser’s interpretation of the terms of the tender 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 or the Dealer Manager at their respective addresses 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 the Depositary’s Lost Securities Department at The Bank of New York Mellon as Transfer Agent at (877) 295-8607. 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.

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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 Internal Revenue Service.

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 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 until a TIN is provided to the Depositary. 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.

9

PAYER’S NAME: COMPUTERSHARE
SUBSTITUTE FORM W-9 Department of the Treasury Internal Revenue Service Payer’s Request for Taxpayer Identification Number (“TIN”)	Part 1 — PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. CHECK APPROPRIATE BOX: o Individual/Sole Proprietor o Corporation o Partnership o Other ­ ­	Social Security Number or Employer Identification Number Part 3 — Awaiting TIN o Part 4 — Exempt o
Please fill in your name and address below. Name Address (Number and Street) City, State and Zip Code	Part 2 — Certification — Under penalties of perjury, I certify that: (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); (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 (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 SIGNATURE ­ ­  DATE ­ ­ , ­ ­

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 (1) 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 (2) 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 ­ ­ , ­ ­

10

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

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. — 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.     Corporate or LLC electing corporate status on Form 8832	The corporation
9.     Association, club, religious, charitable, educational, or other tax-exempt organization	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.

11

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.

12

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.

13

The Depositary for the Tender Offer is:

If delivering by mail:	If delivering by hand or courier:
Computershare Trust Company, N.A.	Computershare Trust Company, N.A.
c/o Computershare Shareholder Services, Inc.	c/o Computershare Shareholder Services, Inc.
P.O. Box 43011	250 Royall Street
Providence, RI 02940-3014	Canton, MA 02021
Attn: Corporate Actions Voluntary Department	Attn: Corporate Actions Voluntary Department

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:

199 Water Street, 26th Floor

New York, NY 10038

Banks and Brokerage Firms, Please Call:

(212) 440-9800

Stockholders and All Others Call Toll-Free

(800) 546-8249

The Dealer Manager for the Offer is:

Lazard Frères & Co. LLC

30 Rockefeller Plaza

New York, NY 10020

(212) 632-1563

EX-99.A.1.C

Exhibit (a)(1)(C)

NOTICE OF GUARANTEED DELIVERY

For Tender of Shares of Common Stock

of

ENCYSIVE PHARMACEUTICALS INC.

at

$2.35 NET PER SHARE

Pursuant to the Offer to Purchase dated March 4, 2008

by

EXPLORER ACQUISITION CORP.

a wholly-owned subsidiary of

PFIZER INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MARCH 31, 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 $0.005 per share (including the associated preferred stock purchase rights, the “Shares”), of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), 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 Computershare (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 Offer is:

By Mail:	By Facsimile Transmission:	By Hand/Overnight Delivery:
Computershare Trust Company, N.A.	(Eligible Institutions Only)	Computershare Trust Company, N.A.
c/o Computershare Shareholder	(617) 360-6810	c/o Computershare Shareholder
Services, Inc.	Confirm by Telephone:	Services Inc.
P.O. Box 43011	(Eligible Institutions Only)	250 Royall Street
Providence, RI 02940-3014	(781) 575-2332	Canton, MA 02021
Attn: Corporate Actions		Attn: Corporate Actions
Voluntary Department		Voluntary Department

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 Explorer Acquisition Corp., a Delaware corporation, (the “Purchaser”) and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), upon the terms and subject to the conditions set forth in the offer to purchase, dated March 4, 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 $0.005 per share (including the associated preferred stock purchase rights, the “Shares”), of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), 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):

o   Check here if Shares will be tendered by book entry transfer.

DTC Account Number: ­ ­

Dated: ­ ­ , ­ ­

Name(s) of Record Holder(s):

(Please type or print)

Address(es): ­ ­

(Zip Code)

Area Code and Tel.
No.: ­ ­

(Daytime telephone number)

Signature(s) ­ ­­ ­

2

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: ­ ­

Address: ­ ­

(Zip Code)

Area Code and Tel. No.: ­ ­

(Authorized Signature)

Name of Firm: ­ ­

(Please type or print)

Title: ­ ­

Dated: ­ ­ , ­ ­

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

3

EX-99.A.1.D

Exhibit (a)(1)(D)

Offer To Purchase For Cash

All Outstanding Shares of Common Stock

of

ENCYSIVE PHARMACEUTICALS INC.

at

$2.35 NET PER SHARE

Pursuant to the Offer to Purchase dated March 4, 2008

by

EXPLORER ACQUISITION CORP.

a wholly-owned subsidiary of

PFIZER INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,

NEW YORK CITY TIME, ON MONDAY, MARCH 31, 2008, UNLESS THE

TENDER OFFER IS EXTENDED.

March 4, 2008

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

We have been engaged by Explorer Acquisition Corp., a Delaware corporation (the “Purchaser”) and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), to act as Dealer Manager in connection with the Purchaser’s offer to purchase (the “Offer”) for cash all outstanding shares of common stock, par value $0.005 per share (including the associated preferred stock purchase rights, the “Shares”), of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), at a purchase price of $2.35 per Share, net to the seller in cash, without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 4, 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 Computershare Trust Company, N.A. (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. 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

5. A return envelope addressed to Computershare, the Depositary, for your use only.

Certain conditions to the Offer are described in Section 15 (“Certain Conditions of the Offer”) 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 Monday, March 31, 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 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, and additional copies of the enclosed materials may be obtained from, the Information Agent or the undersigned at the addresses and telephone numbers set forth on the back cover of the Offer to Purchase.

Very truly yours,

Lazard Frères & Co. 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.

2

EX-99.A.1.E

Exhibit (a)(1)(E)

Offer To Purchase For Cash

All Outstanding Shares of Common Stock

of

ENCYSIVE PHARMACEUTICALS INC.

at

$2.35 NET PER SHARE

Pursuant to the Offer to Purchase dated March 4, 2008

by

EXPLORER ACQUISITION CORP.

a wholly-owned subsidiary of

PFIZER INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MARCH 31, 2008, UNLESS THE

TENDER OFFER IS EXTENDED.

March 4, 2008

To Our Clients:

Enclosed for your consideration are the Offer to Purchase, dated March 4, 2008 (the “Offer to Purchase”), and the related Letter of Transmittal in connection with the offer (the “Offer”) by Explorer Acquisition Corp., a Delaware corporation (the “Purchaser”) and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), to purchase for cash all outstanding shares of common stock, par value $0.005 per share (including the associated preferred stock purchase rights, the “Shares”) of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), at a purchase price of $2.35 per Share, net to the seller in cash, without interest thereon and 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 $2.35 per Share, net to you in cash, without interest thereon and less any required withholding taxes.

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 Monday, March 31, 2008 unless the Offer is extended by the Purchaser.

4. The Offer is subject to certain conditions described in Section 15 (“Certain Conditions of the Offer”) of the Offer to Purchase.

5. Tendering stockholders who are registered stockholders or who tender their Shares directly to Computershare Trust Company N.A. (the “Depositary”), 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.

2

INSTRUCTION FORM

With Respect to the Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
ENCYSIVE PHARMACEUTICALS INC.
at
$2.35 NET PER SHARE
Pursuant to the Offer to Purchase
dated March 4, 2008
by
EXPLORER ACQUISITION CORP.
a wholly-owned subsidiary of
PFIZER INC.

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated March 4, 2008, and the related Letter of Transmittal, in connection with the offer (the “Offer”) by Explorer Acquisition Corp., a Delaware corporation (the “Purchaser”) and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), to purchase for cash all outstanding shares of common stock, par value $0.005 per share (including the associated preferred stock purchase rights, the “Shares”) of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), at a purchase price of $2.35 per Share, net to the seller in cash, without interest thereon and 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: ­ ­ , ­ ­

(Signature(s))

Please Print Names(s)

Address ­ ­

Include Zip Code

Area code and
Telephone no. ­ ­

Tax Identification
or Social Security No. ­ ­

3

EX-99.A.5.B

Exhibit (a)(5)(B)

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 March 4, 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 Lazard Frères & Co. LLC (the “Dealer Manager”) or 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

of

ENCYSIVE PHARMACEUTICALS INC.

at

$2.35 Net Per Share

by

EXPLORER ACQUISITION CORP.

a wholly-owned subsidiary

of

PFIZER INC.

Explorer Acquisition Corp., a Delaware corporation (“Purchaser”) and a wholly-owned subsidiary of Pfizer Inc., a Delaware corporation (“Pfizer”), is offering to purchase all outstanding shares of common stock, par value $0.005 per share (including the associated preferred stock purchase rights, the “Shares”), of Encysive Pharmaceuticals Inc., a Delaware corporation (“Encysive”), at a purchase price of $2.35 per Share (the “Offer Price”), net to the seller in cash, without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 4, 2008 and in the related Letter of Transmittal (which, together with the Offer to Purchase, as each may be amended or supplemented from time to time, collectively constitute the “Offer”). Stockholders of record who tender directly to Computershare Trust Company N.A. (the “Depositary”) will not be obligated to pay brokerage fees or commissions or, except as set forth in the Letter of Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares through a broker, dealer, commercial bank, trust company or other nominee should consult such institution as to whether it charges any service fees.

THE OFFER AND THE WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MARCH 31, 2008, UNLESS THE OFFER IS EXTENDED.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of February 20, 2008 (as it may be amended from time to time, the “Merger Agreement”), by and among Pfizer, the Purchaser and Encysive. The Merger Agreement provides, among other things, that following the consummation of the Offer and subject to certain conditions, the Purchaser will be merged with and into Encysive (the “Merger”) with Encysive continuing as the surviving corporation, wholly-owned by Pfizer. Each Share outstanding immediately prior to the effective time of the Merger (other than Shares held by Encysive, Pfizer or their wholly-owned subsidiaries, all of which will be cancelled and retired and shall cease to exist, or by stockholders who exercise appraisal rights under Delaware law), will be converted in the Merger into the right to receive $2.35 or any greater per Share price paid in the Offer, without interest thereon and less any required withholding taxes. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase.

The Offer is conditioned upon, among other things, (i) the satisfaction of the Minimum Tender Condition (as described below), (ii) the expiration or termination of all statutory waiting periods (and any extensions thereof) applicable to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and any applicable foreign antitrust, competition or merger control laws (the “Regulatory Condition”) and (iii) since February 20, 2008, there not having occurred any event, change, or development of a state of facts that, individually or in the aggregate, has had or would reasonably be expected to have, a Company Material Adverse Effect (as defined in the Merger Agreement). The Minimum Tender Condition

requires that the number of Shares that has been validly tendered and not withdrawn prior to the expiration of the Offer represent more than 50% of the then issued and outstanding Shares (counting as issued and outstanding for these purposes the number of Shares for which then outstanding and unexercised warrants and in-the-money options may be exercised). The Offer also is subject to other conditions set forth in Section 15 of the Offer to Purchase.

The Encysive Board of Directors, among other things, has unanimously (i) approved and declared advisable, the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of Encysive and the stockholders of Encysive and (iii) recommended that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer and, if necessary, approve the Merger Agreement.

The Merger Agreement provides that the Purchaser may, without the consent of Encysive, (i) extend the Offer, if at any scheduled expiration date of the Offer, any of the conditions to the obligation to purchase the Shares have not been satisfied or waived, for one or more periods up to 10 business days each until such time as such conditions are satisfied or waived, (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “SEC”) or the staff thereof applicable to the Offer or (iii) extend the Offer for one or more periods for an aggregate period of not more than 20 business days beyond the latest expiration date that would otherwise be permitted if, on such expiration date, there have not been tendered and not withdrawn that number of Shares that, together with any Shares then owned by Pfizer, would equal more than 90% of the issued and outstanding Shares.

Pursuant to Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and subject to the provisions of the Merger Agreement, Purchaser may elect to provide a subsequent offering period of up to 20 business days beginning the next business day after the expiration of the Offer. Purchaser does not currently intend to provide a subsequent offering period, although Purchaser reserves the right to do so.

In addition, subject to Pfizer’s right to terminate the Merger Agreement (described in Section 11 of the Offer to Purchase) in accordance with its terms, (i) if on March 31, 2008, any one or more of the Minimum Tender Condition, the Regulatory Condition or certain other conditions set forth in Section 15 of the Offer to Purchase are not satisfied, the Purchaser shall, at the request of Encysive, extend the Offer for up to 10 business days and (ii) if at any extended expiration date of the Offer, the Regulatory Condition or certain other conditions set forth in Section 15 of the Offer to Purchase are not satisfied, at the request of Encysive, Purchaser shall, and Pfizer shall cause Purchaser to, extend the Offer for increments of not more than 10 business days until such time as such conditions are satisfied or waived but in no event beyond August 20, 2008.

The Purchaser has agreed in the Merger Agreement that, without the consent of Encysive, it will not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) waive the Minimum Tender Condition, (iv) add to or modify the conditions to the Offer set forth in Section 15 of the Offer to Purchase in any manner adverse to the holders of Shares, (v) extend the Offer, except as described above, (vi) change the form of the consideration payable in the Offer or (vii) otherwise amend the Offer in a manner adverse to the holders of Shares.

Any extension, delay, termination, waiver or amendment of the Offer will be followed as promptly as practicable by public announcement thereof and 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 of the Offer.

For purposes of the Offer, Purchaser will be deemed to have accepted for payment and thereby purchased Shares validly tendered and not withdrawn if and when Purchaser gives oral or written notice to the Depositary of Purchaser’s acceptance of such Shares for payment pursuant to the Offer. Upon the terms and conditions of the Offer, Purchaser will pay for Shares accepted for payment pursuant to the Offer by depositing the purchase price therefor with the Depositary, which will act as agent for the tendering stockholders for purposes of transmitting such payments to the tendering stockholders. Under no circumstances will Purchaser pay interest on the purchase price for Shares, regardless of any extension of the Offer or any delay in payment for Shares.

In all cases, Purchaser will pay for Shares accepted for payment pursuant to the Offer only after timely receipt by the Depositary of (i) certificates representing such Shares or timely confirmation of a book-entry transfer of such Shares into the Depositary’s account at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in Section 3 of the Offer to Purchase; (ii) a properly completed and duly executed Letter of Transmittal with all required signature guarantees or, in the case of a book-entry transfer, an Agent’s Message (as defined in Section 2 of the Offer to Purchase) in lieu of the Letter of Transmittal; and (iii) any other documents required by the Letter of Transmittal.

2

Shares tendered pursuant to the Offer may be withdrawn at any time on or before the expiration of the Offer. Thereafter, tenders are irrevocable, except that Shares tendered may also be withdrawn after May 2, 2008, unless Purchaser has already accepted them for payment. For a withdrawal of Shares to be effective, the Depositary must timely receive a written or facsimile transmission notice of withdrawal at one of its addresses set forth on the back cover of the Offer to Purchase. Any 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 in which the certificates representing such Shares are registered, if different from that of the person who tendered such Shares. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), unless such Shares have been tendered for the account of any Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Shares. If certificates representing the Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the name of the registered owner and the serial numbers shown on such certificates must also be furnished to the Depositary. Purchaser will determine, in its sole discretion, all questions as to the form and validity (including time of receipt) of any notice of withdrawal, and such determination will be final and binding. No withdrawal of Shares shall be deemed to have been properly made until all defects and irregularities have been cured or waived. None of Purchaser, Pfizer or any of their respective affiliates or assigns, the Depositary, 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 such notification. Withdrawals of tenders of Shares may not be rescinded and any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer. Withdrawn Shares may, however, be retendered by following one of the procedures for tendering Shares described in Section 3 of the Offer to Purchase at any time prior to the expiration of the Offer.

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.

Encysive provided Purchaser with Encysive’s stockholder lists and security position listings for the purpose of disseminating the Offer to Purchase, the related Letter of Transmittal and related documents to holders of Shares. The Offer to Purchase and related Letter of Transmittal will be mailed to record holders of Shares whose names appear on Encysive’s stockholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons 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 for subsequent transmittal to beneficial owners of Shares.

The receipt of cash by a holder (as defined in Section 5 of the Offer to Purchase) of Shares pursuant to the Offer or the Merger will be a taxable transaction for U.S. federal income tax purposes. See Section 5 of the Offer to Purchase for a more detailed discussion of the tax treatment of the Offer. You are urged to consult with your own tax advisor as to the particular tax consequences to you of the Offer and the Merger.

The Offer to Purchase and the related Letter of Transmittal contain important information. Stockholders should carefully read both documents in their entirety before any decision is made with respect to the Offer.

3

Questions and requests for assistance may be directed to the Information Agent at its address and telephone numbers set forth below. Requests for copies of the Offer to Purchase and the related Letter of Transmittal may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. Such copies will be furnished promptly at Purchaser’s expense. Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Information Agent or the Depositary) for soliciting tenders of Shares pursuant to the Offer.

The Information Agent for the Offer is:

199 Water Street, 26th Floor

New York, NY 10038

Banks and Brokerage Firms Please call: (212) 440-9800

All Others Call Toll Free: (800) 546-8249

The Depositary for the Offer is:

Computershare Trust Company, N.A.

Attention: Corporate Actions Voluntary Department

250 Royall Street

Canton, MA 02021

The Dealer Manager for the Offer is:

Lazard Frères & Co. LLC

30 Rockefeller Plaza

New York, NY 10020

Call: (212) 632-1563

March 4, 2008

4

EX-99.A.5.C

Exhibit (a)(5)(C)

For immediate release:
March 4, 2008

Pfizer Contacts:
	Shreya Jani (media) 212-733-4889
	Jennifer Davis (investors) 212-733-0717
Encysive Contacts:
	Ann Tanabe (investors) 713-796-8822
	Dan Budwick, BMC Communications 212-477-9007, ext. 14 (media)

PFIZER ANNOUNCES COMMENCEMENT OF TENDER OFFER FOR ALL OUTSTANDING SHARES OF
ENCYSIVE PHARMACEUTICALS INC.

NEW YORK, NY and HOUSTON, TX, March 4, 2008 — Pfizer Inc (NYSE:PFE) today announced the commencement of the tender offer by its wholly-owned subsidiary, Explorer Acquisition Corp., for all outstanding shares of common stock of Encysive Pharmaceuticals Inc. (NASDAQ:ENCY) for $2.35 per share, net to the seller in cash. The tender offer is being made pursuant to an Offer to Purchase, dated March 4, 2008, and in connection with the Agreement and Plan of Merger, dated February 20, 2008, by and among Pfizer, Explorer Acquisition Corp. and Encysive, which Pfizer and Encysive publicly announced on February 20, 2008.

The tender offer is scheduled to expire at 12:00 midnight, New York City time, on Monday, March 31, 2008, unless the tender offer is extended. Following the completion of the tender offer and, if required, receipt of approval by Encysive’s stockholders, Pfizer expects to consummate a merger of Explorer Acquisition Corp. and Encysive in which remaining Encysive stockholders, other than stockholders who exercise appraisal rights under Delaware law, will receive the same cash price per share as paid in the tender offer. The tender offer and merger are subject to customary closing conditions, including the acquisition by Pfizer of more than 50% of Encysive’s outstanding shares in the tender offer and the expiration or earlier termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any applicable foreign antitrust, competition or merger control laws.

The Depositary and Paying Agent for the tender offer is Computershare Trust Company, N.A., c/o Computershare Shareholder Services, Inc., P.O. Box 43011, Providence, RI 02940-3014, Attn: Corporate Actions Voluntary Department. The Dealer Manager for the tender offer is Lazard Frères & Co. LLC, 30 Rockefeller Plaza, New York, NY 10020. The Information Agent for the tender offer is Georgeson Inc., 199 Water Street, 26th Floor, New York, NY 10038.

Additional Information

This press release is neither an offer to purchase nor a solicitation of an offer to sell securities. The tender offer is being made pursuant to a tender offer statement and related materials. Encysive’s stockholders are advised to read the tender offer statement and related materials, as filed by Pfizer with the U.S. Securities and Exchange Commission (the “SEC”). The tender offer statement (including the Offer to Purchase, letter of transmittal and related tender offer documents) filed by Pfizer with the SEC and the solicitation/recommendation

statement filed by Encysive with the SEC contain important information which should be read carefully before any decision is made with respect to the tender offer. The tender offer statement and the solicitation/recommendation statement will be mailed to all Encysive stockholders of record.

The tender offer statement and related materials may be obtained at no charge by directing a request by mail to Georgeson Inc., 199 Water Street, 26th Floor, New York, NY 10038, or by calling toll-free at (800) 546-8249, and may also be obtained at no charge at www.pfizer.com and www.encysive.com and the website maintained by the SEC at http://www.sec.gov .

# # # # #

DISCLOSURE NOTICE: The information contained in this press release is as of March 4, 2008. Except as required by law, neither Pfizer nor Encysive assumes any obligation to update any forward-looking statements contained in this release as a result of new information or future events or developments. Some statements in this release may constitute forward-looking statements. Pfizer and Encysive caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements, including the risk that the tender offer may not be completed or the merger may not be consummated for various reasons, including the failure to satisfy the conditions precedent to the completion of the acquisition. A further list and description of risks and uncertainties can be found in Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and Encysive’s Annual Report for the fiscal year ended December 31, 2006 and in their subsequently filed reports on Forms 10-Q and 8-K.

EX-99.D.1

Exhibit (d)(1)

[EXECUTION COPY]

Agreement and Plan of Merger

dated as of February 20, 2008

among

Pfizer Inc.,

Explorer Acquisition Corp.

and

Encysive Pharmaceuticals Inc.

Table of Contents

		Page
ARTICLE 1 THE OFFER AND THE MERGER			1
SECTION 1.1	The Offer		1
SECTION 1.2	Company Actions		3
SECTION 1.3	The Merger		4
SECTION 1.4	Effects of the Merger		4
SECTION 1.5	Closing		5
SECTION 1.6	Consummation of the Merger		5
SECTION 1.7	Organizational Documents; Directors and Officers		5
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;                       EXCHANGE OF CERTIFICATES			5
SECTION 2.1	Conversion of Merger Sub Capital Stock		5
SECTION 2.2	Conversion of Company Common Stock		6
SECTION 2.3	Exchange of Certificates		7
SECTION 2.4	Company Options; Phantom Units; Restricted Stock		8
SECTION 2.5	Warrants		10
SECTION 2.6	Taking of Necessary Action; Further Action		10
SECTION 2.7	Option to Acquire Additional Shares		10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY			11
SECTION 3.1	Organization		11
SECTION 3.2	Capitalization		13
SECTION 3.3	Authorization; No Conflict		14
SECTION 3.4	Subsidiaries		15
SECTION 3.5	SEC Reports and Financial Statements		16
SECTION 3.6	Absence of Material Adverse Changes, etc		19
SECTION 3.7	Litigation		19
SECTION 3.8	Information Supplied		19
SECTION 3.9	Broker’s or Finder’s Fees		20
SECTION 3.10	Employee Plans		20
SECTION 3.11	Opinion of Financial Advisor		23
SECTION 3.12	Taxes		23
SECTION 3.13	Environmental Matters		26
SECTION 3.14	Regulatory Compliance		27
SECTION 3.15	Intellectual Property		30
SECTION 3.16	Employment Matters		33
SECTION 3.17	Insurance		33
SECTION 3.18	Material Contracts		34
SECTION 3.19	Rights Agreement		36
SECTION 3.20	Real Property		36

i

		Page
SECTION 3.21	Liquidated Damages Event		37
SECTION 3.22	State Takeover Statutes		37
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB			37
SECTION 4.1	Organization		37
SECTION 4.2	Merger Sub; Ownership of Shares		37
SECTION 4.3	Authorization; No Conflict		38
SECTION 4.4	Information Supplied		39
SECTION 4.5	Availability of Funds		39
SECTION 4.6	Broker’s or Finder’s Fees		39
SECTION 4.7	No Additional Representations		39
ARTICLE 5 CONDUCT OF BUSINESS PENDING THE MERGER			40
SECTION 5.1	Conduct of Business by the Company Pending the Merger		40
ARTICLE 6 ADDITIONAL AGREEMENTS			43
SECTION 6.1	Preparation of Proxy Statement; Stockholders Meetings		43
SECTION 6.2	Employee Benefit Matters		44
SECTION 6.3	Antitrust Filings		46
SECTION 6.4	Public Statements		46
SECTION 6.5	Standard of Efforts		46
SECTION 6.6	Notification of Certain Matters		48
SECTION 6.7	Access to Information; Confidentiality		48
SECTION 6.8	No Solicitation		49
SECTION 6.9	Indemnification and Insurance		52
SECTION 6.10	Section 16 Matters		53
SECTION 6.11	Directors		53
SECTION 6.12	Warrants; Notes		54
ARTICLE 7 CONDITIONS			55
SECTION 7.1	Conditions to Each Party’s Obligation To Effect the Merger		55
SECTION 7.2	Conditions to Obligations of Parent and Merger Sub		55
ARTICLE 8 TAX MATTERS			55
SECTION 8.1	Cooperation on Tax Matters		55
ARTICLE 9 TERMINATION, AMENDMENT AND WAIVER			56
SECTION 9.1	Termination		56
SECTION 9.2	Effect of Termination		57
SECTION 9.3	Fees and Expenses		58

ii

		Page
SECTION 9.4	Amendment		59
SECTION 9.5	Waiver		59
ARTICLE 10 GENERAL PROVISIONS			59
SECTION 10.1	Notices		59
SECTION 10.2	Representations and Warranties		60
SECTION 10.3	Knowledge Qualifiers		60
SECTION 10.4	Interpretations		60
SECTION 10.5	Governing Law; Jurisdiction; Waiver of Jury Trial		60
SECTION 10.6	Counterparts; Facsimile Transmission of Signatures		61
SECTION 10.7	Assignment; No Third Party Beneficiaries		61
SECTION 10.8	Severability		61
SECTION 10.9	Entire Agreement		61
SECTION 10.10	Parent Guarantee		62
SECTION 10.11	Enforcement		62

iii

Defined Terms
Affiliate	17
Agreement	1
Antitrust Laws	47
Appraisal Shares	6
Available Company SEC Documents	19
Bankruptcy and Equity Exception	14
Certificate of Merger	5
Certificates	7
Closing	5
Closing Date	5
Code	23
Company	1
Company Adverse Recommendation Change	50
Company Board	3
Company Charter Documents	12
Company Common Stock	1
Company Disclosure Letter	11
Company Employee	45
Company Employee Benefit Plan	20
Company ERISA Affiliates	20
Company Financial Advisor	3
Company Financial Statements	16
Company Intellectual Property Rights	32
Company Material Adverse Effect	11
Company Preferred Stock	13
Company Recommendation	50
Company SEC Reports	16
Company Stockholders Meeting	44
Company Subsidiaries	15
Company Subsidiary	15
Confidentiality Agreement	49
Constituent Corporations	4
Contract	36
Copyrights	32
D&O Insurance	52
DGCL	1
DOJ	46
Drug Laws	27
Effective Date	5
Effective Time	5
EMEA	27
Employee Benefit Plan	20
Environmental Laws	27
ERISA	23
Exchange Act	1
Exchange Agent	7
Exchange Fund	7
Fairness Opinion	23
FCPA	18
FDA	27
FDCA	27
Foreign Plan	22
FTC	46
GAAP	17
GLP	28
Governmental Authority	15
Hazardous Substance	27
HSR Act	15
Indemnified Party	52
Indemnifying Parties	52
Independent Directors	54
Information Statement	15
Intellectual Property	32
Intellectual Property Agreements	31
Involuntary Bankruptcy	A-2
Judgment	15
knowledge of the Company	60
Law	15
Lease	34
Lien	16
Marks	32
Material Contract	34
Maximum Amount	52
Merger	1
Merger Consideration	6
Merger Sub	1
Minimum Tender Condition	A-1
Nasdaq	15
Notes	13
Offer	1
Offer Documents	3
Offer Price	1
Option Consideration	9
Options	9
Outside Date	56
Parent	1
Parent Financial Advisor	39

iv

Defined Terms
Parent Material Adverse Effect	37
Patents	32
Permits	11
Person	16
Phantom Unit	9
PHSA	27
Policies	33
Pre-Closing Tax Period	25
Proxy Statement	15
PSA 1993	23
Qualified Company Employee Benefit Plan	21
Regulatory Condition	A-1
Representatives	49
Required Company Stockholder Vote	14
Restricted Stock	10
Rights	13
Rights Agreement	13
Sarbanes-Oxley Act	17
Schedule 14D-9	4
SEC	1
Section 262	6
Securities Act	16
Share	1
Shares	1
Stock Plans	9
Subsidiary Documents	12
Superior Proposal	51
Superior Proposal Notice	57
Surviving Corporation	4
Takeover Proposal	51
Tax Authority	25
Tax Claim	26
Tax Return	25
Taxes	25
Taxing Authority	25
Termination Fee	58
Top-Up Option	10
Top-Up Option Shares	10
Trade Secrets	32
Transactions	3
US Seconded Employees	44
Voluntary Bankruptcy	A-2
WARN Act	46
Warrant	10

v

Agreement and Plan of Merger (this “Agreement”), dated as of February 20, 2008, among Pfizer Inc., a Delaware corporation (“Parent”), Explorer Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and Encysive Pharmaceuticals Inc., a Delaware corporation (the “Company”).

Introduction

          The respective Boards of Directors of Parent, Merger Sub and the Company have approved the acquisition of the Company by Parent on the terms and subject to the conditions set forth in this Agreement.

          In furtherance of such acquisition, Parent has agreed to cause Merger Sub to commence a tender offer (as it may be amended from time to time as permitted under this Agreement, the “Offer”) to purchase all the shares of common stock, par value $0.005 per share, of the Company (the “Company Common Stock”), including the associated Rights, issued and outstanding (each, a “Share” and, collectively, the “Shares”), at a price per Share of $2.35 (such amount, or any other amount per Share paid pursuant to the Offer and this Agreement, the “Offer Price”), subject to any required withholding of Taxes, net to the seller in cash, on the terms and subject to the conditions set forth in this Agreement.

          Following consummation of the Offer, the parties intend that Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), and each Share that is not tendered and accepted pursuant to the Offer, other than certain Shares as provided in Sections 2.2(b) and (c), will thereupon be cancelled and converted into the right to receive cash in an amount equal to the Offer Price, on the terms and subject to the conditions set forth herein.

          The respective Boards of Directors of Parent, Merger Sub and the Company have approved this Agreement and the Transactions, including the Offer and the Merger, on the terms and subject to the conditions set forth herein.

          In consideration of the foregoing and of the representations, warranties, covenants and agreements set forth in this Agreement, the parties hereto agree as follows:

ARTICLE 1
THE OFFER AND THE MERGER

          SECTION 1.1 The Offer. (a) Provided that (1) none of the events or circumstances set forth in paragraphs (a) through (g) of Annex A hereto shall have occurred and be existing (and shall not have been waived by Merger Sub) and (2) the Company shall have complied in all material respects with its obligations under Section 1.2, as promptly as reasonably practicable, but in no event later than ten (10) business days (as defined in Rule 14d-1(g)(3) promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) after the date of this Agreement, Merger Sub shall, and Parent shall cause Merger Sub to, commence the Offer

1

within the meaning of the applicable rules and regulations of the SEC. The obligations of Merger Sub to, and of Parent to cause Merger Sub to, 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 Annex A. The initial expiration date of the Offer shall be the 20th business day following the commencement of the Offer (determined using Exchange Act Rule 14d-1(g)(3)). Merger Sub expressly reserves the right to waive any condition to the Offer, to increase the price per Share payable in the Offer and/or to modify the other terms of the Offer, except that, without the consent of the Company, Merger Sub shall not (i) reduce the number of shares of Company Common Stock subject to the Offer, (ii) reduce the Offer Price, (iii) waive the Minimum Tender Condition (as defined in Annex A), (iv) add to the conditions set forth in Annex A or modify any condition set forth in Annex A in a manner adverse to the holders of Company Common Stock, (v) extend the Offer (except as provided below), (vi) change the form of consideration payable in the Offer or (vii) otherwise amend the Offer in any manner adverse to the holders of Company Common Stock. Notwithstanding the foregoing, Merger Sub may, without the consent of the Company, extend the Offer (i) for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer, (ii) if at the scheduled expiration date of the Offer, any of the conditions set forth in Annex A shall not have been satisfied or waived, for one (1) or more periods of not more than ten (10) business days each, until such time as such conditions are satisfied or waived, or (iii) for one (1) or more periods for an aggregate period of not more than twenty (20) business days beyond the latest expiration date that would otherwise be permitted if, on such expiration date, there shall not have been tendered and not withdrawn that number of Shares that, together with any Shares then owned by Parent, would equal ninety percent (90%) or more of the issued and outstanding Shares; provided that if Merger Sub shall extend the offer pursuant to this clause (iii), Merger Sub shall waive during such extension all conditions set forth in Annex A other than the Minimum Tender Condition, the Regulatory Condition and the conditions set forth in paragraphs (a), (b) and (f) therein. In addition, subject to Parent’s right to terminate this Agreement pursuant to Section 9.1, (i) if at the initially scheduled expiration date of the Offer, any one or more of the Minimum Tender Condition, the Regulatory Condition or the conditions set forth in paragraphs (a), (b), (e) or (f) of Annex A are not satisfied, at the request of the Company Merger Sub shall, and Parent shall cause Merger Sub to, extend the offer one (1) time for a period of up to ten (10) business days and (ii) if at any extended expiration date of the Offer, the Regulatory Condition or the conditions set forth in paragraphs (e) or (f) of Annex A are not satisfied, at the request of the Company Merger Sub shall, and Parent shall cause Merger Sub to, extend the Offer for increments of not more than ten (10) business days each until such time as such conditions are satisfied or waived; provided that Merger Sub shall not be required to extend the Offer beyond the Outside Date. Further, Merger Sub may, without the consent of the Company, make available a “subsequent offering period”, in accordance with Rule 14d-11 promulgated by the SEC under the Exchange Act, for up to twenty (20) business days. On the terms and subject to the conditions of the Offer and this Agreement, Merger Sub shall, and Parent shall cause Merger Sub to, pay for all Shares validly tendered and not withdrawn pursuant to the Offer that Merger Sub becomes obligated to purchase pursuant to the Offer as soon as practicable after the expiration of the Offer. For the avoidance of doubt, the parties hereto agree that shares of Restricted Stock may be tendered in the Offer and be acquired by Parent or Merger Sub pursuant to the Offer.

2

          (b) On the date of commencement of the Offer, Parent and Merger 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 provide Parent with all information concerning the Company that is required to be included in the Offer Documents. Each of Parent, Merger Sub and the Company shall promptly correct any information provided by it for use 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 Merger 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 the Offer Documents as so amended or supplemented to be disseminated to the holders of Company Common Stock, in each case as and to the extent required by applicable Federal securities Laws. The Company and its counsel shall be given a reasonable opportunity to review and comment upon the Offer Documents before they are filed with the SEC and disseminated to stockholders. Parent and Merger Sub shall provide the Company and its counsel in writing with any comments Parent, Merger Sub or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments, shall consult with the Company and its counsel prior to responding to any such comments and shall provide the Company with copies of all such responses.

          (c) Parent shall provide or cause to be provided to Merger Sub on a timely basis the funds necessary to purchase any shares of Company Common Stock that Merger Sub becomes obligated to purchase pursuant to the Offer.

          SECTION 1.2 Company Actions. The Company hereby approves of and consents to the Offer, the Merger and the other transactions contemplated by this Agreement (collectively, the “Transactions”). The Company represents and warrants that the Board of Directors of the Company (the “Company Board”), at a meeting duly called and held, has unanimously (i) approved and declared advisable this Agreement and the Transactions, including the Offer and the Merger (such approval having been made in accordance with the DGCL, including for purposes of Section 203 thereof), and (ii) resolved to recommend that stockholders of the Company accept the Offer, tender their Shares to Merger Sub pursuant thereto and adopt this Agreement. Subject to Section 6.8(c), the Company shall, through the Company Board, recommend that stockholders of the Company accept the Offer, tender their Shares to Merger Sub pursuant thereto and adopt this Agreement. The Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Company Board described above. The Company also represents and warrants that (A) the Company Board has received the opinion of Morgan Stanley & Co. Incorporated (the “Company Financial Advisor”), dated the date of this Agreement, to the effect that, as of such date, and subject to the various assumptions and qualifications set forth therein, the consideration to be received by the Company’s stockholders in the Offer and the Merger is fair to such holders from a financial point of view and (B) the Company has been authorized by the Company Financial Advisor to permit the inclusion of such opinion and/or references thereto in the Offer Documents and, together with a description of the material financial analyses underlying such opinion, in the Schedule 14D-9 and any Proxy Statement, subject to prior review and consent by the Company Financial Advisor (such consent not to be unreasonably withheld or delayed). Further, the Company represents and warrants that

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it has been informed that all directors and executive officers of the Company intend to tender all of their respective Shares, if any, in the Offer and that the Offer Documents may so state.

          (a) On 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, as amended from time to time, the “Schedule 14D-9”) describing the recommendations referred to in Section 1.2(a) and shall mail the Schedule 14D-9 to the holders of Shares. Each of the Company, Parent and Merger Sub shall promptly correct any information provided by it for use 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 holders of Company Common Stock, in each case as and to the extent required by applicable Federal securities Laws. Parent and its counsel shall be given a reasonable opportunity to review and comment upon the Schedule 14D-9 before it is filed with the SEC and disseminated to holders of Shares. The Company shall provide Parent and its counsel in writing with any comments the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments, shall consult with Parent and its counsel prior to responding to any such comments and shall provide Parent with copies of all such responses.

          (b) In connection with the Offer, the Company shall instruct its transfer agent to furnish Merger 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 Merger 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 the 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, Parent and Merger Sub shall hold in confidence the information contained in any such labels, listings and files, shall use such information only in connection with the Offer and the Merger and, if this Agreement shall be terminated, shall, upon request, deliver to the Company all copies of such information then in their possession.

          SECTION 1.3 The Merger. At the Effective Time, in accordance with this Agreement and the DGCL, Merger Sub shall be merged with and into the Company, the separate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation. For purposes of this Agreement, (i) the corporation surviving the Merger after the Effective Time may be referred to as the “Surviving Corporation” and (ii) the Company and Merger Sub are collectively referred to as the “Constituent Corporations”.

          SECTION 1.4 Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL.

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          SECTION 1.5 Closing. The closing of the Merger (the “Closing”) shall take place at 10:00 a.m. (East Coast time) on a date to be specified by the parties, which shall be no later than the second business day after satisfaction or (to the extent permitted by applicable Law) waiver of the conditions set forth in Article 7 (other than any such conditions which by their nature cannot be satisfied until the Closing Date, which shall be required to be so satisfied or (to the extent permitted by applicable Law) waived on the Closing Date), at the offices of Covington & Burling LLP, 620 Eighth Avenue, New York, New York 10018, unless another time, date or place is agreed to in writing by the parties hereto (such date upon which the Closing occurs, the “Closing Date”).

          SECTION 1.6 Consummation of the Merger. As soon as practicable after the Closing, the parties hereto shall cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware a certificate of merger or other appropriate documents (in any such case, the “Certificate of Merger”) in such form as required by, and executed in accordance with, the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with such Secretary of State, or at such later time as Parent and the Company shall agree and specify in the Certificate of Merger (the time and date the Merger becomes effective being the “Effective Time” and “Effective Date”, respectively).

          SECTION 1.7 Organizational Documents; Directors and Officers.

          (a) The certificate of incorporation of the Company as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided therein and under the DGCL. The By-laws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the By-laws of the Surviving Corporation until thereafter amended as provided therein and under the DGCL. The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation and shall serve until the earlier of their resignation or removal or their respective successors are duly elected or appointed and qualified, as the case may be. The officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation and shall serve until the earlier of their resignation or removal or until their respective successors have been duly elected or appointed and qualified, as the case may be.

          (b) If requested by Parent prior to the Effective Time, the Company shall use its commercially reasonable efforts to cause the directors of each of the Company Subsidiaries (or certain of the Company Subsidiaries as indicated by Parent) to tender their resignations as directors, effective as of the Effective Time and to deliver to Parent written evidence of such resignations at the Effective Time.

ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

          SECTION 2.1 Conversion of Merger Sub Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or any holder of shares of Merger Sub capital stock, each share of Merger Sub capital

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stock shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.005 per share, of the Surviving Corporation.

          SECTION 2.2 Conversion of Company Common Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or any holder of Shares:

          (a) Each Share issued and outstanding immediately prior to the Effective Time (other than (i) any Shares to be canceled pursuant to Section 2.2(b) and (ii) any Appraisal Shares) shall be canceled and shall be converted automatically into the right to receive the highest price per Share paid pursuant to the Offer (the “Merger Consideration”). As of the Effective Time, all such Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration upon surrender of such certificate in accordance with Section 2.3, without interest.

          (b) Each Share held in the treasury of the Company and each Share owned by Merger Sub, Parent or any wholly-owned subsidiary of Parent or of the Company immediately prior to the Effective Time shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto.

          (c) Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, Shares that are outstanding immediately prior to the Effective Time and that are held by any Person who is entitled to demand and properly demands appraisal of such Shares (“Appraisal Shares”) pursuant to, and who complies in all respects with, Section 262 of the DGCL (“Section 262”) shall not be converted into the right to receive Merger Consideration as provided in Section 2.2(a), but rather the holders of Appraisal Shares shall be entitled to payment of the fair value of such Appraisal Shares in accordance with Section 262 (and at the Effective Time, such Appraisal Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and such holders shall cease to have any right with respect thereto, except the right to receive the fair value of such Appraisal Shares in accordance with Section 262); provided, however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262, then the right of such holder to be paid the fair value of such holder’s Appraisal Shares shall cease and such Appraisal Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, Merger Consideration as provided in Section 2.2(a). The Company shall serve prompt notice to Parent of any demands received by the Company for appraisal of any shares of Company Common Stock, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. Prior to the Effective Time, 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 any of the foregoing. Any portion of the Merger Consideration made available by the Exchange Agent pursuant to Section 2.3(a) to pay for Appraisal Shares shall be returned to Parent upon demand.

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          SECTION 2.3 Exchange of Certificates.

          (a) Exchange Agent. Prior to the Effective Time, Parent shall enter into an agreement with such bank or trust company as may be designated by Parent and reasonably acceptable to the Company (the “Exchange Agent”), which shall provide for the payment of Merger Consideration in accordance with the terms of this Section 2.3. Parent shall, or shall take all steps necessary to enable and cause the Surviving Corporation to, deposit with the Exchange Agent as of the Effective Time, for the benefit of the holders of Shares, for payment by the Exchange Agent in accordance with this Article 2, the cash necessary to pay for the Shares converted into the right to receive Merger Consideration (the “Exchange Fund”). The Exchange Fund shall not be used for any other purpose. Such aggregate Merger Consideration deposited with the Exchange Agent shall, pending its disbursement to such holders, be invested by the Exchange Agent as directed by Parent. Any net profit resulting from, or interest or income produced by, such amounts on deposit with the Exchange Agent will be payable to Parent or as Parent otherwise directs.

          (b) Exchange Procedures. As soon as reasonably practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding Shares (the “Certificates”) whose shares were converted into the right to receive the Merger Consideration pursuant to Section 2.2, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in surrendering the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Certificate shall receive in exchange therefor the amount of cash which the Shares theretofore represented by such Certificate entitle such holder to receive pursuant to the provisions of this Article 2 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 transfer records of the Company, payment may be made to a Person other than the Person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such issuance 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 Parent that such Tax has been paid or is not applicable. Each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon surrender in accordance with this Section 2.3 the Merger Consideration into which the Shares shall have been converted pursuant to Section 2.2. No interest shall be paid or shall accrue on any cash payable to holders of Certificates pursuant to the provisions of this Article 2.

          (c) No Further Ownership Rights in Company Common Stock. The Merger Consideration paid upon the surrender for exchange of Certificates in accordance with the terms of this Article 2 shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares theretofore represented by such Certificates, subject, however, to the Surviving Corporation’s obligation to pay any dividends or make any other distributions with a record date prior to the Effective Time that may have been declared or made by the Company on such Shares

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in accordance with the terms of this Agreement or prior to the date of this Agreement and that remain unpaid at the Effective Time, and there shall be no further registration of transfers on the stock transfer books of the Company of the Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article 2, except as otherwise provided by Law.

          (d) Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the holders of Certificates for 180 days after the Effective Time shall be delivered to Parent, upon demand, and any holders of Certificates who have not theretofore complied with this Article 2 shall thereafter look only to Parent (subject to abandoned property, escheat or similar Laws, as general creditors thereof) for payment of their claim for Merger Consideration.

          (e) No Liability. None of Parent, Merger Sub, the Company or the Exchange Agent shall be liable to any Person in respect of any cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate shall not have been surrendered prior to such date on which any amounts payable pursuant to this Article 2 would otherwise escheat to or become the property of any Governmental Authority (as defined in Section 3.3(c)), any such amounts 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.

          (f) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond in such reasonable amount as Parent may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect thereto pursuant to this Agreement.

          (g) Withholding Rights. Parent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock such amounts as it is required to deduct and withhold with respect to the making of such payment under the applicable Tax Law. To the extent that amounts are so withheld by the Parent and paid to the appropriate Taxing Authorities, 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 the Parent.

          SECTION 2.4 Company Options; Phantom Units; Restricted Stock.

          (a) Prior to the Effective Time, the Company shall take all actions necessary to provide that each Option outstanding immediately prior to the Effective Time (whether or not then vested or exercisable) shall be cancelled and terminated and converted at the Effective Time into the right to receive a cash amount equal to the Option Consideration for each share of Company Common Stock then subject to the Option, or, if the Option Consideration shall be a

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negative number, no such cash payment shall be due and owing. Except as otherwise provided below, any Option Consideration due and owing shall be paid as soon after the Closing Date as shall be practicable. Notwithstanding the foregoing, Parent and the Surviving Corporation shall be entitled to deduct and withhold from any Option Consideration otherwise payable such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax law. Prior to the Effective Time, the Company shall make any amendments to the terms of the Stock Plans and obtain any consents from holders of Options that, in each case, are necessary to give effect to the transactions contemplated by this Section 2.4 and, notwithstanding anything to the contrary, payment may be withheld in respect of any Option until any necessary consents are obtained. Prior to the Effective Time, the Company shall take all actions necessary to terminate all its Stock Plans, such termination to be effective at or before the Effective Time. For purposes of this Agreement, “Option Consideration” means, with respect to any share of Company Common Stock issuable under a particular Option, an amount equal to (i) the Merger Consideration per Share less (ii) the exercise price payable in respect of each share of Company Common Stock issuable under such Option; “Options” means any option granted, and, immediately before the Effective Time not exercised, expired or terminated, to a current or former employee, director or independent contractor of the Company or any of the Company Subsidiaries or any former subsidiary of the Company or predecessor thereof to purchase shares of Company Common Stock pursuant to the Stock Plans; and “Stock Plans” means the Company’s Amended and Restated 1990 Incentive Stock Option Plan, Amended and Restated 1992 Incentive Stock Option Plan, Amended and Restated 1995 Stock Option Plan, Amended and Restated 1995 Non-Employee Director Stock Option Plan, Amended and Restated 1999 Stock Incentive Plan and 2007 Incentive Plan, as amended.

          (b) As soon as practicable following the date of this Agreement, the Company Board (or, if appropriate, any committee thereof administering the Stock Plans) shall adopt such resolutions or take such other actions as may be required, if any, so that, subject to the terms of the Stock Plans and the grants thereunder (i) each Phantom Unit shall become fully vested and deemed earned in full effective as of the day immediately preceding the date of acceptance for payment of the shares of Company Common Stock pursuant to the Offer, (ii) each holder of a Phantom Unit shall thereafter become entitled to receive in cash (subject to amounts required to be withheld by Law), within 30 days of the day immediately preceding the date of acceptance for payment of the shares of Common Stock pursuant to the Offer, the amount payable thereunder to the holder thereof pursuant the terms of such Phantom Unit and the related Stock Plan under which it was granted and (iii) any forfeiture provisions applicable to the Phantom Units shall lapse as of the acceptance for payment of shares of Company Common Stock pursuant to the Offer. As used in this Agreement, “Phantom Unit” means an award, other than an Option or Restricted Stock, granted and, immediately before the date specified in clause (b)(i) above, not paid or terminated to a current or former employee, director or independent contractor of the Company or any of the Company Subsidiaries or any former subsidiary of the Company or predecessor thereof pursuant to the Stock Plans for which the value of a Share of Company Common Stock is used to measure the benefits payable to the grantee of such award.

          (c) As soon as practicable following the date of this Agreement, the Company Board (or, if appropriate, any committee thereof administering the Stock Plans) shall adopt such resolutions or take such other actions as may be required to provide for the lapse as of the

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acceptance for payment of shares of Company Common Stock pursuant to the Offer of all forfeiture provisions applicable to any shares of Restricted Stock and to permit cashless or net vesting of such shares of Restricted Stock. Each holder of Restricted Stock shall be treated as a holder of the corresponding number of shares of Company Common Stock as of the acceptance for payment of shares of Company Common Stock pursuant to the Offer in accordance with the terms of Section 2.2 in the same manner as other outstanding shares of Company Common Stock issued and outstanding as of immediately prior to the acceptance for payment of shares of Company Common Stock pursuant to the Offer. As used in this Agreement, “Restricted Stock” means any award of restricted Company Common Stock outstanding immediately before the Effective Time with respect to which the restrictions have not lapsed, and which award shall not have previously expired or terminated, to a current or former employee, director or independent contractor of the Company or any of the Company Subsidiaries or any predecessor thereof pursuant to any applicable Stock Plan or any other contract or agreement entered into by the Company or any of the Company Subsidiaries.

          SECTION 2.5 Warrants. At the Effective Time and subject to Section 6.12, each outstanding Warrant of the Company shall be converted into the right to receive, upon exercise of such Warrant and payment of the exercise price thereof, an amount equal to the product of (x) the number of shares of Company Common Stock for which such Warrant may be exercised and (y) the Merger Consideration. As used in this Agreement, “Warrant” means a Common Stock Purchase Warrant issued by the Company pursuant to the Securities Purchase Agreement dated as of August 20, 2007.

          SECTION 2.6 Taking of Necessary Action; Further Action. Each of Parent, Merger Sub and the Company shall use commercially reasonable efforts to take all such actions as may be necessary or appropriate in order to effectuate the Merger under the DGCL as promptly as commercially practicable. If at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of either of the Constituent Corporations, the officers and directors of the Surviving Corporation are fully authorized in the name of each Constituent Corporation or otherwise to take, and shall take, all such lawful and necessary action.

          SECTION 2.7 Option to Acquire Additional Shares. The Company hereby grants to Merger Sub an option (the “Top-Up Option”), exercisable in accordance with this Section 2.7, to purchase up to that number of newly issued shares of Company Common Stock (the “Top-Up Option Shares”) equal to the number of shares that, when added to the number of Shares owned by Parent and its subsidiaries immediately following consummation of the Offer, shall constitute one share more than 90% of the Shares then outstanding (after giving effect to the issuance of the Top-Up Option Shares) for a cash purchase price per Top-Up Option Share equal to the Offer Price; provided, however, that the number of Top-Up Option Shares shall not exceed the number equal to 19.9% of the Shares outstanding immediately prior to the issuance of the Top-Up Option Shares. The Top-Up Option may be exercised by Merger Sub at any one time before the Effective Time within thirty (30) business days after Merger Sub’s acceptance of, and payment for Shares pursuant to the Offer in accordance with the terms of this Agreement. If Merger Sub wishes to so exercise the Top-Up Option, Merger Sub shall give the Company written notice within such thirty (30)-business day period specifying the number of shares of

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Company Common Stock that Merger Sub wishes to purchase pursuant to the Top-Up Option and a place and a time (which, subject to applicable Law and any required regulatory approvals, shall be at least two (2), but not more than five (5), business days after the date of delivery of such written notice) for the closing of such purchase. At such closing, (i) the purchase price in respect of such exercise of the Top-Up Option (which shall equal the product of (x) the number of shares of Company Common Stock being purchased pursuant to the Top-Up Option and (y) the Offer Price) shall be paid to the Company in immediately available funds by wire transfer to an account designated by the Company, and (ii) the Company shall deliver to Merger Sub a certificate or certificates representing the number of shares of Company Common Stock so purchased. The Company agrees that it shall reserve (and maintain free from preemptive rights) sufficient authorized but unissued shares of Common Stock so that the Top-Up Option may be exercised without additional authorization of shares of Company Common Stock (after giving effect to all other options, warrants, convertible securities and other rights to purchase shares of Company Common Stock). Merger Sub shall acquire the Top-Up Option Shares for investment purposes only and not with a view to any distribution thereof, and will not sell any Top-Up Option Shares purchased pursuant to this Section except in compliance with the Securities Act of 1933, as amended.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          Except as set forth on the disclosure letter (each section of which qualifies the correspondingly numbered representation and warranty or covenant to the extent specified therein, provided that any disclosure set forth with respect to any particular section shall be deemed to be disclosed in reference to other applicable sections of this Agreement to the extent it is reasonably apparent from a reading of the disclosure that such disclosure is applicable to such other sections) previously delivered by the Company to Parent (the “Company Disclosure Letter”), the Company hereby represents and warrants to Parent and Merger Sub as follows:

          SECTION 3.1 Organization.

          (a) Each of the Company and the Company Subsidiaries is a corporation, limited liability company or limited partnership duly organized, validly existing and, where applicable, in good standing under the laws of the jurisdiction of its organization. Each of the Company and the Company Subsidiaries has all requisite power and authority necessary to enable it to own, operate and lease its properties and to carry on its business as now conducted. Each of the Company and the Company Subsidiaries possesses all licenses, franchises, permits, certificates, approvals and authorizations from Governmental Authorities, or required by Governmental Authorities to be obtained, in each case necessary for the lawful conduct of their respective businesses as now conducted, the lack of which, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect (collectively, “Permits”). A “Company Material Adverse Effect” means any change, event, occurrence or development of a state of facts that, individually or in the aggregate with all other changes, events, occurrences or developments of a state of facts, is materially adverse to, (i) the business, operations, properties, assets, liabilities (contingent or otherwise), financial condition or results of operations of the Company and the Company Subsidiaries considered as a single enterprise or (ii) the ability of the Company to perform its obligations under this Agreement in

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accordance with its terms or to consummate the Transactions; provided, however, that no event, change, occurrence or development of a state of facts shall be included in the definition of Company Material Adverse Effect that (A) arises out of general political, economic or market conditions or general changes or developments in the biotechnology or pharmaceutical industry or affecting participants in the biotechnology or pharmaceutical industry (provided that such adverse effect does not affect the Company or any Company Subsidiaries, taken as a whole, in a disproportionate manner), (B) results from or is caused by acts of terrorism or war (whether or not declared) or natural disasters occurring after the date hereof (provided that such adverse effect does not affect the Company or any Company Subsidiaries, taken as a whole, in a disproportionate manner), (C) arises out of, results from or relate to the Transactions or the announcement or performance thereof (including any negative impact on relationships with employees of the Company or the Company Subsidiaries as a result of the announcement or performance of this Agreement), provided that any legal or contractual consequence of the execution of this Agreement or the consummation of the Transactions that has not been disclosed to Parent in this Agreement or the Company Disclosure Letter shall not be excluded under this proviso, (D) results from changes in Law (after the date hereof) or any applicable accounting regulations or principles or the interpretations thereof, (E) results from changes in the price or trading volume of the Company’s stock (provided that any event, change, occurrence or development of a state of facts that may have caused or contributed to such change in market price or trading volume shall not be excluded under this proviso) (F) results from any failure by the Company to meet revenue, earnings or other projections, in and of itself (provided that any event, change, occurrence or development of a state of facts that may have caused or contributed to such failure to meet published revenue, earnings or other projections shall not be excluded under this proviso) or (G) results from a delisting warning or delisting of the Company Common Stock on the Nasdaq Stock Market due to the closing price per share falling below the $1.00 minimum bid price.

          (b) The copies of the certificate of incorporation and bylaws of the Company (the “Company Charter Documents”) which are incorporated by reference as exhibits to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 are complete and correct copies of such documents and contain all amendments thereto as in effect on the date of this Agreement. The Company has delivered or made available to Parent complete and correct copies of the certificate of incorporation and by-laws (or comparable organizational documents) of each of the Company Subsidiaries (the “Subsidiary Documents”), in each case, as amended to the date of this Agreement. All such Company Charter Documents and Subsidiary Documents are in full force and effect and neither the Company nor any of the Company Subsidiaries is in violation of any of their respective provisions. The Company has made available to Parent correct and complete copies of the minutes (or, in the case of minutes that have not yet been finalized, a brief summary of the meeting) of all meetings of stockholders, the Company Board and each committee of the Company Board and the Company Subsidiaries since January 1, 2005; provided that the Company shall not be obligated to furnish to Parent any minutes for meetings that only discuss the Transactions or alternative transactions considered by the Company Board.

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          SECTION 3.2 Capitalization.

          (a) The authorized capital stock of the Company consists of (i) 150,000,000 shares of Company Common Stock and (ii) 5,000,000 shares of preferred stock, par value $0.005 per share, (“Company Preferred Stock”). As of the close of business on February 15, 2008: (A) 81,175,765 shares of Company Common Stock were issued and 80,962,765 shares of Company Common Stock were outstanding, including in each case the associated Preferred Share Purchase Rights (the “Rights”) issued pursuant to the Rights Agreement dated as of January 2, 2002 between the Company and The Bank of New York, as Rights Agent (the “Rights Agreement”); (B) no shares of Company Preferred Stock were issued or outstanding and 10,000 shares of Junior Participating Series A Company Preferred Stock were reserved for issuance upon exercise of the Rights under the Rights Agreement; (C) 213,000 shares of Company Common Stock were held by the Company in its treasury; (D) there were outstanding Options to purchase 5,032,753 shares of Company Common Stock and 7,866,067 shares of Company Common Stock were reserved for issuance under the Stock Plans (including upon exercise of the Options); (E) there were outstanding $130,000,000 in aggregate principal amount of the Company’s 2.50% Convertible Notes due 2012 (the “Notes”) convertible into 9,322,001 shares of Company Common Stock and such number of shares of Company Common Stock were reserved for issuance upon conversion of the Notes; and (F) there were outstanding Warrants exercisable for 7,692,305 shares of Company Common Stock and such number of shares of Company Common Stock were reserved for issuance upon conversion of the Warrants. Such issued and outstanding shares of Company Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, and are free of preemptive rights. Section 3.2(a) of the Company Disclosure Letter sets forth, as of the close of business on February 15, 2008, each outstanding option, warrant or other right to subscribe for, purchase or acquire from the Company any capital stock of the Company or securities convertible into or exchangeable for capital stock of the Company, including the name of the holder thereof, the stock plan under which it was issued, the date of grant and exercise price thereof, and the vesting schedule thereof. Except for the Phantom Units described on Section 3.2(a) of the Company Disclosure Letter, there are no outstanding or authorized stock appreciation rights, phantom stock awards or other rights that are linked in any way to the price of the Company Common Stock or the value of the Company or any part thereof. During the period from February 15, 2008 to the date of this Agreement, (i) the Company has not issued any shares of its capital stock, options, warrants voting securities or equity interests, or any securities convertible into or exchangeable or exercisable for any shares of its capital stock, options, warrants, voting securities or equity interests. The Company has not, subsequent to February 15, 2008, declared or paid any dividend, or declared or made any distribution on, or authorized the creation or issuance of, or issued, or authorized or effected any split-up or any other recapitalization of, any of its capital stock, or directly or indirectly redeemed, purchased or otherwise acquired any of its outstanding capital stock. The Company has not heretofore agreed to take any such action, and there are no outstanding contractual obligations of the Company of any kind to redeem, purchase or otherwise acquire any outstanding shares of capital stock of the Company. Other than the Company Common Stock, there are no outstanding bonds, debentures, notes or other indebtedness or securities of the Company having the right to vote (or, other than the outstanding Options, Rights, Notes and Warrants, convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote.

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          (b) Except as set forth in Section 3.2(a) and for Company Preferred Stock issuable upon exercise of the Rights, (i) as of February 15, 2008, no shares of capital stock or other voting securities of the Company are issued, reserved for issuance or outstanding, and (ii) there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or any of the Company Subsidiaries is a party or by which any of them is bound obligating the Company or any of the Company Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities or equity interests of the Company or of any of the Company Subsidiaries or obligating the Company or any of the Company Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking.

          (c) The Compensation Committee of the Company’s Board of Directors, consisting solely of independent directors, has taken all such actions as may be required to cause to be exempted under Rule 14d—10(d)(2) under the Exchange Act, any and all employment compensation, severance and employee benefit agreements and arrangements that have been entered into or granted by the Company or any Company Subsidiary with or to current or future directors, officers, or employees of the Company and the Company Subsidiaries, to ensure that all such agreements and arrangements satisfy the safe harbor provisions of Rule 14d—10(d)(2) of the Exchange Act. All Options were granted at an exercise price at least equal to the fair market value (within the meaning of Section 409A of the Code) of a share of Company Common Stock on the date of grant and no Option has been extended, amended or repriced since the date of the grant.

          SECTION 3.3 Authorization; No Conflict.

          (a) The Company has the requisite corporate power and authority to enter into and deliver this Agreement and all other agreements and documents contemplated hereby to which it is a party and to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by the Company, the performance by the Company of its obligations hereunder and the consummation by the Company of the Transactions have been duly authorized and approved by the Company Board. No other corporate proceedings on the part of the Company or any of the Company Subsidiaries are necessary to authorize the execution and delivery of this Agreement, the performance by the Company of its obligations hereunder and the consummation by the Company of the Transactions, except, in the case of the Merger (to the extent required by the DGCL), for the approval of this Agreement by the holders of a majority of the issued and outstanding shares of Company Common Stock (the “Required Company Stockholder Vote”). This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws of general application affecting or relating to the enforcement of creditors rights generally and equitable principles of general applicability, whether considered in a proceeding at law or in equity (the “Bankruptcy and Equity Exception”).

          (b) Neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the Transactions nor compliance by the Company with any of the provisions herein will (i) result in a violation or breach of or conflict with the

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Company Charter Documents or the Subsidiary Documents, (ii) result in a violation or breach of or conflict with any provisions of, or result in the loss of any benefit under or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination, cancellation of, or give rise to a right of purchase under, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any Lien (as defined in Section 3.4) upon any of the properties or assets owned or operated by the Company or any Company Subsidiaries under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, contract, lease, agreement or other instrument or obligation of any kind to which the Company or any of the Company Subsidiaries is a party or by which the Company or any of the Company Subsidiaries or any of their respective properties or assets may be bound or (iii) subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (c) below, violate any judgment, ruling, order, writ, injunction or decree of any Governmental Authority (“Judgment”) or any statute, code, decree, law, ordinance, rule or regulation or orders of Governmental Authorities (“Law”) applicable to the Company or any of the Company Subsidiaries or any of their respective properties or assets, other than any such event described in items (ii) or (iii) which, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.

           (c) No consent, approval, order or authorization of, or registration, declaration or filing with, any Federal, state, local or foreign governmental or regulatory authority (a “Governmental Authority”) is necessary to be obtained or made by the Company or any Company Subsidiary in connection with the Company’s execution, delivery and performance of this Agreement or the consummation by the Company of the Transactions, except for (i) compliance with the DGCL, with respect to the filing of the Certificate of Merger, (ii) compliance with and filings pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”) and the foreign competition or antitrust Laws identified on Section 3.3(c)(ii) of the Company Disclosure Letter, (iii) the filing with the SEC of (A) the Schedule 14D-9, (B) if necessary, a proxy statement in definitive form relating to the Company Stockholders Meeting (as defined in Section 6.1(b)) (such proxy statement, as amended or supplemented from time to time, (the “Proxy Statement”)) and compliance with other applicable requirements of the Exchange Act, (C) any information statement required by Rule 14f-1 promulgated by the SEC under the Exchange Act (the “Information Statement”) in connection with the Offer and (D) such reports under Section 13 or 16 of the Exchange Act and the rules and regulations promulgated thereunder, as may be required in connection with this Agreement and the Transactions, (iv) compliance with the rules of The Nasdaq Stock Market Inc. (“Nasdaq”), and (v) compliance with the “blue sky” laws of various states, other than such other consents, approvals, orders, authorizations, filings, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the Transactions.

          SECTION 3.4 Subsidiaries.

          (a) All of the subsidiaries of the Company (each a “Company Subsidiary” and together, the “Company Subsidiaries”) and their respective jurisdictions of organization are identified in Section 3.4(a) of the Company Disclosure Letter. Other than the Company

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Subsidiaries, the Company does not own or control, directly or indirectly, any membership interest, partnership interest, joint venture interest, other equity interest or any other capital stock of any Person and there are no silent partnerships, sub-partnerships and/or similar rights with respect to the Company or any Company Subsidiary. As used in this Agreement, “Person” means an individual, corporation, partnership, limited partnership, joint venture, association, trust, unincorporated organization, limited liability company or other entity.

          (b) All of the outstanding shares of capital stock or other equity securities of, or other ownership interests in, each Company Subsidiary are, where applicable, duly authorized, validly issued, fully paid and nonassessable, and the Company or a Company Subsidiary is the record and beneficial owner of such shares, securities or interests, free and clear of any Liens or limitations on voting rights. All such shares of capital stock, equity securities and other ownership interests have been duly and validly issued and are fully paid and nonassessable. There are no subscriptions, options, warrants, calls, rights, convertible securities or other agreements or commitments of any character relating to the issuance, transfer, sales, delivery, voting or redemption (including any rights of conversion or exchange under any outstanding security or other instrument) for any of the capital stock or other equity interests of, or other ownership interests in, any Company Subsidiary. There are no agreements requiring the Company or any Company Subsidiary to make contributions to the capital of, or lend or advance funds to, any Company Subsidiary. As used in this Agreement, “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, claim or encumbrance of any kind in respect of such asset.

          SECTION 3.5 SEC Reports and Financial Statements. Since January 1, 2005, the Company has filed with the SEC all forms, reports, schedules, registration statements, definitive proxy statements and other documents (collectively, including all exhibits thereto, the “Company SEC Reports” ) required to be filed by the Company with the SEC. As of their respective dates, and giving effect to any amendments or supplements thereto filed prior to the date of this Agreement, the Company SEC Reports complied in all material respects with the requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act and the Sarbanes-Oxley Act, as the case may be and the respective rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Reports, and none of the Company SEC Reports contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments received from the SEC Staff with respect to the Company SEC Reports. To the knowledge of the Company, none of the Company SEC Reports is the subject of ongoing SEC review or investigation. None of the Company Subsidiaries is required to file any forms, reports or other documents with the SEC pursuant to Section 13 or 15 of the Exchange Act.

          (a) The consolidated balance sheets and the related consolidated statements of operations, consolidated statements of stockholders’ equity and consolidated statements of cash flows (including, in each case, any related notes and schedules thereto) (collectively, the “Company Financial Statements”) of the Company contained in the Company SEC Reports comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in

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conformity with United States generally accepted accounting principles (“GAAP”) (except, in the case of unaudited statements, as may be noted therein) applied on a consistent basis during the periods involved (except as otherwise noted therein) and present fairly in all material respects the consolidated financial position and the consolidated results of operations and cash flows of the Company and the Company Subsidiaries as of the dates or for the periods presented therein (subject, in the case of unaudited statements, to normal year end adjustments that will not be material in amount or effect). Neither the Company nor any of the Company Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP or the notes thereto, other than liabilities (i) as and to the extent reflected or reserved against on the audited balance sheet of the Company and the Company Subsidiaries as of December 31, 2006 (including the notes thereto) or any subsequent Company Financial Statement included in the Company SEC Reports or (ii) incurred after December 31, 2006 in the ordinary course of business consistent with past practices and that are not, individually or in the aggregate, material to the Company and the Company Subsidiaries, taken as a whole.

          (b) Neither the Company nor any Company Subsidiary 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 the Company 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 of the SEC), where the results, purpose or effect of such contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of the Company Subsidiaries in the Company SEC Reports. As used in this Agreement, “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

          (c) With respect to each annual report on Form 10-K, each quarterly report on Form 10-Q and each amendment of any such report included in the Company SEC Reports filed since January 1, 2005, the principal executive officer and principal financial officer of the Company (or each former principal executive officer and each former principal financial officer of the Company) have made all certifications required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and any related rules and regulations promulgated by the SEC and the statements contained in any such certifications are complete and correct.

          (d) The Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) or 15d-15(e) promulgated by the SEC under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to the Company and the Company Subsidiaries required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is made known to the Company’s principal executive officer and its principal financial officer by others within

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those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; and, to the knowledge of the Company, such disclosure controls and procedures are effective in timely alerting the Company’s principal executive officer and its principal financial officer to material information required to be included in the Company’s periodic reports required under the Exchange Act and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The Company’s principal executive officer and its principal financial officer have disclosed, based on their most recent completed evaluation, to the Company’s auditors and the audit committee of the Board of Directors of the Company and to Parent, (x) all significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data and have identified for the Company’s auditors any material weaknesses in internal controls and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls. To the knowledge of the Company, there are no facts or circumstances that would prevent its chief executive officer and principal financial officer from giving the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act, without qualification, when next due.

          (e) To the knowledge of the Company, neither the Company nor any of the Company Subsidiaries nor any director, officer, agent, employee or Affiliate of the Company or any of the Company Subsidiaries is aware of any action, or any allegation of any action, or has taken any action, directly or indirectly, (i) that would constitute a violation by such Persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder the (“FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA, or (ii) that would constitute an offer to pay, a promise to pay or a payment of money or anything else of value, or an authorization of such offer, promise or payment, directly or indirectly, to any employee, agent or representative of another company or entity in the course of their business dealings with the Company or any of the Company Subsidiaries, in order to induce such person to act against the interest of his or her employer or principal.

          (f) The Company has disclosed to Parent all internal investigations, and, to the knowledge of the Company, all external, governmental or other regulatory investigations, in each case regarding any action or any allegation of any action described in subsection (e) of this Section 3.5. To the knowledge of the Company, it also has disclosed to Parent all facts or circumstances that call into question the accuracy of its books and records or the adequacy of the internal controls at the Company or any of the Company Subsidiaries with respect to the actions described in subsection (e) of this Section 3.5.

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          (g) The Company and the Company Subsidiaries have instituted and maintained policies and procedures designed to ensure, and which are reasonably expected to ensure, compliance with the FCPA.

          (h) The Company is in compliance in all material respects with all current listing and corporate governance requirements of Nasdaq, and is in compliance in all material respects with all rules, regulations and requirements of the Sarbanes-Oxley Act and the SEC.

          SECTION 3.6 Absence of Material Adverse Changes, etc.

          (a) Since September 30, 2007, the Company and the Company Subsidiaries have conducted their business in the ordinary course of business consistent with past practice and:

     (i) there has not been or occurred any event, change, occurrence or development of a state of facts that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect; and

     (ii) neither the Company nor any of the Company Subsidiaries have taken any action described in Section 5.1 hereof (other than (b)(vii), (ix), (x), (xiii), (xv), (xvi) and (xvii) and (b)(xxii) to the extent relating the foregoing) that, if taken during the period from the date of this Agreement through the Effective Time, would constitute a breach of such provision.

          (b) Without limiting the foregoing, except as disclosed in the Available Company SEC Documents, since December 31, 2006, there has not occurred any damage, destruction or loss (whether or not covered by insurance) of any material asset of the Company or any of the Company Subsidiaries that materially affects the use thereof. As used in this Agreement, “Available Company SEC Documents” means the reports, schedules, forms, statements and other documents filed by the Company with the SEC or furnished by the Company to the SEC, in each case, prior to the date of this Agreement.

          SECTION 3.7 Litigation. There are no suits, actions, claims or legal, administrative, arbitration or other proceedings or governmental or regulatory investigations pending or, to the knowledge of the Company, threatened, to which the Company or any of the Company Subsidiaries is a party, or, to the knowledge of the Company, that materially affects the assets of the Company or any of the Company Subsidiaries, except where such suits, actions, claims, proceedings or investigations would not reasonably be expected to result in a Judgment for money damages in excess of $250,000 and would not reasonably be expected to result in any material injunctive relief. There are no material Judgments of any Governmental Authority or arbitrator outstanding (or, to the knowledge of the Company, threatened to be imposed) against the Company or any of the Company Subsidiaries.

          SECTION 3.8 Information Supplied. None of the information supplied or to be supplied by the Company specifically for inclusion or incorporation by reference in (i) the Offer Documents, the Schedule 14D-9 or the Information Statement will, at the time such document is filed with the SEC, at any time it is amended or supplemented or at the time it is first published, sent or given to the holders of Company Common Stock, contain any untrue

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statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they are made, not misleading, and (ii) the Proxy Statement (if any) will, at the date it is first mailed to the holders of Company Common Stock or at the time of the Company Stockholders Meeting (if such a meeting is held), 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 or will, at the time of the Company Stockholders Meeting (if such a meeting is held), omit to state any material fact necessary to correct any statement in any earlier communication from the Company with respect to the solicitation of proxies for the Company Stockholders Meeting that shall have become false or misleading in any material respect. The Schedule 14D-9, the Information Statement and the Proxy Statement (if any) will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder. No representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Merger Sub in writing specifically for inclusion or incorporation by reference in the Schedule 14D-9, the Information Statement or the Proxy Statement (if any).

          SECTION 3.9 Broker’s or Finder’s Fees. Except for the Company Financial Advisor, no agent, broker, investment banker, or similar Person or firm acting on behalf of the Company or any Company Subsidiary or under the Company’s or any Company Subsidiary’s authority is or will be entitled to any advisory, commission or broker’s or finder’s fee or similar fee or commission or reimbursement of expenses from any of the parties hereto in connection with any of the Transactions. The Company has heretofore delivered to Parent a complete and correct copy of the Company’s engagement letter with the Company Financial Advisor, which letter describes all fees payable to the Company Financial Advisor in connection with the Transactions, all agreements under which any such fees or any expenses are payable and all indemnification and other agreements related to the engagement of the Company Financial Advisor.

          SECTION 3.10 Employee Plans. (a) Section 3.10(a)(i) of the Company Disclosure Letter sets forth all Company Employee Benefit Plans. Section 3.10(a)(ii) of the Company Disclosure Letter sets forth a complete and accurate list, as of the date of this Agreement, of all employees of the Company and the Company Subsidiaries, indicating for each employee (to the extent permitted by Law) his or her name, date of hire, position, salary, target bonus, and accrued vacation and sick leave balance, location and status as full time or part time employees. Such information shall be updated in writing and delivered to Parent as of a date within three (3) business days of Closing. As used in this Agreement, “Company Employee Benefit Plan” means an Employee Benefit Plan maintained, adopted, sponsored, contributed or required to be contributed to by the Company or any entity with which the Company is considered a single employer under Section 414(b), (c) or (m) of the Code (“Company ERISA Affiliates») with respect to any current or former employee, officer or director of the Company or any of the Company Subsidiaries or any beneficiary or dependent thereof and under which the Company or any Company ERISA Affiliate would reasonably be expected to have any material liability. As used in this Agreement, “Employee Benefit Plan” means any material plan, program, policy, practice, agreement or other arrangement, whether written or unwritten, relating to individual consulting, employment, pension, profit-sharing, bonus, incentive compensation,

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deferred compensation, vacation, sick pay, stock purchase, equity-based stock option, phantom equity, severance, supplemental unemployment, hospitalization or other medical, life, or other insurance, long- or short-term disability, change of control, fringe benefit or any other similar employee benefits.

          (b) With respect to each Company Employee Benefit Plan, the Company has made available to Parent a true, correct and complete copy of: (i) each written Company Employee Benefit Plan and all amendments thereto, if any; (ii) the most recent Annual Report (Form 5500 Series) including all applicable schedules, if any; (iii) the current summary plan description and any material modifications thereto, if any, or any written summary provided to participants with respect to any plan for which no summary plan description exists; (iv) the most recent determination letter (or if applicable, advisory or opinion letter) from the Internal Revenue Service, if any; and (v) all material notices given to such Company Employee Benefit Plan, the Company, or any Company ERISA Affiliate by the Internal Revenue Service, Department of Labor, Pension Benefit Guarantee Corporation, the Financial Services Commission of Ontario, the Canada Revenue Agency, or other governmental agency relating to such Company Employee Benefit Plan.

          (c) Each Company Employee Benefit Plan that is intended to be “qualified” within the meaning of Section 401(a) of the Code (“Qualified Company Employee Benefit Plan”) has been the subject of a favorable determination letter (or, if applicable, advisory or opinion letter) from the Internal Revenue Service that has not been revoked (or if not determined to be so qualified, such Company Employee Benefit Plan may still be amended within the remedial amendment period to cure any qualification defect to the extent permitted by Law), and to the Company’s knowledge, no event has occurred and no condition exists that would reasonably be expected to adversely affect the qualified status of any such Company Employee Benefit Plan.

          (d) (i) Each Company Employee Benefit Plan has been operated and administered in all material respects in accordance with its provisions and in compliance with all applicable provisions of ERISA and the Code and any other applicable Laws; and (ii) all contributions required to be made to any Company Employee Benefit Plan have to the extent material been made or the amount of such payment or contribution obligation has been reflected in the Available Company SEC Documents which are publicly available prior to the date of this Agreement.

          (e) (i) Neither the Company nor any Company Subsidiary has engaged in any prohibited transaction that will have a material effect on the Company and the Company Subsidiaries, taken as a whole, within the meaning of Section 4975 of the Code or Section 406 of ERISA, as a fiduciary or party in interest with respect to any Company Employee Benefit Plan; and (ii) to the knowledge of the Company, no prohibited transaction has occurred with respect to any Company Employee Benefit Plan.

          (f) Neither the Company nor any Company ERISA Affiliate has, at any time during the last six years, sponsored, contributed to or been obligated to contribute to any pension plan subject to Title IV of ERISA, any “multiemployer plan” (as defined in Section 3(37) of ERISA) or a plan that has two or more contributing sponsors at least two of whom are not under common control (within the meaning of Section 4063 of ERISA).

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          (g) No Company Employee Benefit Plan that is a welfare plan within the meaning of Section 3(1) of ERISA provides benefits or coverage following retirement or other termination of employment other than as required by Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the Code or under a similar state Law, or claims incurred on or before the end of the month on or immediately following the termination date of any employee.

          (h) Neither the execution and delivery of this Agreement nor the consummation of the Transactions, either alone or in connection with a subsequent event, will (i) result in any material payment (including without limitation severance, unemployment compensation, bonus or otherwise) becoming due to any director, officer or employee of the Company under any Company Employee Benefit Plan or otherwise, (ii) result in a payment or benefit becoming due to any director, officer or employee of the Company under any Company Employee Benefit Plan or otherwise which will be characterized as an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code that is subject to the imposition of an excise tax under section 4999 of the Code, (iii) materially increase any benefits otherwise payable under any Company Employee Benefit Plan, or (iv) result in the acceleration of the time of payment, funding or vesting of any such benefits to any material extent.

          (i) Each Company Employee Benefit Plan has been operated in good faith compliance with the applicable provisions of Section 409A of the Code, and no benefit provided under such Company Employee Benefit Plan will trigger any reportable transaction under Section 409A of the Code.

          (j) With respect to each non-US Company Employee Benefit Plan (a “Foreign Plan”):

     (i) all employer and employee contributions to each Foreign Plan required by law or by the terms of such Foreign Plan have been made, or, if applicable, accrued in accordance with normal accounting practices;

     (ii) each Foreign Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities;

     (iii) other than routine claims for benefits, no Company Employee Benefit Plan, no administrator of any Company Employee Benefit Plan, and no member of any body which administers a Company Employee Benefit Plan, is subject to any pending action, investigation, examination, claim (including claims for income taxes, interest, penalties, fines or excise taxes) or any other proceeding initiated by any Person, and there exists no state of facts which could reasonably be expected to give rise to any such action, investigation, examination, claim or other proceeding;

     (iv) subject to the requirements of applicable Laws, no provision of any Company Employee Benefit Plan or of any agreement, and no act or omission of the Company in any way limits, impairs, modifies or otherwise affects the right of the Company to unilaterally amend or terminate any Company Employee Benefit Plan, and no commitments to improve or otherwise amend any Company Employee Benefit Plan have been made; and

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     (v) No Foreign Plan is, or at any time was, a defined benefit registered pension plan; and

          (k) the Company is not and has not at any time since 27 April 2004 been connected with or an associate of (as those terms are used in the UK Pensions Act 2004) an employer in relation to an occupational pension scheme (as defined in section 1 of the UK Pension Schemes Act 1993 (“PSA 1993”) established in the UK which is not a money purchase scheme (as defined in section 181 of PSA 1993).

          As used in this Agreement, “Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, and “ERISA” means the Employee Retirement Income Securities Act of 1974, as amended, and the rules and regulations promulgated thereunder.

          SECTION 3.11 Opinion of Financial Advisor. The Company Board has received from the Company Financial Advisor an opinion (the “Fairness Opinion”) to the effect that, as of the date of the opinion and subject to the considerations and limitations set forth therein, the consideration to be received by holders of Company Common Stock in the Offer and the Merger is fair, from a financial point of view, to the holders of the Company Common Stock (other than Parent, Merger Sub and their affiliates). The Company has delivered to Parent a correct and complete copy of the Fairness Opinion for informational purposes only and not for reliance by Parent.

          SECTION 3.12 Taxes.

          (a) Each of the Company and each Company Subsidiary has timely filed all material federal, provincial, state, local, municipal, and other Tax Returns required to be filed by it in the manner prescribed by applicable Law and all such Tax Returns are true, complete and correct in all material respects; and all Taxes due and owing (whether or not shown as due on such Tax Returns) have been paid in full and the Company and each Company Subsidiary has made adequate provision (or adequate provision has been made on its behalf) for all accrued Taxes not yet due. The accruals and reserves for Taxes reflected in the Company’s Form 10-K for the fiscal year ended December 31, 2006 are adequate to cover all Taxes accruing through such date. There are no Liens on any of the assets, rights or properties of the Company or any Company Subsidiary with respect to Taxes, (other than Liens for Taxes not yet due and payable or for Taxes that the Company or a Company Subsidiary is contesting in good faith through appropriate proceedings).

          (b) There is no claim, audit, action, suit, proceeding or investigation currently pending or, to the knowledge of the Company threatened against or with respect to the Company or any Company Subsidiary in respect of any Tax or Tax asset of the Company or any Company Subsidiary.

          (c) Neither the Company nor any Company Subsidiary has ever been a party to a “reportable transaction” within the meaning of Treas. Reg. Sec. 1.6011-4(b) or any similar provision of state, local or foreign law.

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          (d) Neither the Company nor any Company Subsidiary is a party to any Tax sharing agreement, Tax indemnity obligation or similar agreement, arrangement or practice with respect to Taxes (including any advance pricing agreement, closing agreement or other agreement relating to Taxes with any Taxing Authority).

          (e) The federal income Tax Returns of the Company and the Company Subsidiaries have been examined by and settled with the United States Internal Revenue Service or have expired or otherwise have been closed by virtue of the expiration of the relevant statute of limitations for all taxable periods ending on or before December 31, 2003.

          (f) Neither the Company nor any Company Subsidiary (i) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company), or (ii) has any liability for the Taxes of any Person (other than the Company or any of the Company Subsidiaries) under Treas. Reg. Sec. 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee of successor, by contract, or otherwise.

          (g) Neither the Company nor any Company Subsidiary currently is the beneficiary of any extension of time within which to file any Tax Return. Neither the Company nor any Company Subsidiary has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

          (h) Neither the Company nor any Company Subsidiary has been included in any “consolidated”, “unitary” or “combined” Tax Return provided for under the law of the United States, any foreign jurisdiction or any state or locality with respect to Taxes for any taxable period for which the statute of limitations has not expired (other than a group of which the Company and/or any Company Subsidiary are the only members).

          (i) Neither the Company nor any Company Subsidiary has applied for and/or received a ruling or determination from a Tax Authority regarding a past or prospective transaction of the Company or any Company Subsidiary.

          (j) No claim has been made by a Tax Authority in a jurisdiction where the Company or any of the Company Subsidiaries does not file Tax Returns that the Company or any Company Subsidiary is or may be subject to taxation by that jurisdiction.

          (k) Each of the Company and each Company Subsidiary has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.

          (l) Each of the Company and each Company Subsidiary has collected from each receipt from any of the past and present customers (or other third parties) the amount of all Taxes (including sales taxes) required to be collected and has paid and remitted such Taxes when due, in the form required under applicable Laws.

          (m) The unpaid Taxes of the Company or any Company Subsidiary, if any, (i) did not exceed any payables or liabilities for Taxes that are reflected or reserved against on

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the Balance Sheet and (ii) do not exceed any such payables or liabilities incurred in the ordinary course of business and are consistent with past practice since September 30, 2007.

          (n) Neither the Company nor any Company Subsidiary has been a United States real property interest within the meaning of Section 897(c) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

          (o) Neither the Company nor any Company Subsidiary has (i) applied for, been granted, or agreed to any accounting method change for which it will be required to take into account any adjustment under Section 481 of the Code or any similar provision of the Code or corresponding Tax Laws of any Tax Authority; (ii) any knowledge that any Tax Authority has proposed or purported to require such adjustment or change in accounting method, and the Company has no knowledge or belief that any such adjustment under Section 481 of the Code or the corresponding Tax Laws of any Tax Authority will be required of the Company or any Company Subsidiary upon completion of, or by reason of the Merger.

          (p) Since January 1, 2007, the Company and each Company Subsidiary has only incurred liabilities for Taxes arising in the ordinary course of business.

          (q) Neither the Company nor any Company Subsidiary has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code.

          (r) The Company and each Company Subsidiary has possession, custody or control of all records and documentation that it is obliged to hold, preserve and retain for the purposes of any Tax and of sufficient information to enable it to compute correctly its liability to Tax in so far as it relates to any event occurring on or before the Closing Date.

          (s) As used in this Agreement (i) “Pre-Closing Tax Period” means any taxable period or portion thereof ending on or before the Closing Date or, as the context may require, all such periods. If a taxable period begins on or before the Closing Date and ends after the Closing Date, then the portion of the taxable period to the end of the Closing Date shall constitute a Pre-Closing Tax Period; (ii) “Taxes” means all taxes, levies or other like assessments, charges or fees (including estimated taxes, charges and fees), including income, franchise, profits, corporations, goods and services, advance corporation, gross receipts, transfer, excise, property, sales, use value-added, ad valorem, license, capital, wage, employment, Canada and provincial pension plan contributions, payroll, withholding, social security, unemployment and employment insurance contributions, severance, occupation, import, custom, stamp, capital, alternative, add-on minimum, environmental or other governmental taxes or charges, imposed by any Federal, state, county, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions to tax applicable or related thereto whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other person; “Tax Return” means any return, election, report, claim for refund, declaration, statement, certificate, bill, schedule or other document, together with all amendments, attachments and supplements thereto, required to be filed with any Taxing Authority; and “Tax Authority” or “Taxing Authority” means any governmental or regulatory authority, body or instrumentality exercising any authority to impose, regulate or administer the

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imposition of Taxes; and (iii) “Tax Claim” means any notice in writing of any examination, dispute, settlement, proposed settlement, administrative or judicial proceeding or other matter relating to Taxes of the Company or any Company Subsidiary (whether pending or threatened).

          (t) Neither the Company nor any Company Subsidiary are a party to any agreement, contract, arrangement or plan that has resulted, separately or in the aggregate, in the payment of any amount that will not be fully deductible as a result of Section 162(m) of the Code.

          SECTION 3.13 Environmental Matters.

          (a) Except as has not had and would not reasonably be expected to have, individually or the aggregate, a Company Material Adverse Effect:

     (i) The Company and the Company Subsidiaries are and have for the past five years been in compliance with all applicable Environmental Laws, which compliance includes obtaining, maintaining and complying with all permits, notices, approvals and authorizations, if any, required under Environmental Laws in connection with the operation of the Company’s and any Company Subsidiary’s businesses or owned or leased real property.

     (ii) There are no pending or, to the knowledge of the Company, threatened, demands, claims, investigations, proceedings, information requests, or notices against the Company or any Company Subsidiary or any property currently or, to the knowledge of the Company, formerly owned or leased by the Company or any Company Subsidiary alleging non-compliance with or liability under any Environmental Law.

     (iii) To the knowledge of the Company, there are no conditions associated with the Company or any Company, Subsidiary or its operations or any real property currently or, to the knowledge of the Company, formerly owned, leased or operated by the Company or any Company Subsidiary or, to the knowledge of the Company, any other property, including any property to which the Company or any Company Subsidiary or any person working at the request or direction of the Company or any Company Subsidiary has arranged for the disposal or treatment of Hazardous Substances that would reasonably be expected to give rise to any violation of any Environmental Laws or result in the Company or any Company Subsidiary incurring Environmental Liabilities.

     (iv) Neither the Company nor any Company Subsidiary has assumed by contract or other binding agreement or by operation of Law, any liabilities of a third party arising under or pursuant to any Environmental Law or has agreed to indemnify, defend or hold harmless any third party for any liabilities arising under or pursuant to any Environmental Law.

          (b) The Company and each Company Subsidiary have made available to Parent copies of any material environmental or health and safety assessments, audits, investigations, or similar reports pertaining to the operation of the Company’s and any Company Subsidiary’s businesses and the operation or use of any real property currently or formerly owned, leased, or operated by the Company or any Company Subsidiary and any correspondence

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relating to any pending or threatened claim or proceeding or any similar matter resolved in the past five years, to the extent in the possession, custody or control of the Company or any Company Subsidiary.

          (c) As used in this Agreement, (i) “Environmental Laws” means any national, super-national, regional, federal, foreign, state, provincial or local Law or legal requirement, including regulations, orders, permits, licenses, approvals, ordinances, directives and the common law, pertaining to (a) pollution, the environment, natural resources, and the protection of the environment or human health and safety or (b) the presence of, use, handling, recycling, generation, treatment, storage, transportation or disposal of or employee exposure or the labeling or registration of Hazardous Substances and (ii) “Hazardous Substance” means any material, substance, chemical or waste (including, but not limited to biologic agents or vectors, living or genetically modified materials, culture, serum, wastes or off spec products) that are listed, classified, regulated, or characterized as hazardous, biohazardous, toxic, dangerous, explosive, radioactive, reactive, infectious, contagious, bioaccumulative, special, or as a pollutant, contaminant or words of similar meaning or effect under Environmental Laws or would otherwise form the basis of liability under such Environmental Laws, including, but not limited to, asbestos, bloodborne pathogens, radiation and radioactive materials, polychlorinated biphenyls, petroleum and petroleum products and by-products, lead, pesticides, natural gas, nuclear fuel, bacteria or fungi and medical waste.

          SECTION 3.14 Regulatory Compliance.

          (a) The Company and the Company Subsidiaries are (and since January 1, 2006 have been) in compliance in all material respects with all Laws applicable to the Company or any Company Subsidiaries, any of their properties or other assets or any of their businesses or operations. All activities of the Company or any of the Company Subsidiaries that are subject to the jurisdiction of the United States Food and Drug Administration (the “FDA”), European Medicines Agency (“EMEA”) or any comparable Governmental Authority, or subject to the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Public Health Service Act (“PHSA”), and the regulations promulgated thereunder or similar Laws of any foreign jurisdiction (collectively, “Drug Laws”), have been conducted in compliance in all material respects with all applicable requirements under all such Drug Laws, including, without limitation, those relating to good laboratory practices, good clinical practices, adverse event reporting, good manufacturing practices, recordkeeping, and filing of reports. Except for matters governed by Environmental Laws, which are addressed in Section 3.13 hereof, neither the Company nor any of the Company Subsidiaries has received after January 1, 2006 any notice or other communication from the FDA, EMEA or any other Governmental Authority alleging any violation of any Drug Law by the Company or any Company Subsidiary relating to any activity that is subject to Drugs Laws. Neither the Company nor any of the Company Subsidiaries has received after January 1, 2006 any (i) notices of inspectional observations (including those recorded on form FDA 483), establishment inspection reports, warning letters, untitled letters, or (ii) any other documents issued by the FDA, EMEA or any other Governmental Authority that indicate lack of compliance with any Drug Law by the Company, any Company Subsidiary, or by Persons who are otherwise performing services for the benefit of the Company or any Company Subsidiary.

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          (b) The Company and the Company Subsidiaries are (and since January 1, 2006 have been) in compliance in all material respects with the terms of all Permits. Since January 1, 2006, neither the Company nor any of the Company Subsidiaries has received written notice to the effect that a Governmental Authority (i) claimed or alleged that the Company or any of the Company Subsidiaries was not in material compliance with any Drug Laws applicable to the Company or any of the Company Subsidiaries, any of their properties or any other assets or any of their businesses or operations or (ii) was considering the amendment, termination, revocation or cancellation of any Permit. The consummation of the Merger, in of itself, will not cause the revocation or cancellation of any Permit.

          (c) All preclinical tests performed in connection with or as the basis for any submission to the FDA, EMA or other comparable Government Authority, filed under an IND, CTA, or other foreign equivalent or that the Company anticipates will be submitted to FDA or EMEA or other comparable Governmental Authority either (i) have been conducted in accordance, in all material respects, with applicable Good Laboratory Practice (“GLP”) requirements, including those contained in 21 C.F.R. Part 58 or (ii) involved experimental research techniques that were not required to be performed by a registered GLP testing laboratory, but employed procedures and controls generally used by qualified experts in the conduct of preclinical studies.

          (d) All human clinical trials to the extent conducted by the Company or the Company Subsidiaries, or to the knowledge of the Company by a third party on behalf of the Company or the Company Subsidiaries, have been and are being conducted in material compliance with all applicable requirements of “Good Clinical Practice”, “Informed Consent” and, to the knowledge of the Company, “Institutional Review Boards”, as those terms are defined by FDA, EMEA, and all applicable Drug Laws relating to clinical trials or the protection of human subjects, including those contained in 21 C.F.R. Parts 50, 54, 56, and 312, and the provisions governing the privacy of patient medical records under the Health Insurance Portability and Accountability Act of 1996 and the implementing regulations of the United States Department of Health and Human Services and all comparable foreign Drug Laws. Neither the Company nor any Company Subsidiary, nor to the knowledge of the Company, anyone acting on behalf of the Company or any Company Subsidiary, has received since January 1, 2006 any notice that the FDA, EMEA or any other Governmental Authority or institutional review board has initiated, or threatened to initiate, any clinical hold or other action to suspend any clinical trial or suspend or terminate any IND (or foreign equivalent thereto) sponsored by the Company or any Company Subsidiary, or otherwise materially restrict the preclinical animal studies on or clinical study of Thelin. Notwithstanding the foregoing, any representation is made only to the knowledge of the Company with respect to activities by third parties to which the Company has transferred its regulatory obligations under the provisions of 21 C.F.R. Section 312.52 or any comparable foreign Drug Law.

          (e) No product or product candidate manufactured, tested, distributed, held or marketed by the Company or any of the Company Subsidiaries has been recalled, withdrawn, suspended or discontinued (whether voluntarily or otherwise) since January 1, 2006. No proceedings (whether completed or pending) seeking the recall, withdrawal, suspension or seizure of any such product or product candidate or pre-market approvals or marketing authorizations are pending, or to the knowledge of the Company, threatened, against the

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Company or any of its Affiliates, nor have any such proceedings been pending at any time since January 1, 2006. The Company has, prior to the execution of this Agreement, provided or made available to Parent all information about adverse drug experiences since January 1, 2006 obtained or otherwise received by the Company from any source, in the United States or outside the United States, including information derived from clinical investigations prior to any market authorization approvals, commercial marketing experience, postmarketing clinical investigations, postmarketing epidemiological/surveillance studies or registries, reports in the scientific literature, and unpublished scientific papers relating to any product or product candidate manufactured, tested, distributed, held or marketed by the Company, any of the Company Subsidiaries or any of their licensors or licensees in the possession of the Company or any of the Company Subsidiaries (or to which any of them has access). In addition, the Company (and each Company Subsidiary, as applicable) has filed all annual and periodic reports, amendments and IND Safety Reports required for any of its products or product candidates required to be made to the FDA, EMEA or any other Governmental Authority.

          (f) There are no proceedings pending or, to the knowledge of the Company, threatened against the Company or a Company Subsidiary with respect to a violation by the Company or any Company Subsidiary of any Drug Law.

          (g) Section 3.14(g) of the Company Disclosure Letter sets forth a complete and accurate listing as of the date hereof by study title and report number of all preclinical animal studies and clinical trials previously or currently undertaken or sponsored with respect to Thelin in connection with or as the basis for any regulatory submission by or on behalf of the Company or the Company Subsidiaries to FDA, EMEA or any other Governmental Authority. True, complete and accurate copies of all such data and reports made available to the Company with respect to the studies and trials listed in Section 3.14(g) of the Company Disclosure Letter have been provided for review to the Parent, and the Company has otherwise provided or made available for review all material animal preclinical and material clinical studies and trials and all other material information known to it regarding the efficacy and safety of Thelin.

          (h) Except for Thelin, neither the Company nor any Company Subsidiary has or is marketing, distributing, selling or otherwise commercializing any product.

          (i) The Company and each Company Subsidiary have delivered or made available to Parent all forms, licenses, reports, applications, material correspondence, and material meeting minutes received from or sent to the FDA, EMEA and any other similar Governmental Authority relating to Thelin.

          (j) None of the Company, any Company Subsidiary, or any officer, employee or, to the knowledge of the Company, agent of the Company or any of the Company Subsidiaries, has with respect to any product that is manufactured, tested, distributed, held or marketed by the Company or any of the Company Subsidiaries made an untrue statement of a material fact or fraudulent statement to the FDA, the EMEA or any other Governmental Authority, failed to disclose a material fact required to be disclosed to the FDA, the EMEA or any other Governmental Authority, or committed any act, made any statement, or failed to make any statement, that would reasonably be expected to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Fact, Bribery, and Illegal Gratuities”,

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set forth in 56 Fed. Reg. 46191 (September 10, 1991) or for the EMEA or any other Governmental Authority in the European Economic Area to invoke any similar policy. Neither the Company (or any Company Subsidiary) nor, to the knowledge of the Company, any officer, employee or agent of the Company or any Company Subsidiary has been convicted of any crime or engaged in any conduct that would reasonably be expected to result in (x) debarment under 21 U.S.C. Section 335a or any similar state or federal Law, or (y) exclusion from participating in the federal health care programs under Section 1128 of the Social Security Act or any similar state or federal Law.

          SECTION 3.15 Intellectual Property.

          (a) Either the Company or a Company Subsidiary owns all right, title and interest, or is licensed and has a valid and continuing right to use, subject to any existing licenses or other grants to third parties, the Company Intellectual Property Rights. The Company Intellectual Property Rights comprise all of the Intellectual Property necessary for the conduct and operations of the business of the Company as currently conducted. Section 3.15(a) of the Company Disclosure Letter sets forth an accurate and complete list as of the date hereof of all Patents, registered Marks, pending applications for registrations of any Marks, registered Copyrights and pending applications for registration of any Copyrights owned or filed by the Company or any of the Company Subsidiaries and the jurisdictions in which each such Company Intellectual Property Right has been issued or registered or in which any application for such issuance and registration has been filed.

          (b) To the knowledge of the Company, the business and operations of the Company and the Company Subsidiaries, their products and services and the designing, development, manufacturing, reproduction, use, marketing, sale, distribution, maintenance and modification of any of the foregoing as presently performed does not infringe upon, misappropriate or otherwise violate any Intellectual Property of any third party.

          (c) Except as would not, individually or in the aggregate, have or reasonably be expected to have a Company Material Adverse Effect, there are no pending or, to the knowledge of the Company, threatened: (i) claims by any Person, alleging infringement, misappropriation, violation or dilution by the Company or the Company Subsidiaries of any Intellectual Property of a third party or challenging the validity, enforceability, ownership or use by the Company or a Company Subsidiary of any of the Company Intellectual Property Rights; (ii) claims by the Company or the Company Subsidiaries, alleging infringement, misappropriation, violation or dilution by a third party of any Company Intellectual Property Rights; (iii) claims by any Person against the Company or the Company Subsidiaries regarding payment of any royalty, license fee, charge or other amount due by the Company or a Company Subsidiary with respect to the use by the Company or a Company Subsidiary of any Intellectual Property of a third party; or (iv) claims that any default exists under any Contracts (including licenses, sublicenses, assignments and indemnities) under which the Company or a Company Subsidiary (A) has received or has granted any express license or express covenant not to sue with respect to Company Intellectual Property Rights or (B) is obligated to make payments or provide other consideration (in any form, including royalties, milestones and other contingent payments or other consideration) to a third party for use of any Company Intellectual Property Rights, in each case that is material to the business of the Company and the Company

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Subsidiaries as currently conducted and other than (x) customer, consultant, distribution, advertising and marketing, clinical trial, web development and design, and other similar commercial arrangements or agreements entered into in the ordinary course of business, (y) “shrink-wrap” or other non-exclusive licenses granted to the Company or a Company Subsidiary that are generally commercially available, and (z) agreements between and among the Company and/or one or more Company Subsidiaries (“Intellectual Property Agreements”), and, to the knowledge of the Company, there is no reasonable basis for any such claims. Section 3.15(c) of the Company Disclosure Letter sets forth, as of the date hereof, a complete and accurate list of all Intellectual Property Agreements.

          (d) No Company Intellectual Property Right is subject to any action, order, settlement agreement or stipulation that restricts in any material manner the use, transfer or licensing thereof by the Company or that may materially affect the validity, use or enforceability of such Company Intellectual Property Rights whether before or after the Closing. Except for the agreements set forth on Section 3.15(c) of the Company Disclosure Letter, the Company has not expressly granted any licenses, sublicenses, covenants not to sue or any other rights in, to or under the Company Intellectual Property Rights, in each case that is material to the business of the Company and the Company Subsidiaries as currently conducted and other than customer, consultant, distribution, advertising and marketing, clinical trial, web development and design, and other similar commercial arrangements or agreements entered into in the ordinary course of business and agreements between and among the Company and/or one or more Company Subsidiaries.

          (e) To the knowledge of the Company and as of the date hereof, none of the Company Intellectual Property Rights listed in Section 3.15(a) of the Company Disclosure Letter, except as identified therein, has lapsed, expired, been finally abandoned or been declared invalid or unenforceable, in whole or in part, by any Governmental Authority, and, to the knowledge of the Company, there are no facts or circumstances that would reasonably be expected to provide a basis for such abandonment, invalidity, or unenforceability. With respect to all Company Intellectual Property Rights listed in Section 3.15(a) of the Company Disclosure Letter, except as identified therein, all necessary filings have been timely made, and all necessary maintenance fees, and other fees have been timely paid to continue all such rights in effect as of the date hereof.

          (f) Each of the employees located in the United States who has contributed to or participated in the discovery, creation, conception, reduction to practice, or development of any Company Intellectual Property Right on behalf of the Company or any Company Subsidiary: (i) has executed a valid “invention assignment” agreement (in a form delivered by Company to Parent prior to Closing) under which he/she/it has assigned to the Company or Company Subsidiary, or is under a valid obligation to assign to the Company or Company Subsidiary, all right, title and interest in such Intellectual Property; (ii) is a party to a valid “work-made-for-hire” or other agreement under which the Company or Company Subsidiary is deemed to be the original and exclusive owner and author of all subject matter included in such Intellectual Property (a correct and complete copy of each such “work-made-for-hire” or other similar agreement having been delivered by Company to Parent prior to Closing); or (iii) otherwise has by operation of law irrevocably vested in the Company or Company Subsidiary all right, title and interest in such Intellectual Property by virtue of his or her relationship with the Company or

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Company Subsidiary, except in each case as would not have, individually or in the aggregate, a Material Adverse Effect. To the knowledge of the Company, no such employee has any contractual or other obligation that would preclude any such assignment or otherwise conflict with the obligations of such employee to the Company or any Company Subsidiary, as the case may be. No former employer of any employee of the Company or the Company Subsidiaries has made a claim against the Company or Company Subsidiary, that such employee is using Intellectual Property of such former employer. To the knowledge of the Company, no employee located outside of the United States has contributed to or participated in the discovery, creation, conception, reduction to practice, or development of any Patents included in any Company Intellectual Property Right on behalf of the Company or any Company Subsidiary.

          (g) The Company and the Company Subsidiaries have taken reasonable steps necessary to protect and preserve the confidentiality of their Trade Secrets. To the knowledge of the Company, all employees, contractors and other parties having access to such Trade Secrets have executed a written proprietary information or confidentiality agreement with the Company or the Company Subsidiaries. To the knowledge of the Company, there have been no violations of confidentiality with respect to any such Trade Secrets by any Person.

          (h) To the knowledge of the Company, no government funding and no facilities of a university, college, other educational institution or research center were used in the development of any Intellectual Property claimed in any issued Patent claiming the active ingredient, composition, method of manufacture or use of Thelin owned by the Company or any of the Company Subsidiaries where, as a result of such funding or the use of such facilities, the government or any university, college, other educational institution or research center has any rights in such Intellectual Property except with respect to any method of use Patent as would not be material to the Company and the Company Subsidiaries, taken as a whole.

          (i) As used in this Agreement, “Intellectual Property” means any Marks, Patents, Copyrights, domain names, Trade Secrets, industrial designs, any rights in know-how, inventions or tangible research materials, and any other intellectual property and intellectual property rights of any kind or nature. As used in this Agreement, “Trade Secrets” means any trade secrets under applicable Law anywhere in the world and all claims and rights related thereto. As used in this Agreement, “Patents” means, collectively, all patents and applications therefor, including all provisionals, non-provisionals, continuations, divisionals, continuations-in-part, reexaminations and reissues and any and all extensions, and renewals of any of the foregoing, including without limitation supplementary protection certificates. As used in this Agreement, “Marks” means trade marks, service names, brand names, brand marks, trade dress rights, and any other source identifying symbols, logos, emblems, signs or insignia, whether registered or unregistered, and all registrations and applications therefor, together with the goodwill associated with or symbolized thereby. As used in this Agreement, “Copyrights” mean all copyrights, whether registered or unregistered (including copyrights in computer software programs), mask work rights, and all registrations and applications therefor. As used in this Agreement, “Company Intellectual Property Rights” means all Intellectual Property owned or used by the Company or any of the Company Subsidiaries that is material to or necessary for the conduct of the business of the Company or any of the Company Subsidiaries as currently conducted.

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          (j) Notwithstanding the foregoing, nothing in this Section 3.15 shall apply to the drug Argatroban or to any Intellectual Property associated therewith.

          SECTION 3.16 Employment Matters.

          (a) Neither the Company nor any Company Subsidiary is a party to or otherwise bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is any such contract or agreement presently being negotiated, nor, to the knowledge of the Company, are there, any threatened or pending union organizing activities or representation campaigns respecting any of the employees of the Company or any of the Company Subsidiaries. As of the date of this Agreement, there is no pending or, to the knowledge of the Company, threatened, labor strike, dispute, walkout, work stoppage, slow-down or lockout involving the Company or any of the Company Subsidiaries. During the 180-day period preceding the Closing Date, there will have been no “mass layoff” or “plant closing” as defined by the Worker Adjustment and Retraining Notification Act or any similar state, local law or provincial law.

          (b) The Company and the Company Subsidiaries are in compliance in all material respects with all terms and conditions of employment and all Laws respecting employment, including, pay equity, wages and hours of work and occupational health and safety, and to the knowledge of the Company, there are no outstanding claims, charges, complaints, investigations or order under any such Laws;

          (c) No trade union has applied to have the Company or any of the Company Subsidiaries declared a related employer pursuant to the Labour Relations Act (Ontario);

          (d) There are no outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any workplace safety and insurance legislation and neither the Company nor any Company Subsidiary has been reassessed in any material respect under such legislation during the past three (3) years and, to the knowledge of the Company, no audit of the Company or any Company Subsidiary is currently being performed pursuant to any applicable workplace safety and insurance legislation. There are no claims or potential claims that may materially adversely affect the Company’s or any of the Company Subsidiaries’ accident cost experience in respect of their business.

          (e) Neither the Company nor any Company Subsidiary has or reasonably anticipates any direct or indirect liability that would be material to the Company and the Company Subsidiaries taken as a whole with respect to any misclassification of any person as an independent contractor rather than as an employee, or with respect to any employee leased from another employer.

          SECTION 3.17 Insurance. Section 3.17 of the Company Disclosure Letter sets forth a correct and complete list as of the date hereof of all insurance policies (including information on the premiums payable in connection therewith and the scope and amount of the coverage provided thereunder) maintained by the Company or any of the Company Subsidiaries (the “Policies”). To the knowledge of the Company, the Policies provide adequate coverage for the operations conducted by the Company and the Company Subsidiaries. The Policies are in

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full force and effect. Neither the Company nor any of the Company Subsidiaries is in material breach or default, and neither the Company nor any of the Company Subsidiaries have taken any action or failed to take any action that, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, of any of the material Policies. No notice of cancellation or termination has been received by the Company with respect to any of the Policies.

          SECTION 3.18 Material Contracts.

          (a) Set forth in Section 3.18(a) of the Company Disclosure Letter is a list of the following Contracts to which the Company or any Company Subsidiary is a party or by which it is bound as of the date hereof (each such Contract, whether or not set forth in such section of the Company Disclosure Letter, a “Material Contract”):

     (i) employment Contract (other than ordinary course employment contracts with employees located in Europe), severance Contract, change of control Contract or any employee collective bargaining agreement or other Contract with any labor union;

     (ii) Contract not to compete or otherwise restricting in any material respect the development, manufacture, marketing, distribution or sale of any products or services (including any Contract that requires the Company or any of the Company Subsidiaries to work exclusively with any Person in any particular area) or any other similar limitation on the ability of the Company or any of the Company Subsidiaries to transact or compete in any line of business, in any therapeutic area, with any Person, in any geographic area or during any period of time;

     (iii) Contract containing any provision that applies to or restricts the operations or business of any Affiliate of the Company (other than any of the Company Subsidiaries) in a manner described in Section 3.18(a)(ii);

     (iv) Contract with (A) any Affiliate of the Company, other than any of the Company Subsidiaries, or any officer or director, (B) any current holder of capital stock of the Company or any Affiliate (other than any director, officer or employee or former employee holding incentive awards under any Stock Plan) or (C) any director or officer of the Company or a Company Subsidiary (other than any Contracts of the type described in Section 3.18(a)(i) or indemnification agreements) thereof;

     (v) each lease, license, sublease or other occupancy right or similar Contract with any Person (together with any amendments or supplements thereto) (each, a “Lease”) under which the Company or any of the Company Subsidiaries are a lessee, lessor or sublessor of, or makes available for use, to any Person (other than the Company) any real property or any portion or any premises otherwise occupied by or owned by the Company or any of the Company Subsidiaries;

     (vi) Contract (A) requiring or otherwise involving the potential payment by or to the Company or any of the Company Subsidiaries of more than an aggregate of $1,000,000, (B) in which the Company or any of the Company Subsidiaries have granted manufacturing rights, “most favored nation” pricing provisions or marketing or

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distribution rights relating to Thelin or (C) in which the Company or any of the Company Subsidiaries have agreed to purchase a minimum quantity of goods relating to Thelin or has agreed to purchase goods relating to Thelin exclusively from a certain party;

     (vii) Contract for the disposition of any significant portion of the assets or business of the Company or any of the Company Subsidiaries or any agreement for the acquisition, directly or indirectly, of a material portion of the assets or business of any other Person, in each case within the last five years;

     (viii) non ordinary course Contract for any joint venture, partnership, material research and development project or similar arrangement;

     (ix) Intellectual Property Agreement;

     (x) Contract (other than trade debt incurred in the ordinary course of business) under which the Company or any of the Company Subsidiaries have borrowed any money from, or issued any note, bond, debenture or other evidence of indebtedness for borrowed money to, any Person, in each case with a principal amount in excess of $1,000,000;

     (xi) Contract (including so-called take-or-pay or keepwell agreements) under which (A) any Person has directly or indirectly guaranteed indebtedness for borrowed money, liabilities or obligations of the Company or any of the Company Subsidiaries or (B) the Company or any of the Company Subsidiaries have directly or indirectly guaranteed indebtedness for borrowed money, liabilities or obligations of any Person (other than a Company Subsidiary), in each case other than (I) endorsements for the purpose of collection in the ordinary course of business, (II) Contract with a principal amount or expected obligations or liabilities of less than $1,000,000 and (III) ordinary course Contracts relating to research and development of products;

     (xii) Except for Contracts covered by (vi) above, Contract under which the Company or any of the Company Subsidiaries have, directly or indirectly, made any advance, loan, extension of credit or capital contribution to, or other investment in, any Person other than a Company Subsidiary in excess of $1,000,000;

     (xiii) Contract providing for any mortgage or security interest in material property of the Company and the Company Subsidiaries;

     (xiv) confidentiality agreements with any full time employee of the Company or any of the Company Subsidiaries that is not substantially in the form of the Company’s or a Company Subsidiary’s form of confidentiality agreement;

     (xv) Contract involving a supply or tolling agreement or arrangement that commits the Company or any of the Company Subsidiaries to purchase goods or supplies relating to Thelin for clinical studies or commercial use;

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     (xvi) Contract involving a standstill or similar obligation of the Company or any of the Company Subsidiaries to a third party or of a third party to the Company or any of the Company Subsidiaries;

     (xvii) Contract with any Governmental Authority other than clinical trial Contracts, investigator initiated study Contracts, sponsored research Contracts and similar research and development Contracts; and

     (xviii) Contract not entered into in the ordinary course of business that is material to the Company and the Company Subsidiaries taken as a whole and not required to be disclosed in response to any other subparagraph of this Section 3.18(a).

          (b) Except as would not reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect, (i) each of the Material Contracts is valid, binding and in full force and effect and is enforceable in accordance with its terms by the Company and the Company Subsidiaries party thereto, subject to the Bankruptcy and Equity Exception, (ii) neither the Company nor any of the Company Subsidiaries is in material default under any Material Contract, nor, to the knowledge of the Company, does any condition exist that, with notice or lapse of time or both, would constitute a material default thereunder by the Company and the Company Subsidiaries party thereto and (iii) to the knowledge of the Company, no other party to any Material Contract is in material default thereunder, nor does any condition exist that, with notice or lapse of time or both, would constitute a material default thereunder of such other party. As of the date hereof neither the Company nor any of the Company Subsidiaries has received any notice of termination or cancellation under any Material Contract or received any notice of breach or default in any material respect under any Material Contract which breach has not been cured. The Company has provided, or otherwise made available to Parent, true and correct copies of all of the Material Contracts in effect as of the date hereof. As used in this Agreement, “Contract” means any loan or credit agreement, debenture, note, bond, mortgage, indenture, deed of trust, license, lease, contract or other agreement, instrument or obligation.

          SECTION 3.19 Rights Agreement. The Company has taken all actions necessary (subject only to execution by The Bank of New York, as Rights Agent, which the Company shall cause to take place as soon as practicable, but in no event later than two days after the date hereof) to amend the Rights Agreement to provide that neither Parent nor any of its affiliates will become an Acquiring Person (defined in the Rights Agreement), that no Distribution Date or Stock Acquisition Date (each defined in the Rights Agreement) will occur, and that the Rights will not separate from the underlying shares of Company Common Stock or give the holders thereof the right to acquire securities of any party hereto, in each case as a result of the execution, delivery or performance of this Agreement or the consummation of the Offer, the Merger or the other Transactions.

          SECTION 3.20 Real Property.

          (a) Neither the Company nor any Company Subsidiary owns any real property, nor has the Company or any Company Subsidiary ever owned any real property.

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          (b) Section 3.20 of the Company Disclosure Letter sets forth a list of all real property that is as of the date hereof leased, subleased or licensed by or from the Company or any Company Subsidiary or otherwise used or occupied by the Company or any Company Subsidiary, the name of the lesser, licensor, sublessor, master lessor and/or lessee, the date and term of the Lease. The Company, or any of the Company Subsidiaries, holds a valid leasehold interest in each Lease. No party has a right to occupy any of the premises subject to a Lease except for the Company or any of the Company Subsidiaries. There are not pending, or to the knowledge of the Company, threatened condemnation or eminent domain actions or proceedings, or any special assessments or other activities of any public or quasi-public body that are reasonably likely to adversely affect the Company’s rights pursuant to the Leases.

          SECTION 3.21 Liquidated Damages Event. No “Liquidated Damages Event” (as defined in that certain Indenture, dated as of February 6, 2007 and supplemented September 21, 2007, by and between Argatroban Royalty Sub LLC and U.S. Bank National Association) has occurred or with notice or the passage of time or both will occur and the Company has no obligation to pay the Liquidated Damages Amount (as defined in such Indenture).

          SECTION 3.22 State Takeover Statutes. No “fair price”, “moratorium”, “control share acquisition” or other similar antitakeover statute or regulation enacted under state or federal laws in the United States (with the exception of Section 203 of the DGCL) applicable to the Company is applicable to the Offer, the Merger or the other Transactions. The action of the Board of Directors of the Company in approving this Agreement and the Transactions is sufficient to render inapplicable to this Agreement and the Transactions the restrictions on “business combinations” (as defined in Section 203 of the DGCL) as set forth in Section 203 of the DGCL.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND MERGER SUB

          Parent and Merger Sub hereby jointly and severally represent and warrant to the Company as follows:

          SECTION 4.1 Organization. Each of Parent and Merger Sub is a corporation organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each of Parent and Merger Sub has all requisite power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, operate and lease its properties and to carry on its business as now conducted, except for such franchises, licenses, permits, authorizations and approvals, the lack of which, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. A “Parent Material Adverse Effect” means a material adverse effect on the ability of either Parent or Merger Sub to perform its obligations under this Agreement or to consummate the Offer, the Merger and the other Transactions.

          SECTION 4.2 Merger Sub; Ownership of Shares. Merger Sub is a direct, wholly owned subsidiary of Parent that was formed solely for the purpose of engaging in the Transactions. Since the date of its incorporation and prior to the Effective Time, Merger Sub has

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not carried, and will not carry, on any business or conduct any operations other than the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto. Neither Parent nor Merger sub owns (directly or indirectly) any shares of Company Common Stock or holds any rights to acquire any shares of Company Common Stock except pursuant to this Agreement.

          SECTION 4.3 Authorization; No Conflict.

          (a) Each of Parent and Merger Sub has the requisite corporate power and authority to enter into and deliver this Agreement and all other agreements and documents contemplated hereby to which it is a party and to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by Parent and Merger Sub, the performance by Parent and Merger Sub of their respective obligations hereunder and the consummation by Parent and Merger Sub of the Transactions have been duly authorized by the respective Boards of Directors of Parent and Merger Sub, and no other corporate proceedings on the part of Parent or Merger Sub (including any vote of any class or series of outstanding capital stock) are necessary to authorize the execution and delivery of this Agreement, the performance by Parent and Merger Sub of their respective obligations hereunder and the consummation by Parent and Merger Sub of the Transactions. This Agreement has been duly executed and delivered by Parent and Merger Sub and constitutes a valid and binding obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.

          (b) The respective Board of Directors of each of Parent and Merger Sub has, by resolutions duly adopted by the requisite vote of the directors present at a meeting of such board, and not subsequently rescinded or modified in any way, approved this Agreement, the Offer, the Merger and the other Transactions.

          (c) None of the execution and delivery of this Agreement by Parent or Merger Sub, the consummation by Parent or Merger Sub of the Transactions or compliance by Parent or Merger Sub with any of the provisions herein will (i) result in a violation or breach of or conflict with the certificate or articles of incorporation or bylaws of Parent or Merger Sub or (ii) subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (d) below, violate any Judgment or Law applicable to Parent or Merger Sub or any of their respective properties or assets other than any such event described in items (i) or (ii) which, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. The copies of the certificate of incorporation and bylaws of Merger Sub that have been provided to the Company are complete and correct copies of such documents and contain all amendments thereto as in effect on the date of this Agreement.

          (d) No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Authority is necessary to be obtained or made by Parent, any Parent Subsidiary or Merger Sub in connection with Parent’s or Merger Sub’s execution, delivery and performance of this Agreement or the consummation by Parent or Merger Sub of the Transactions, except for (i) compliance with the DGCL, with respect to the filing of the Certificate of Merger, (ii) compliance with the HSR Act and the foreign competition and

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antitrust Laws set forth on Section 3.3(c)(ii) of the Company Disclosure Letter, (iii) the filing with the SEC of the Offer Documents and such reports under Sections 13 or 16 of the Exchange Act, as may be required in connection with this Agreement and the Transactions, (iv) compliance with the rules of Nasdaq and the NYSE, (v) and relevant national implementations thereof, (vi) compliance with the “blue sky” laws of various states, and (vii) such consents, approvals, orders, authorizations, registrations, declarations or filings, the lack of which, individually or in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect.

          SECTION 4.4 Information Supplied. None of the information supplied or to be supplied by Parent or Merger Sub specifically for inclusion or incorporation by reference in (i) the Offer Documents, the Schedule 14D-9 or the Information Statement will, at the time such document is filed with the SEC, at any time it is amended or supplemented or at the time it is first published, sent or given to the holders of Company Common Stock, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) the Proxy Statement (if any) will, at the date it is first mailed to the holders of Company Common Stock or at the time of the Company Stockholders Meeting (if such a meeting is held), 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 the light of the circumstances under which they are made, not misleading. The Offer Documents will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder. No representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference therein based on information supplied by the Company in writing specifically for inclusion or incorporation by reference in the Offer Documents.

          SECTION 4.5 Availability of Funds. Parent has available and will have available through the expiration of the Offer and the Effective Time, cash, cash equivalents and available sources of credit sufficient to accept for payment and pay for the Shares pursuant to the Offer and consummate the Merger and the other Transactions.

          SECTION 4.6 Broker’s or Finder’s Fees. Except for Lazard Frères & Co. LLC (the “Parent Financial Advisor”), no agent, broker, investment banker, or similar Person or firm acting on behalf of Parent, Merger Sub or any Parent Subsidiary or under Parent’s, Merger Sub’s or any Parent Subsidiary’s authority is or will be entitled to any advisory, commission or broker’s or finder’s fee or similar fee or commission from any of the parties hereto in connection with any of the Transactions.

          SECTION 4.7 No Additional Representations. Parent acknowledges that it and its Representatives have received access to such books and records, facilities, equipment, contracts and other assets of the Company that it and its representatives have desired or requested to review, and that it and its representatives have had full opportunity to meet with the management of the Company and to discuss the business and assets of the Company. Parent acknowledges that neither the Company nor any person has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Company furnished or made available to Parent and its representatives except as expressly set forth in Article 3 (which includes the Company Disclosure Letter and the Available Company

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SEC Documents). Without limiting the foregoing, the Company makes no representation or warranty to Parent with respect to any financial projection or forecast relating to the Company or any of the Company Subsidiaries.

ARTICLE 5
CONDUCT OF BUSINESS PENDING THE
MERGER

          SECTION 5.1 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, prior to the Effective Time, unless Parent shall otherwise consent in writing or except as expressly permitted or required pursuant to this Agreement (including Section 5.1 of the Company Disclosure Letter):

          (a) The Company and the Company Subsidiaries shall (i) conduct their business only in the ordinary and usual course of business and consistent with past practices and (ii) use their respective commercially reasonable efforts to maintain and preserve intact their respective business organizations, to maintain their significant beneficial business relationships with suppliers, contractors, distributors, customers, licensors, licensees and others having material business relationships with them, to retain the services of their present officers and key employees and to comply in all material respects with all applicable Laws and the requirements of all Contracts that are material to the Company and the Company Subsidiaries, taken as a whole, in each case, to the end that their goodwill and ongoing business shall be unimpaired at the Effective Time.

          (b) Without limiting the generality of the foregoing Section 5.1(a), the Company shall not, and shall not permit any of the Company Subsidiaries to, do any of the following:

     (i) other than in ordinary course of business consistent with past practice, purchase or otherwise acquire, sell, lease, transfer or dispose of or encumber any assets, rights or securities of the Company and the Company Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole;

     (ii) acquire by merging or consolidating with or by purchasing all or a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof;

     (iii) amend or propose to amend its certificate of incorporation or bylaws or, in the case of the Company Subsidiaries, their respective constituent documents;

     (iv) declare, set aside or pay any dividend or other distribution payable in cash, capital stock, property or otherwise with respect to any shares of its capital stock;

     (v) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any shares of its capital stock, other equity securities, other ownership interests or any options, warrants or rights to acquire any such stock, securities or interests, other than in connection with (x) the relinquishment of shares by former or

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current employees and directors of the Company in payment of withholding tax upon the vesting of Restricted Stock or (y) the cashless or net exercise of Options or Warrants;

     (vi) split, combine, subdivide or reclassify its outstanding securities;

     (vii) except for the Company Common Stock issuable upon the exercise or conversion of Options outstanding on the date hereof, the Notes or the Warrants, or pursuant to the Rights Agreement, and the vesting of Restricted Stock awards granted prior to the execution of this Agreement, issue, sell, grant, dispose of, pledge or otherwise encumber or authorize, propose or agree to the issuance, sale or disposition by the Company or any of the Company Subsidiaries of, any shares of, or any options, warrants, calls, commitments or rights of any kind or any other agreements of any character to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any voting securities or equity interests or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock outstanding on the date hereof;

     (viii) incur any indebtedness for borrowed money (other than trade payables) or guarantee any such indebtedness or enter into a “keep well” or similar agreement or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any Company Subsidiaries;

     (ix) except as required by Law or in order to replace any key employee whose employment is terminated with the Company or a Company Subsidiary after the date hereof (but any increase in compensation paid to the employee who replaces such departed employee shall not cause the total compensation to be paid to the replacement employee to exceed the total compensation paid to the departed employee), (A) grant or increase any severance or termination pay to any current or former director, executive officer or employee of the Company or any Company Subsidiary, (B) execute any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any such director, executive officer or employee of the Company or any Company Subsidiary, (C) increase the benefits payable under any existing severance or termination pay policies or employment agreements, (D) increase the compensation, bonus or other benefits of current or former directors, executive officers or employees of the Company or any Company Subsidiary, (E) adopt or establish any new employee benefit plan or amend in any material respect any existing employee benefit plan, (F) provide any material benefit to a current or former director, executive officer or employee of the Company or any Company Subsidiary not required by any existing agreement or employee benefit plan, or (G) take any action that would result in its incurring any obligation for any payments or benefits described in subsections (i), (ii) or (iii) of Section 3.10(h) (without regard to whether the Transactions are consummated) except to the extent required in a written contract or agreement in existence as of the date of this Agreement;

     (x) other than in the ordinary course of business consistent with past practice, execute or amend (other than as required by existing employee benefit plans or employment agreements or by applicable Law) in any material respect any material

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employment, consulting, severance or indemnification agreement between the Company or any of the Company Subsidiaries and any of their respective directors, officers, agents, consultants or employees, or any collective bargaining agreement or other obligation to any labor organization or employee incurred or entered into by the Company or any of the Company Subsidiaries (other than as required by existing employee benefit plans or employment agreements, or in order to comply with Section 409A of the Code, or other applicable Law);

     (xi) make any changes in its reporting for taxes or accounting methods, principles or practices (or change an annual accounting period or the Company’s fiscal year) other than as required by GAAP or applicable Law; change or rescind any Tax election; make any change to its method of reporting income, deductions, or other Tax items for Tax purposes; settle or compromise any Tax liability or enter into any transaction with an affiliate outside the ordinary course of business if such transaction would give rise to a material tax liability;

     (xii) settle, compromise or otherwise resolve any litigation or other legal proceedings material to the Company and the Company Subsidiaries taken as a whole or as would result in any liability in excess of the amount reserved therefor or reflected on the balance sheets included in the Company Financial Statements;

     (xiii) pay, discharge, settle or satisfy any claims, Liens, obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) involving more than $250,000 individually or $1,000,000 in the aggregate, which are not reserved for or reflected on the balance sheets included in the Company Financial Statements or incurred since the date of such financial statements in the ordinary course of business consistent with past practice, other than fees and expenses of advisors or other transaction costs related to this Agreement and the transactions contemplated hereunder substantially as previously disclosed to Parent;

     (xiv) make or commit to make capital expenditures in excess of $100,000 individually or $500,000 in the aggregate;

     (xv) enter into any agreement, arrangement or commitment that materially limits or otherwise materially restricts the Company or any Company Subsidiary, or that would reasonably be expected to, after the Effective Time, materially limit or restrict the Parent or any of its Subsidiaries or any of their respective affiliates or any successor thereto, from engaging or competing in any line of business in which it is currently engaged or in any geographic area material to the business or operations of Parent or any of its Subsidiaries;

     (xvi) enter into any lease or sublease of real property (whether as lessor, sublessor, lessee or sublessee) or modify, amend, terminate or fail to exercise any right to renew any lease or sublease of real property;

     (xvii) (A) enter into, terminate or amend any Material Contract that is material to the Company and the Company Subsidiaries (taken as a whole), (B) enter into any

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Contract that would be breached by, or require the consent of any third party in order to continue in full force following consummation of the Transactions, or (C) enter into any Contract with any third party that grants such third party any rights upon a change of control of the Company or that provides for any diminution of rights of the Company or the Company Subsidiaries upon a change of control of the Company or that can be terminated by such third party upon a change of control of the Company or (D) release any Person from prior to its expiration, or modify or waive any provision of, any confidentiality, standstill or similar agreement entered into since January 1, 2006 in connection with the Company’s review of strategic alternatives, or (E) exempt any Person from the definition of “Acquiring Person” in the Rights Agreement or amend or modify the Rights Agreement in any manner except as contemplated by Section 3.19;

     (xviii) create any subsidiary of the Company or a Company Subsidiary, other than the Company Subsidiaries;

     (xix) engage in any business or business activity other than the business and the business activities currently conducted;

     (xx) fail to use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by the Company and the Company Subsidiaries, other than such policies that expire by their terms (in which event the Company will use commercially reasonable efforts so that they will be renewed or replaced) or changes to such policies made in the ordinary course of business; and

     (xxi) except as permitted under Sections 5.1(b)(i) and (ii), make any investment (by contribution of capital, property transfers, purchase of securities or otherwise) in, or loan or advance to, any Person, other than (A) travel and similar advances to its employees or (B) to a direct or indirect wholly-owned Company Subsidiary, in each of (A) and (B) in the ordinary course of business; or

     (xxii) agree or commit to take any of the actions precluded by Section 5.1(b).

ARTICLE 6
ADDITIONAL AGREEMENTS

          SECTION 6.1 Preparation of Proxy Statement; Stockholders Meetings.

          (a) If the adoption of this Agreement by the holders of Company Common Stock is required by Law, the Company shall, as soon as practicable following the expiration of the Offer, prepare and file with the SEC the Proxy Statement in preliminary form, and each of the Company and Parent shall use its commercially reasonable efforts to respond as promptly as practicable to any comments of the SEC and its staff with respect thereto. The Company shall notify Parent promptly of the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Proxy Statement or for additional information and shall supply Parent with copies of all correspondence between the Company or any of its representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement. The Company shall give Parent and its counsel the opportunity to review the Proxy Statement, if required, prior to its being filed with the SEC and

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shall give Parent and its counsel the opportunity to review all amendments and supplements to the Proxy Statement, if required, and all responses to request for additional information and replies to comments prior to their being filed with, or sent to, the SEC. If at any time prior to receipt of the Required Company Stockholder Vote there shall occur any event that should be set forth in an amendment or supplement to the Proxy Statement, the Company shall promptly prepare and mail to its stockholders such an amendment or supplement. The Company shall not mail any Proxy Statement, or any amendment or supplement thereto, without Parent’s approval, which will not be unreasonably conditioned, withheld or delayed. The Company shall use its commercially reasonable efforts to cause the Proxy Statement and all required amendments and supplements thereto to be mailed to the holders of Company Common Stock as promptly as practicable after filing with the SEC.

          (b) If the adoption of this Agreement by the holders of Company Common Stock is required by Law, the Company shall, at Parent’s request, as soon as practicable following the expiration of the Offer, duly call, give notice of, convene and hold a meeting of its stockholders (the “Company Stockholders Meeting”) for the purpose of seeking the Required Company Stockholder Vote. Once the Company Stockholders Meeting has been called and noticed, the Company shall not postpone or adjourn the Company Stockholders Meeting without the consent of Parent, which shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, if Parent, Merger Sub and any other Parent subsidiary shall collectively acquire at least 90% of the outstanding shares of the Company Common Stock, the parties shall take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a stockholders meeting in accordance with Section 253 of the DGCL.

          (c) At the Company Stockholders Meeting, if such Company Stockholders Meeting is required, Parent shall cause all shares of Company Common Stock purchased pursuant to the Offer and all other shares of Company Common Stock owned by Parent, Merger Sub or any Parent Subsidiary to be voted in favor of the adoption of this Agreement.

          SECTION 6.2 Employee Benefit Matters.

          (a) Parent agrees to honor in accordance with their terms all employment and severance agreements in each case listed in Section 6.2 of the Company Disclosure Letter or filed as exhibits to the Available Company SEC Documents and all accrued benefits vested thereunder; it being understood and agreed that nothing in this Section 6.2(a) shall prevent Parent from amending or terminating any Company Employee Benefit Plan or other agreement in accordance with its terms and applicable Law.

          (b) For a period of one (1) year following the Closing, Parent agrees to provide employees of the Company and the Company Subsidiaries who are located in the United States (including employees of the Company and any Company Subsidiary incorporated in the United States who have been seconded to non-United States incorporated Company Subsidiaries (“US Seconded Employees”)) and retained by Parent with employee benefits (excluding equity and change in control plans, programs, or arrangements) that are substantially comparable in the aggregate to those benefits provided to such employees immediately prior to the Closing; provided that Parent shall be under no obligation to retain any employee or group of employees

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of the Company or the Company Subsidiaries other than as required by applicable Law or an employment agreement listed in Section 6.2 of the Company Disclosure Letter or filed as an exhibit to the Available Company SEC Documents.

          (c) For purposes of all employee benefit plans, programs and arrangements maintained by or contributed to by Parent and its subsidiaries (including, after the Closing, the Surviving Corporation), Parent shall, or shall cause its subsidiaries to, cause each such plan, program or arrangement to treat the prior service with the Company and its affiliates of each person who is an employee or former employee of the Company or the Company Subsidiaries immediately prior to the Closing (a “Company Employee”) who is located in the United States (including US Seconded Employees) (to the same extent such service is recognized under analogous plans, programs or arrangements of the Company or its affiliates prior to the Closing) as service rendered to Parent or its Subsidiaries, as the case may be, for purposes of eligibility to participate in and vesting thereunder (but not for any other purposes, including benefit accrual); provided, however, that such crediting of service shall not operate to duplicate any benefit or the funding of such benefit. Company Employees located in the United States (including US Seconded Employees) shall also be given credit for any deductible or co-payment amounts paid in respect of the plan year in which the Closing occurs, to the extent that, following the Closing, they participate in any other plan for which deductibles or co-payments are required. Parent shall also use its commercially reasonable efforts to cause each Employee Benefit Plan maintained by or contributed to by Parent and its subsidiaries (including, after the Closing, the Surviving Corporation) in which Company Employees located in the United States (including US Seconded Employees) participate, to waive any preexisting condition that was waived under the terms of any Company Employee Benefit Plan immediately prior to the Closing or waiting period limitation which would otherwise be applicable to a Company Employee located in the United States (including US Seconded Employees) on or after the Closing. Parent shall recognize any accrued but unused vacation, sick leave (to the extent accrued on the Company’s books and records) of the Company Employees located in the United States (including US Seconded Employees) as of the Closing Date, in accordance with the terms of such Company policies and Parent shall cause the Company and the Company Subsidiaries to provide such vacation, sick leave, and sabbatical time in accordance with the terms of such Company policies but in no event will Parent be obligated to extend or enlarge the benefits available under such Company policies.

          (d) Section 6.2(d) of the Company Disclosure Letter sets forth all severance obligations (other than any arising between the date hereof and the Effective Time as permitted by Section 5.1(b)(ix)), including a written description of any non-written severance policy, if applicable. Any Company Employee located in the United States (including US Seconded Employees) who is terminated other than for Cause within 180 days following the Closing Date shall receive from Parent severance benefits at least at great as the severance benefits such Company Employee would have received from the Company or Company Subsidiary, as applicable, if (1) the Company or such Company Subsidiary had terminated such Company Employee immediately before the Closing Date and (2) except with respect to a Company Employee described in section 1.2 of the Encysive 2007 Severance Pay Plan, such Company Employee were eligible for separation payments under Article 4 of the Encysive 2007 Severance Pay Plan (regardless of whether the Company Employee otherwise would not be so eligible). Notwithstanding the preceding sentence, a Company Employee located in the United States

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(including US Seconded Employees) who is terminated for Cause shall not be eligible to receive a severance benefit. For purposes of this Section 6.2(d), “Cause” shall mean conviction of a felony, misconduct involving material dishonesty, breach of trust, or unethical business practice, or refusal or material failure to perform material job functions (unless caused by incapacitating disability occurring after the Closing Date or in accordance with applicable Law).

          (e) Parent agrees to provide any required notice under the Worker Adjustment and Retraining Notification Act, as amended (the “WARN Act”), and any similar federal, state or local Law or regulation, and to otherwise comply with the WARN Act and any such other similar Law or regulation with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act) or group termination or similar event affecting Company Employees (including as a result of the consummation of the Transactions) and occurring from and after the Closing.

          (f) In the event the Closing occurs prior to March 31, 2008, Parent agrees to cause the Surviving Corporation and the Company Subsidiaries to pay to each Company Employee no later than March 31, 2008 the bonuses to which they are entitled in respect of 2007 to the extent accrued on the Company’s books and records as of the date hereof.

          SECTION 6.3 Antitrust Filings. The Company, Parent and Merger Sub shall each, as promptly as practicable (and in any event within ten business days) after the date of this Agreement, file or cause to be filed with the Federal Trade Commission (the “FTC”), the United States Department of Justice (the “DOJ”) and any comparable foreign antitrust or competition authority any notifications required to be filed under the HSR Act or comparable foreign antitrust or competition Laws with respect to the Transactions.

          SECTION 6.4 Public Statements. Subject to Section 6.8, the Company and Parent shall consult with each other prior to issuing, and provide each other with the opportunity to review and comment upon, any public announcement, statement or other disclosure with respect to this Agreement or the Transactions and shall not issue any such public announcement or statement prior to such consultation, except as may be required by Law or any listing agreement with a national securities exchange or trading market. The parties shall issue a joint press release, mutually acceptable to the Company and Parent, promptly upon execution and delivery of this Agreement.

          SECTION 6.5 Standard of Efforts.

          (a) Subject to the terms and conditions provided herein, each of the Company, Parent and Merger Sub agrees to use its commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective in the most expeditious manner practicable, the Offer, the Merger and the other Transactions, including (i) obtaining all consents, approvals, authorizations and actions or nonactions required for or in connection with the consummation by the parties hereto of the Offer, the Merger and the other Transactions (including any required or recommended filings under applicable Antitrust Laws), (ii) the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, a Governmental Authority, (iii) the obtaining of all necessary consents from third parties and (iv) the execution and delivery of any additional instruments

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necessary to consummate the Transactions and to fully carry out the purposes of this Agreement. For the purposes hereof, “Antitrust Laws” means the HSR Act, the Federal Trade Commission Act, the Sherman Act, as amended, the Clayton Act, as amended and any applicable foreign antitrust Laws and all other applicable laws issued by a Governmental Authority that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition. The Company shall have the right to review and approve in advance all characterizations of the information relating to the Company; Parent shall have the right to review and approve in advance all characterizations of the information relating to Parent or Merger Sub; and each of the Company and Parent shall have the right to review and approve in advance all characterizations of the information relating to the Transactions, in each case which appear in any material filing (including the Offer Documents, the Schedule 14D-9 and the Proxy Statement) made in connection with the Transactions. The Company, Parent and Merger Sub agree that they shall consult with each other with respect to the obtaining of all such necessary permits, consents, approvals and authorizations of all third parties and Governmental Authorities.

          (b) In furtherance of, and not in limitation of the foregoing, the parties shall use their respective commercially reasonable efforts to respond promptly to any requests for additional information made by the FTC, the DOJ or any applicable comparable foreign antitrust or competition authorities, and to cause the waiting periods under the HSR Act and any applicable comparable foreign antitrust or competition Law to terminate or expire at the earliest possible date after the date of filing. The parties hereto agree not to extend directly or indirectly any waiting period under the HSR Act or any applicable comparable foreign antitrust or competition Law or enter into any agreement with a Governmental Authority to delay or not to consummate the Offer, the Merger and the other Transactions, except with the prior written consent of the other parties hereto. Each of Parent and Merger Sub and the Company shall (x) promptly notify the other party of any written communication to that party from any Governmental Authority and, subject to applicable Law, permit the other party to review in advance any proposed written communication to any such Governmental Authority and incorporate the other party’s reasonable comments, (y) not agree to participate in any substantive meeting or discussion with any such Governmental Authority in respect of any filing, investigation or inquiry concerning this Agreement, the Offer, the Merger or the other Transactions unless it consults with the other party in advance and, to the extent permitted by such Governmental Authority, gives the other party the opportunity to attend, and (z) furnish the other party with copies of all correspondence, filings and written communications between them and their affiliates and their respective representatives on one hand, and any such Governmental Authority or its staff on the other hand, with respect to this Agreement, the Offer, the Merger and the other Transactions. Notwithstanding the foregoing or any other provision of this Agreement, the Company shall not, without Parent’s prior written consent, commit to any divestiture transaction or agree to any restriction on its business, and nothing in this Section 6.5 shall (i) limit any applicable rights a party may have to terminate this Agreement pursuant to Section 9.1 so long as such party has up to then complied in all material respects with its obligations under this Section 6.5, (ii) require Parent to offer, accept or agree to (A) dispose or hold separate any part of its or the Company’s businesses, operations, assets or product lines (or a combination of Parent’s and the Company’s respective businesses, operations, assets or product lines), (B) not compete in any geographic area or line of business, and/or (C) restrict the manner in which, or whether, Parent, the Company, the Surviving Corporation or any of their Affiliates may carry on

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business in any part of the world or (iii) require any party to this Agreement to defend, contest or otherwise resist any administrative or judicial action or proceeding, including any proceeding by a Governmental Authority or private party, challenging any of the Transactions as violative of any Antitrust Law.

          SECTION 6.6 Notification of Certain Matters. The Company shall give prompt notice to Parent and Merger Sub and Parent and Merger Sub shall give prompt notice to the Company of (i) any written notice or other communication received from any Person by the Company or any Company Subsidiary, or by Parent or Merger Sub, respectively, alleging that the consent of such Person is required in connection with the Transactions, (ii) any notice received from any Governmental Authority by the Company or any Company Subsidiary, or by Parent or Merger Sub, respectively, in connection with the Transactions, (iii) any actions, suits, claims, investigations or proceedings commenced or, to such party’s knowledge, threatened against, relating to or involving or otherwise affecting such party or any of its Subsidiaries that relate to the Transactions, (iv) the discovery of any fact or circumstance that, or the occurrence or non occurrence of any event the occurrence or non occurrence of which, would to the knowledge of the Company or Parent and Merger Sub, as applicable, cause any of the conditions to the Offer set forth in Annex A hereto not to be satisfied at the scheduled expiration date for the Offer, (v) any written notice received from any Person by the Company or any Company Subsidiary providing notice of any breach or default in any material respect under any Material Contract pursuant to Section 3.18(b), or (vi) any other communication received from any Person by the Company or any Company Subsidiary providing notice of any breach or default in any material respect under any Material Contract pursuant to Section 3.18(b) that is material to the Company and the Company Subsidiaries, taken as a whole; provided, however, that the delivery of any notice pursuant to this Section 6.6 shall not (x) cure any breach of, or non-compliance with, any other provision of this Agreement or (y) limit the remedies available to the party receiving such notice.

          SECTION 6.7 Access to Information; Confidentiality.

          (a) The Company shall, and shall cause the Company Subsidiaries and the officers, directors and employees of the Company and the Company Subsidiaries, to, afford the officers, employees and agents of Parent and Merger Sub, at their sole cost and risk, reasonable access during normal business hours and upon no less than two business days’ advance written notice, from the date hereof through the Effective Date, to all of the Company’s and the Company Subsidiaries’ officers, employees, properties, facilities, books, records, non-privileged correspondence (in each case, whether in physical or electronic form), contracts and other assets, and shall request and use its commercially reasonable efforts to cause its agents, accountants, counsel, financial advisors and other Representatives to provide such access, and shall promptly furnish Parent and Merger Sub (i) all financial, operating and other similar data and information, (ii) a copy of each report, schedule and other document filed or submitted by it pursuant to the requirements of federal or state securities Laws and a copy of any communication (including “comment letters”) received by the Company from the SEC concerning compliance with securities laws, (iii) all other non-privileged information concerning its and the Company Subsidiaries’ business, properties and personnel, in each case (x) as Parent through their officers, employees or agents may reasonably request, (y) that are in the possession, custody or control of the Company or a Company Subsidiary and (z) the disclosure of which would not violate any

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Law. Parent and Merger Sub, at their sole cost and risk, shall have the right to make such due diligence investigations as Parent and Merger Sub shall deem necessary or reasonable, upon reasonable notice to the Company and without disruption or damage to Company’s operations or properties. No additional investigations or disclosures shall affect the Company’s representations and warranties contained herein, or limit or otherwise affect the remedies available to Parent and Merger Sub pursuant to this Agreement.

          (b) Until the Effective Time, the provisions of the Confidentiality Agreement dated October 9, 2007 and as amended on January 22, 2008, between Parent and the Company (the “Confidentiality Agreement”) shall remain in full force and effect in accordance with its terms.

          SECTION 6.8 No Solicitation.

          (a) The Company shall, and shall cause the Company Subsidiaries and the Company’s and the Company Subsidiaries’ respective directors, officers, employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives (collectively, “Representatives”) to, immediately cease and cause to be terminated any discussions or negotiations with any Person conducted heretofore with respect to a Takeover Proposal (as hereinafter defined), promptly request and use commercially reasonable efforts to obtain the return from all such Persons or cause the destruction of all copies of confidential information previously provided to such parties by the Company, the Company Subsidiaries or Representatives to the extent any confidentiality agreement with such Person so provides. From the date of this Agreement until the Effective Time or, if earlier, the termination of this Agreement in accordance with its terms, the Company shall not, nor shall it permit any of the Company Subsidiaries to, nor shall it authorize or permit any Representative to, directly or indirectly, (i) solicit, initiate, or take any action to facilitate or encourage (including by way of furnishing non-public information) the submission of, any Takeover Proposal, (ii) approve or recommend any Takeover Proposal, enter into any agreement, agreement-in-principle or letter of intent with respect to or accept any Takeover Proposal (or resolve to or publicly propose to do any of the foregoing), or (iii) participate or engage in any discussions or negotiations regarding, or furnish to any Person any non-public information with respect to, or knowingly take any action to facilitate any inquiries or the making of any proposal that constitutes, or would reasonably be expected to lead to, any Takeover Proposal; provided, however, that (A) the Company may refer any third party to this Section 6.8 and (B) if in response to an unsolicited, bona fide written Takeover Proposal made after the date hereof in circumstances not involving a breach of this Agreement, the Company Board reasonably determines in good faith (after receiving the advice of its financial advisor of nationally recognized reputation) that such Takeover Proposal constitutes or is reasonably likely to lead to, a Superior Proposal and with respect to which the Company Board determines in good faith, after consulting with and receiving the advice of outside counsel, that the taking of such action is necessary in order for such Board to comply with its fiduciary duties to the Company’s stockholders under Delaware law, then the Company may at any time prior to the acceptance for payment of Shares pursuant to the Offer (but in no event after such time), (x) furnish information with respect to the Company and the Company Subsidiaries to the person making such Takeover Proposal and its Representatives, but only pursuant to a confidentiality agreement in customary form that is no less favorable to the Company than the Confidentiality Agreement (except that such

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confidentiality agreement shall contain additional provisions that expressly permit the Company to comply with the provisions of this Section 6.8), provided that (1) such confidentiality agreement may not include any provision calling for an exclusive right to negotiate with the Company, (2) the Company provides Parent with not less than 24 hours notice of its intention to enter into such confidentiality agreement and (3) the Company advises Parent of all such non-public information delivered to such Person concurrently with its delivery to such Person and concurrently with its delivery to such Person the Company delivers to Parent all such information not previously provided to Parent, (y) conduct discussions or negotiations with such Person regarding such Takeover Proposal, and (z) to the extent permitted pursuant to and in compliance with Section 9.1(f), enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal. The Company shall ensure that its Representatives are aware of the provisions of this Section 6.8(a). Without limiting the foregoing, it is understood that any violation of the foregoing restrictions by the Company Subsidiaries or their Representatives shall be deemed to be a breach of this Section 6.8 by the Company. The Company shall provide Parent with a correct and complete copy of any confidentiality agreement entered into pursuant to this paragraph within 24 hours of the execution thereof.

          (b) In addition to the other obligations of the Company set forth in this Section 6.8, the Company shall promptly advise Parent, orally and in writing, and in no event later than 24 hours after receipt, if any proposal, offer, inquiry or other contact is received by, any information is requested from, or any discussions or negotiations are sought to be initiated or continued with, the Company in respect of any Takeover Proposal, and shall, in any such notice to Parent, indicate the identity of the Person making such proposal, offer, inquiry or other contact and the terms and conditions of any proposals or offers or the nature of any inquiries or contacts (and shall include with such notice copies of any written materials received from or on behalf of such Person relating to such proposal, offer, inquiry or request), and thereafter shall promptly keep Parent reasonably informed of all material developments affecting the status and terms of any such proposals, offers, inquiries or requests (and the Company shall provide Parent with copies of any additional written materials received that relate to such proposals, offers, inquiries or requests) and of the status of any such discussions or negotiations.

          (c) Except as expressly permitted by this Section 6.8(c), neither the Company Board nor any committee thereof shall (i) withdraw or modify, or propose publicly to withdraw or modify, in a manner adverse to Parent, the recommendation by the Company Board that stockholders of the Company accept the Offer, tender their Shares to Purchaser pursuant thereto and adopt this Agreement (the “Company Recommendation”) or the approval or declaration of advisability by the Company Board of this Agreement and the Transactions (including the Offer and the Merger) or (ii) approve or recommend, or propose publicly to approve or recommend, any Takeover Proposal (any action described in clause (i) or (ii) being referred to as a “Company Adverse Recommendation Change”). Notwithstanding the foregoing, the Company Board may, prior to the acceptance for payment of Shares pursuant to the Offer, (x) withdraw or modify the Company Recommendation, (y) recommend a Takeover Proposal that constitutes a Superior Proposal, or (z) to the extent permitted pursuant to and in compliance with Section 9.1(f), enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal, if the Company Board determines in good faith, after consulting with and receiving advice from outside counsel, that such withdrawal, modification, recommendation or agreement is necessary in order for the Company Board to comply with its fiduciary duties to the Company’s

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stockholders under Delaware law; provided, however, that no Company Adverse Recommendation Change may be made in the absence of a Superior Proposal unless such change is based upon an event that is unknown to the Company Board as of the date hereof but becomes known prior to the acceptance for payment of Shares pursuant to the Offer.

          (d) Nothing in this Section 6.8 shall prohibit the Company Board from (i) taking and disclosing to the Company’s stockholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act or (ii) from making any disclosure to the holders of Company Common Stock, if in each case such Board determines in good faith, after consultation with outside counsel, that the taking of such position or the making of such disclosure is necessary in order for the Company Board to comply with the Company Board’s fiduciary duties to its stockholders under Delaware law; provided, however, that in no event shall the Company, the Company Board or any committee thereof take, or agree or resolve to take, any action prohibited by Section 6.8(c). Any disclosure (other than a “stop, look and listen” or similar communication of the type contemplated by Rule 14D-9(f) under the Exchange Act) made pursuant to this subsection (d) shall be deemed to be a Company Adverse Recommendation Change unless the Company Board expressly reaffirms its recommendation of the Offer to its stockholders.

          (e) For purposes of this Agreement:

     (i) “Takeover Proposal” shall mean any inquiry, proposal or offer from any Person (other than Parent, Merger Sub or any of their affiliates) or “group” (as defined in Section 13(d) of the Exchange Act) relating to (A) the direct or indirect acquisition (whether in a single transaction or a series of related transactions) of assets of the Company and the Company Subsidiaries (including securities of Company Subsidiaries) equal to 20% or more of the Company’s consolidated assets or to which 20% or more of the Company’s revenues or earnings on a consolidated basis are attributable, (B) the direct or indirect acquisition (whether in a single transaction or a series of related transactions) of 20% or more of any class of equity securities of the Company, (C) a tender offer or exchange offer that if consummated would result in any Person or “group” (as defined in Section 13(d) of the Exchange Act) beneficially owning 15% or more of any class of equity securities of the Company or (D) a merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of the Company Subsidiaries, in each case, other than the Transactions.

     (ii) “Superior Proposal” means any bona fide written offer obtained after the date hereof and not in breach of this Agreement to acquire, directly or indirectly, for consideration consisting of cash and/or securities, more than 50% of the outstanding voting equity securities of the Company or all or substantially all of the assets of the Company and the Company Subsidiaries on a consolidated basis, and is on terms that the Company Board determines in its good faith judgment (after receipt of the advice of its financial advisor of nationally recognized reputation and outside counsel), taking into account all relevant factors, (A) would, if consummated, result in a transaction that is more favorable to the holders of Company Common Stock from a financial point of view than the Transactions (including the terms of any proposal by the Parent to modify the

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terms of the Transactions) and (B) is reasonably capable of being completed on the terms proposed.

     SECTION 6.9 Indemnification and Insurance.

     (a) Parent and Merger Sub agree that all rights to indemnification by the Company now existing in favor of each person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective Time an officer or director of the Company or any Company Subsidiary (each an “Indemnified Party”) as provided in the Company’s certificate of incorporation or bylaws, in each case as in effect on the date of this Agreement, or pursuant to any other agreements in effect on the date hereof, accurate and complete copies of which have been provided to Parent, including provisions relating to the advancement of expenses incurred in the defense of any action or suit or as permitted under applicable Law, shall survive the Merger and shall remain in full force and effect for a period of not less than six years after the Effective Time.

     (b) For six years after the Effective Time, to the full extent permitted under applicable Law (with the parties’ agreeing that any limitations on a corporation’s ability to indemnify a director or officer under Delaware Law shall be applicable to the indemnification provided for under this subsection (b) notwithstanding that such limitations may not otherwise be applicable), Parent and the Surviving Corporation (the “Indemnifying Parties”) shall, jointly and severally indemnify, defend and hold harmless each Indemnified Party against all losses, claims, damages, liabilities, fees, expenses, judgments and fines arising in whole or in part out of actions or omissions in their capacity as such occurring at or prior to the Effective Time (including in respect of this Agreement), and shall reimburse each Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such losses, claims, damages, liabilities, fees, expenses, judgments and fines as such expenses are incurred, but subject to the Indemnifying Parties’ receipt of an undertaking by or on behalf of the Indemnified Party to repay such expenses if it is ultimately determined that such Indemnified Party is not entitled to indemnification hereunder; provided that nothing herein shall impair any rights to indemnification of any Indemnified Party referred to in clause (a) above.

     (c) Parent shall cause the individuals serving as officers and directors of the Company immediately prior to the Effective Time who are then covered by the directors’ and officers’ liability insurance policy currently maintained by the Company (a correct and complete copy of which has been delivered to Parent) (the “D&O Insurance”), to be covered for a period of not less than six years after the Effective Time, but only to the extent related to actions or omissions of such officers and directors prior to the Effective Time in their capacities as such; provided that (i) Parent may, or may cause the Surviving Corporation to, substitute therefor policies of at least the same coverage and amounts containing terms no less advantageous to such former directors or officers and (ii) such substitution shall not result in gaps or lapses of coverage with respect to matters occurring prior to the Effective Time; provided, further, that in no event shall Parent or the Surviving Corporation be required to expend more than an amount per year equal to 200% of current annual premiums paid by the Company for such insurance (the “Maximum Amount”) to maintain or procure insurance coverage pursuant hereto; provided, further, that if the amount of the annual premiums necessary to maintain or procure such

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insurance coverage exceeds the Maximum Amount, Parent and the Surviving Corporation shall procure and maintain for such six-year period as much coverage as reasonably practicable for the Maximum Amount. Parent shall have the right to cause coverage to be extended under the D&O Insurance by obtaining a six-year “tail” policy on terms and conditions no less advantageous than the D&O Insurance, and such “tail” policy shall satisfy the provisions of this Section 6.9(c). The Indemnified Parties may be required to make reasonable application and provide reasonable and customary representations and warranties to applicable insurance carriers for the purpose of obtaining such insurance.

     (d) The obligations of Parent and the Surviving Corporation under this Section 6.9 shall survive the consummation of the Merger and shall not be terminated or modified in such a manner as to adversely affect any Indemnified Party to whom this Section 6.9 applies without the consent of such affected Indemnified Party (it being expressly agreed that the Indemnified Parties to whom this Section 6.9 applies shall be third party beneficiaries of this Section 6.9, each of whom may enforce the provisions of this Section 6.9).

     (e) If Parent or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or Surviving Corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 6.9.

     SECTION 6.10 Section 16 Matters. Prior to the Effective Time, Parent, Merger Sub and the Company shall take all such steps as may be required to cause the transactions contemplated by Section 2.4 and any other dispositions of equity securities of the Company (including derivative securities) or acquisitions of Parent equity securities (including derivative securities) in connection with this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company to be exempt under Rule 16b-3 under the Exchange Act in accordance with that certain No-Action Letter dated January 12, 1999 issued by the SEC regarding such matters.

     SECTION 6.11 Directors.

     (a) Subject to applicable Law and Nasdaq rules applicable to the Company, promptly upon the acceptance for payment of, and payment by Merger Sub for, any shares of Company Common Stock pursuant to the Offer, and as long as Parent directly or indirectly beneficially owns not less than a majority of the issued and outstanding shares of Company Common Stock, Merger Sub shall be entitled to designate such number of directors on the Company Board as will give Merger Sub representation on the Company Board 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 on the Company Board (giving effect to the directors elected pursuant to this sentence) multiplied by (b) the percentage that (i) the number of shares of Company Common Stock owned by Merger Sub or any other subsidiary of Parent bears to (ii) the total number of shares of Company Common Stock that are issued and outstanding, and the Company shall, at such time, use its reasonable best efforts to cause Merger Sub’s designees to be so elected. The Company shall also, upon the request of Parent, cause such persons designated by Parent to

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constitute at least the same percentage (rounded up to the next whole number) as is on the Company’s Board of Directors of (i) each committee of the Company’s Board of Directors, subject to compliance with applicable securities Laws and the Nasdaq rules, and (ii) each board of directors (or similar body) of each Company Subsidiary and each committee of such board (or similar body); provided, however, that in the event that Merger Sub’s designees are appointed or elected to the Company Board, until the Effective Time the Company Board shall have at least two directors who are directors on the date of this Agreement and who are not officers of the Company or any Company Subsidiary (the “Independent Directors”); and provided further that, in such event, if the number of Independent Directors shall be reduced below two for any reason whatsoever, the remaining Independent Director shall be entitled to designate a person to fill such vacancy who shall be deemed to be an Independent Director for purposes of this Agreement or, if no Independent Directors then remain, the other directors shall designate three persons to fill such vacancies who are not officers, stockholders or affiliates of the Company, any Company Subsidiary, Parent or Merger Sub, and such persons shall be deemed to be Independent Directors for purposes of this Agreement. In connection with the foregoing, the Company shall promptly, at the option of Merger Sub, use its commercially reasonable efforts to either increase the size of the Company Board or obtain the resignation of such number of its current directors as is necessary to enable Merger Sub’s designees to be elected or appointed to the Company Board as provided above.

     (b) The Company’s obligations to appoint designees to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-l in order to fulfill its obligations under this Section 6.11, including mailing to the Company’s stockholders the information required by such Section 14(f) and Rule 14f-1 (which the Company shall mail no later than ten days prior to the first scheduled expiration of the Offer) as is necessary to fulfill the Company’s obligations under Section 6.11(a). Parent shall supply to the Company in writing and be solely responsible for any information with respect to itself, Merger Sub and their respective nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. The provisions of Section 6.11(a) are in addition to and shall not limit any rights the Parent or Merger Sub or any of their Affiliates may have as a holder or beneficial owner of Company Common Stock as a matter of law with respect to the election of directors or otherwise.

     (c) Following the election or appointment of Parent’s designees pursuant to Section 6.11(a) and prior to the Effective Time, the approval by affirmative vote or written consent of all of the Independent Directors then in office (or, if there shall be only one Independent Director then in office, the Independent Director) shall be required to authorize (and such authorization shall constitute the authorization of the Company Board and no other action on the part of the Company, including any action by any committee thereof or any other director of the Company, shall, unless otherwise required by Law, be required or permitted to authorize) (i) any amendment or termination of this Agreement by the Company, (ii) any extension of time for performance of any obligation or action hereunder by Parent or Merger Sub or (iii) any waiver or exercise of any of the Company’s rights under this Agreement.

     SECTION 6.12 Warrants; Notes. The Company and, after the Effective Time, the Surviving Corporation shall provide notice of the Offer and the Merger as required by the

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terms of the Warrants and the terms of the Indenture, dated March 16, 2005, between the Company and the Bank of New York Trust Company, N.A., governing the Notes, and shall comply with any required payment obligations (including under Section 3(e) of the Warrants) and repurchase obligations arising out of the Offer and the Merger upon the exercise by the holders thereof of the rights requiring such payments or repurchases. Parent shall provide, or cause to be provided, to the Company and, after the Effective Time, the Surviving Corporation the funds necessary to allow the Company or the Surviving Corporation to satisfy such obligations on a timely basis, with the provision of such funds being on such terms as Parent shall determine.

ARTICLE 7
CONDITIONS

          SECTION 7.1 Conditions to Each Party’s Obligation To Effect the Merger. The respective obligations of each party to effect the Merger are subject to the satisfaction or, to the extent permitted by applicable Law, waiver on or prior to the Closing Date of each of the following conditions:

          (a) Stockholder Approval. If required by Law, this Agreement shall have been duly adopted by the Required Company Stockholder Vote.

          (b) No Injunctions or Restraints. No Judgment issued by a court of competent jurisdiction or by a Governmental Authority, nor any Law or other legal restraint or prohibition, shall be in effect that would make the Merger illegal or otherwise prevent or prohibit the consummation thereof.

          SECTION 7.2 Conditions to Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to effect the Merger are further subject to the condition that Merger Sub shall have purchased all Shares validly tendered and not withdrawn pursuant to the Offer.

ARTICLE 8
TAX MATTERS

          SECTION 8.1 Cooperation on Tax Matters.

          (a) The Company shall retain all books, records, working papers (including any documentation relating to FIN48) with respect to Tax matters pertinent to any of the Company or any Company Subsidiary relating to any Pre-Closing Tax Period.

          (b) The Parties further agree, upon request, to use reasonable efforts to obtain any certificate or other document from any Governmental Authority, Taxing Authority or customer of the Company or any Company Subsidiary or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (included but not limited to the purchase and sale and merger hereto).

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ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER

          SECTION 9.1 Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after this Agreement has been adopted by the Required Company Stockholder Vote:

          (a) by mutual written consent of Parent, Merger Sub and the Company;

          (b) by either the Company or Parent, if (i) Merger Sub shall not have accepted for payment and paid for the shares of Company Common Stock pursuant to the Offer in accordance with the terms thereof on or prior to August 20, 2008 (the “Outside Date”); or (ii) the Offer is terminated or withdrawn pursuant to its terms and the terms of this Agreement without any shares of Company Common Stock being purchased thereunder; provided, however, that the right to terminate this Agreement under either clause of this Section 9.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the event specified in such clause;

          (c) by either the Company or Parent, if any Judgment issued by a court of competent jurisdiction or by a Governmental Authority, or Law or other legal restraint or prohibition in each case making the Merger illegal or permanently restraining, enjoining or otherwise preventing the consummation thereof shall be in effect and shall have become final and nonappealable; provided that the party seeking the right to terminate this Agreement pursuant to this Section 9.1(c) shall have used commercially reasonable efforts to resist, lift or resolve such Judgment, Law or other legal restraint and the right to terminate pursuant to this Section 9.1(c) shall not be available if the issuance of such legal restraint or prohibition was primarily due to the failure of such party to perform any of its obligations under this Agreement;

          (d) by Parent prior to the acceptance of Shares for payment in the Offer, if:

     (i) due to a circumstance or occurrence that if occurring after the commencement of the Offer would make it impossible to satisfy one or more of the conditions set forth in Annex A hereto, Merger Sub shall have failed to commence the Offer as set forth in Section 1.1 of this Agreement;

     (ii) (A) a Company Adverse Recommendation Change shall have occurred, (B) the Company Board or any committee thereof shall not have rejected any tender or exchange offer that is commenced or a Takeover Proposal (replacing “20%” and “15%” in the definition thereof with 50%) that is made in writing to the Company Board and publicly disseminated within 10 business days of the commencement or public dissemination thereof (including, for these purposes, by taking no position with respect to the acceptance by the Company’s stockholders of a tender offer or exchange offer within such period, which shall constitute a failure to reject such offer) or (C) the Company shall have willfully violated or breached in any material respect any of its obligations under Section 6.8; or

     (iii) if (A) there shall have occurred any event, change, or development of a state of facts that, individually or in the aggregate, has had or would reasonably be

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expected to have, a Company Material Adverse Effect or (B) the Company shall have breached any of its representations or warranties or failed to perform in any material respect any of its covenants or other agreements in each case contained in this Agreement, which breach or failure to perform (x) would give rise to the failure of a condition set forth in paragraphs (e) or (f) of Annex A and (y) is incapable of being cured or has not been cured by the Company within the later of (I) fifteen (15) business days after written notice has been given by Parent to the Company of such breach or failure to perform and (II) the next scheduled expiration date of the Offer pursuant to Section 1.1;

     (e) by the Company, if Parent shall have breached any of its representations or warranties or failed to perform in any material respect any of its covenants or other agreements in each case contained in this Agreement, which breach or failure to perform (A) has had or would reasonably be expected to have a Parent Material Adverse Effect, and (B) is incapable of being cured or has not been cured by Parent within fifteen (15) business days after written notice has been given by the Company to Parent of such breach or failure to perform; or

     (f) by the Company, if prior to the acceptance of Shares for payment in the Offer, (A) the Company is in compliance with its obligations under Section 6.8, (B) the Company Board has received a Takeover Proposal that it has determined in good faith, after consultation with its financial advisor, constitutes a Superior Proposal, (C) the Company has notified Parent in writing that it intends to enter into a definitive agreement implementing such Superior Proposal, attaching the most current version of such agreement (including any amendments, supplements or modifications) to such notice (a “Superior Proposal Notice”), (D) during the three business day period following Parent’s receipt of a Superior Proposal Notice, (1) the Company shall have offered to negotiate with (and, if accepted, negotiated in good faith with), and shall have caused its respective financial and legal advisors to offer to negotiate with (and, if accepted, negotiate in good faith with), Parent in making adjustments to the terms and conditions of this Agreement and (2) the Company Board shall have determined in good faith, after the end of such three business day period, and after considering the results of such negotiations and the revised proposals made by Parent, if any, that the Superior Proposal giving rise to such notice continues to be a Superior Proposal; provided that any amendment, supplement or modification to the financial terms or other material terms of any Takeover Proposal shall be deemed a new Takeover Proposal and the Company may not terminate this Agreement pursuant to this Section 9.1(f) unless the Company has complied with the requirements of this Section 9.1(f) with respect to such new Takeover Proposal, including sending a Superior Proposal Notice with respect to such new Takeover Proposal and offering to negotiate for three business days from such new Superior Proposal Notice, (E) the Company prior to, or concurrently with, such termination pays to Parent in immediately available funds the fee required to be paid pursuant to Section 9.3(a)(iv), and (F) the Company Board concurrently approves, and the Company concurrently enters into, a definitive agreement providing for the implementation of such Superior Proposal.

The party desiring to terminate this Agreement shall give written notice of such termination to the other party.

          SECTION 9.2 Effect of Termination. Upon the termination of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become null and void except for the

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provisions of (i) Section 9.3, (ii) Section 6.7(b) and (iii) Article 10, which shall survive such termination; provided that nothing herein shall relieve any party from liability for any intentional and material breach of a covenant of this Agreement. The Confidentiality Agreement shall not be affected by the termination of this Agreement.

          SECTION 9.3 Fees and Expenses.

          (a) In the event that:

     (i) (A) a Takeover Proposal shall have been made to the Company or shall have been made directly to its stockholders generally and thereafter, (B) this Agreement is terminated by the Company or Parent pursuant to Section 9.1(b) and (C) the Company enters into a definitive agreement with respect to, or consummates a transaction contemplated by, any Takeover Proposal (replacing “20%” and “15%” in the definition thereof with “50%”) within twelve (12) months of the date this Agreement is terminated (so long as, in the case of a transaction that has not been consummated within such period, such transaction is thereafter consummated);

     (ii) (A) a Takeover Proposal shall have been made to the Company or shall have been made directly to its stockholders generally and thereafter, (B) this Agreement is terminated by Parent pursuant to Section 9.1(d)(iii)(B) as a result of a willful breach by the Company and (C) the Company enters into a definitive agreement with respect to, or consummates a transaction contemplated by any Takeover Proposal (replacing “20%” and “15%” in the definition thereof with “50%”) within twelve (12) months of the date this Agreement is terminated (so long as, in the case of a transaction that has not been consummated within such period, such transaction is thereafter consummated);

     (iii) this Agreement is terminated by Parent pursuant to Section 9.1(d)(ii) (or by Parent or the Company pursuant to Section 9.1(b) or by Parent pursuant to Section 9.1(d)(i) or (iii) following any time at which Parent was entitled to terminate this Agreement pursuant to Section 9.1(d)(ii)(A) or (B)); or

     (iv) this Agreement is terminated by the Company pursuant to Section 9.1(f);

then in any such event under clause (i), (ii), (iii) or (iv) of this 9.3(a), the Company shall pay to Parent a termination fee of $7,700,000 (the “Termination Fee”). Any payment required to be made pursuant to clause (i) or clause (ii) of Section 9.3(a) shall be made to Parent promptly following the consummation of the transaction contemplated by the Takeover Proposal referred to therein (and in any event not later than two business days after delivery to the Company of notice of demand for payment); any payment required to be made pursuant to clause (iii) of Section 9.3(a) shall be made to Parent promptly following termination of this Agreement by Parent as set forth in such clause (iii) (and in any event not later than two business days after delivery to the Company of notice of demand for payment) and any payment required to be made pursuant to clause (iv) of Section 9.3(a) shall be made to Parent at the time provided for in clause (E) of Section 9.1(f). All such payments shall be made by wire transfer of immediately available funds to an account to be designated by Parent.

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          (b) All fees and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses, whether or not the Merger is consummated. Other than any Taxes imposed upon a holder of Shares or Options, the Company shall pay all Taxes incident to preparing for, entering into and carrying out this Agreement and the consummation of the Transactions (including (i) transfer, stamp and documentary Taxes or fees and (ii) sales, use, gains, real property transfer and other or similar Taxes or fees).

          SECTION 9.4 Amendment. Subject to Section 6.11, this Agreement may be amended by the parties hereto, at any time before or after approval of this Agreement and the Transactions by the respective Boards of Directors or stockholders of the parties hereto; provided, however, that after any such approval by the holders of Company Common Stock, no amendment shall be made that in any way materially adversely affects the rights of such stockholders (other than a termination of this Agreement in accordance with the provisions hereof) 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 9.5 Waiver. Subject to Section 6.11, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived at any time prior to the Effective Time by any of the parties entitled to the benefit thereof only by a written instrument signed by each such party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement or condition shall not operate as a waiver of or estoppel with respect to, any subsequent or other failure.

ARTICLE 10
GENERAL PROVISIONS

          SECTION 10.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight courier or by facsimile (upon confirmation of receipt) to the parties at the following addresses or at such other addresses as shall be specified by the parties by like notice:

if to the Company:

Encysive Pharmaceuticals Inc.
4848 Loop Central Drive
Houston, TX 77081
Attention: Chief Executive Officer and General Counsel
Facsimile: 713-796-8232

with a copy to:

Covington & Burling LLP
1201 Pennsylvania Ave., NW
Washington, DC 20004
Attention: John A. Hurvitz
Facsimile: 202-778-5319

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if to Parent or Merger Sub:

Pfizer Inc.
235 East 42nd Street
New York, NY 10017
Attention: Vice President, Worldwide Business Development
Facsimile: 212-716-9151

with copies to:

Pfizer Inc.
235 East 42nd Street
New York, NY 10017
Attention: Senior Vice President and Managing Director, Legal Division
Facsimile: 212-573-0768

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Raymond O. Gietz
Facsimile: 212-310-8007

          Notice so given shall (in the case of notice so given by mail or overnight courier) be deemed to be given when received and (in the case of notice so given by facsimile or personal delivery) on the date of actual transmission or (as the case may be) personal delivery.

          SECTION 10.2 Representations and Warranties. The representations and warranties contained in this Agreement shall not survive the Merger.

          SECTION 10.3 Knowledge Qualifiers. To the “knowledge of the Company” and similar phrases mean the actual knowledge of the individuals described in Section 10.3 of the Company Disclosure Letter.

          SECTION 10.4 Interpretations. When a reference is made in this Agreement to Sections or Exhibits, such reference shall be to a Section or Exhibit to this Agreement unless otherwise indicated. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” Any references in this Agreement to “the date hereof” refers to the date of execution of this Agreement. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The parties hereto agree that they have been represented by counsel during the negotiation, drafting, preparation and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

          SECTION 10.5 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of

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Delaware regardless of the Laws that might otherwise govern under applicable principles of conflicts of laws thereof.

          (a) Each of the parties hereto (i) consents to submit itself to the exclusive jurisdiction of any state or Federal court located in the State of Delaware or in the Court of Chancery of the State of Delaware in the event any dispute arises out of this Agreement, the Offer, the Merger or any of the other Transactions, (ii) agrees that it shall not attempt to deny or defeat such exclusive jurisdiction by motion or other request for leave from any such court, and (iii) agrees that it shall not bring any action relating to this Agreement or any of the Transactions in any court other than a state or Federal court located in the State of Delaware or the Court of Chancery of the State of Delaware.

          (b) Each of the parties to this Agreement irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the Transactions.

          SECTION 10.6 Counterparts; Facsimile Transmission of Signatures. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, and delivered by means of facsimile transmission or other electronic transmission, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

          SECTION 10.7 Assignment; No Third Party Beneficiaries.

          (a) This Agreement and all of the provisions hereto shall be binding upon and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations set forth herein shall be assigned by any party hereto without the prior written consent of the other parties hereto and any purported assignment without such consent shall be void.

          (b) Nothing in this Agreement shall be construed as giving any Person, other than the parties hereto and their heirs, successors, legal representatives and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof, except that from and after the Closing each Indemnified Party is an intended third party beneficiary of Section 6.9, and such persons may specifically enforce such provisions.

          SECTION 10.8 Severability. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable under any applicable Law, then such contravention or invalidity shall not invalidate the entire Agreement. Such provision shall be deemed to be modified to the extent necessary to render it legal, valid and enforceable, and if no such modification shall render it legal, valid and enforceable, then this Agreement shall be construed as if not containing the provision held to be invalid, and the rights and obligations of the parties shall be construed and enforced accordingly.

          SECTION 10.9 Entire Agreement. This Agreement (including the Company Disclosure Letter) and the Confidentiality Agreement contain all of the terms of the understandings of the parties hereto with respect to the subject matter hereof.

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          SECTION 10.10 Parent Guarantee. Parent agrees to take all action necessary to cause Merger Sub or the Surviving Corporation, as applicable, to perform all of its respective agreements, covenants and obligations under this Agreement. Parent unconditionally guarantees to the Company the full and complete performance by Merger Sub or the Surviving Corporation, as applicable, of its respective obligations under this Agreement and shall be liable for any breach of any representation, warranty, covenant or obligation of Merger Sub or the Surviving Corporation, as applicable, under this Agreement. This is a guarantee of payment and performance and not collectibility. Parent hereby waives diligence, presentment, demand of performance, filing of any claim, any right to require any proceeding first against Merger Sub or the Surviving Corporation, as applicable, protest, notice and all demands whatsoever in connection with the performance of its obligations set forth in this Section 10.10.

          SECTION 10.11 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 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 Chancery Court of the State of Delaware or any Federal Court sitting in the State of Delaware, this being in addition to any other remedy to which they are entitled at law or in equity.

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          IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above.

ENCYSIVE PHARMACEUTICALS, INC.
By:
	Name:	George W. Cole
	Title:	President & Chief Executive Officer
PFIZER INC.
By:
	Name:	Frank D’Amelio
	Title:	Chief Financial Officer
EXPLORER ACQUISITION CORP.
By:
	Name:	Lawrence Miller
	Title:	Vice President

[Signature Page to Agreement and Plan of Merger]

Annex A

Conditions of the Offer

          Notwithstanding any other term of the Offer or the Agreement, Merger Sub shall not be required 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 Merger 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 tendered pursuant to the Offer, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered Shares, and (subject to the provisions of the Agreement) may terminate the Offer and not accept for payment any tendered Shares unless (i) there shall have been validly tendered (other than Shares tendered by guaranteed delivery where actual delivery has not occurred) and not withdrawn prior to the expiration of the Offer that number of Shares which would represent more than 50% of the issued and outstanding shares of Company Common Stock (counting as issued and outstanding for these purposes the number of Shares for which then outstanding and unexercised Warrants and in-the-money Options may be exercised) (the “Minimum Tender Condition”), (ii) any waiting period under the HSR Act and any applicable foreign antitrust, competition or merger control Law applicable to the purchase of Shares pursuant to the Offer shall have expired or been terminated prior to the expiration of the Offer (the “Regulatory Condition”), (iii) Merger Sub shall have received prior to the scheduled expiration of the Offer a certificate signed by the Chief Executive Officer and principal accounting officer of the Company, dated as of the date of the scheduled expiration date of the Offer, to the effect that none of the conditions set forth in paragraphs (e) or (f) below exist, and (iv) at the then effective date of the expiration of the Offer, none of the following conditions shall exist:

          (a) there shall be any injunction, judgment, ruling, order, decree, action, proceeding or litigation instituted, issued, entered, commenced or pending by any Governmental Authority that would or that seeks or is reasonably likely to (i) restrain, enjoin, prevent, prohibit or make illegal the acceptance for payment, payment for or purchase of some or all of the Shares by Merger Sub or Parent or the consummation of the Transactions, (ii) impose limitations on the ability of Merger Sub, Parent or any of their Affiliates effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by them on all matters properly presented to the Company’s stockholders on an equal basis with all other stockholders (including, without limitation, the adoption of the Agreement and approval of the Transactions), (iii) restrain, enjoin, prevent, prohibit or make illegal, or impose material limitations on, Parent’s, Merger Sub’s or any of their Affiliates’ ownership or operation of all or substantially all of the businesses and assets of the Company and the Company Subsidiaries, taken as a whole, or, as a result of the Transactions, of Parent and the Company Subsidiaries, taken as a whole, (iv) compel Parent, Merger Sub or any of their Affiliates to dispose of any Shares or, as a result of the Transactions, compel Parent, Merger Sub or any of their Affiliates to dispose of or hold separate any material portion of the businesses or assets of the Company and the Company Subsidiaries taken as a whole, or of Parent and its Subsidiaries, taken as a whole, or (v) impose material damages on Parent, the Company or any of their respective Subsidiaries as a result of the Transactions;

A-1

          (b) there shall be any Law enacted, issued, promulgated, amended or enforced by any Governmental Authority applicable to (i) Parent, the Company or any of their respective Affiliates or (ii) the Transactions (other than the routine application of applicable waiting periods) that results directly or indirectly, in any of the consequences referred to in paragraph (a) above;

          (c) (A) since the date of this Agreement, there shall have occurred any event, change, or development of a state of facts that, individually or in the aggregate, has had or would reasonably be expected to have, a Company Material Adverse Effect or (B) the Company or any Company Subsidiary shall have become subject to Voluntary Bankruptcy or Involuntary Bankruptcy. As used in this Annex A, “Involuntary Bankruptcy” means, with respect to the Company or a Company Subsidiary, without the consent or acquiescence of the Company or such Company Subsidiary, respectively, the entering of an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar Law, or the filing of any such petition against the Company or such Company Subsidiary, respectively, or, without the consent or acquiescence of the Company or a Company Subsidiary, respectively, the entering of an order appointing a trustee, custodian, receiver or liquidator of the Company or such Company Subsidiary, respectively, or of all or substantially all of the property of the Company or such Company Subsidiary, respectively, in each case where such petition or order shall remain unstayed or shall not have been stayed or dismissed within 90 days from the entry thereof. As used in this Agreement, “Voluntary Bankruptcy” means, with respect to the Company or a Company Subsidiary, (i) a general assignment by the Company or such Company Subsidiary, respectively, for the benefit of creditors, (ii) the filing of any petition or answer by the Company or a Company Subsidiary, respectively, seeking to adjudicate itself as bankrupt or insolvent, or seeking for itself any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of the Company or such Company Subsidiary, respectively, or its debts under any bankruptcy, insolvency, receivership, winding up, liquidation, reorganization, examination, relief of debtors or other similar Law now or hereafter in effect, or seeking, consenting to or acquiescing in the entry of an order for relief in any case under any such Law, or the appointment of or taking possession by a receiver, trustee, custodian, liquidator, examiner, sequestrator or other similar official for the Company or a Company Subsidiary, respectively, or for all or substantially all of its property, or (iii) corporate or other entity action taken by the Company or a Company Subsidiary, respectively, to authorize any of the actions set forth above;

          (d) a Company Adverse Recommendation Change shall have occurred;

          (e) (A) the representations and warranties of the Company set forth in the Agreement (other than the representations and warranties of the Company set forth in Sections 3.2(a)-(c), 3.3(a), 3.3(b), 3.9, or 3.11) shall not be true and correct as of the date of the Agreement and as of such time, except to the extent such representations and warranties expressly relate to an earlier time (in which case on and as of such earlier time), without regard to materiality or Company Material Adverse Effect qualifiers contained therein, other than for such failures to be true and correct that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect or (B) the representations and warranties of the Company set forth in Sections 3.2(a)-(c), 3.3(a), 3.3(b), or

A-2

3.9 or 3.11 shall not be true and correct in all material respects as of the date of the Agreement and as of such time;

          (f) the Company shall have failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of the Company to be performed or complied with by it under the Agreement prior to such time; or

          (g) the Agreement shall have been terminated in accordance with its terms. which, in the sole and reasonable judgment of Merger Sub or Parent, in any such case, makes it inadvisable to proceed with such acceptance for payment or payment.

          The foregoing conditions are for the sole benefit of Parent and Merger Sub and may be asserted by either of them regardless or the circumstances giving rise to such conditions or may be waived by Parent or Merger Sub, in whole or in part at any time and from time to time in the sole discretion of Parent or Merger Sub (except for any condition which, pursuant to Section 1.1 of the Agreement, may only be waived with the Company’s consent). The failure by Parent, Merger 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.

A-3