EX-10.155 4 merger.htm MERGER AGREEMENT

Exhibit 10.155

AGREEMENT AND PLAN OF MERGER

Dated as of June 12, 2001

Among

Axys Pharmaceuticals, Inc.,

Applera Corporation,

And

Angel Acquisition Sub, Inc.

TABLE OF CONTENTS

Page

Article I THE MERGER *

Section 1.01 The Merger. *

Section 1.02 Closing. *

Section 1.03 Effective Time of the Merger. *

Section 1.04 Effects of the Merger. *

Section 1.05 Certificate of Incorporation; By-laws. *

Section 1.06 Directors. *

Section 1.07 Officers. *

Section 1.08 Effect on Capital Stock. *

Section 1.09 Exchange of Certificates. *

Section 1.10 Treatment of Options. *

Section 1.11 Treatment of Debt Securities, Convertible Notes and Company
Warrants. *

Article II REPRESENTATIONS AND WARRANTIES OF THE COMPANY *

Section 2.01 Organization, Standing and Corporate Power. *

Section 2.02 Subsidiaries and Minority Investments. *

Section 2.03 Capital Structure. *

Section 2.04 Authority. *

Section 2.05 Noncontravention. *

Section 2.06 SEC Documents; Financial Statements. *

Section 2.07 Undisclosed Liabilities. *

Section 2.08 Information Supplied. *

Section 2.09 Absence of Certain Changes or Events. *

Section 2.10 Litigation. *

Section 2.11 Labor Matters. *

Section 2.12 Permits; Compliance with Laws. *

Section 2.13 Employee Benefit Plans. *

Section 2.14 Taxes. *

Section 2.15 Properties. *

Section 2.16 Environmental Matters. *

Section 2.17 Contracts; Debt Instruments. *

Section 2.18 Intellectual Property. *

Section 2.19 Brokers and Other Advisors. *

Section 2.20 Opinion of Financial Advisor. *

Section 2.21 Board Recommendation; State Antitakeover Law. *

Section 2.22 Required Company Vote. *

Section 2.23 Rights Agreement. *

Section 2.24 Affiliate Transactions. *

Article III REPRESENTATIONS AND WARRANTIES OF PARENT *

Section 3.01 Organization, Standing and Corporate Power. *

Section 3.02 Capital Structure. *

Section 3.03 Authority. *

Section 3.04 Noncontravention. *

Section 3.05 Parent SEC Documents; Financial Statements. *

Section 3.06 Undisclosed Liabilities. *

Section 3.07 Information Supplied. *

Section 3.08 Absence of Certain Changes or Events. *

Section 3.09 Litigation; Compliance with Laws. *

Section 3.10 Brokers. *

Section 3.11 Interim Operations of Merger Sub. *

Section 3.12 Required Vote. *

Article IV COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER. *

Section 4.01 Conduct of Business by the Company. *

Section 4.02 Conduct of Business by Parent. *

Section 4.03 Employment Arrangements. *

Section 4.04 Tax Elections. *

Section 4.05 Tax-Free Reorganization Treatment. *

Section 4.06 Other Actions. *

Article V ADDITIONAL AGREEMENTS *

Section 5.01 Preparation of Form S-4 and Proxy Statement; Stockholder Meeting. *

Section 5.02 Access to Information; Confidentiality. *

Section 5.03 Reasonable Best Efforts. *

Section 5.04 Indemnification. *

Section 5.05 Public Announcements. *

Section 5.06 No Solicitation. *

Section 5.07 Benefit Matters. *

Section 5.08 Stock Exchange Listing. *

Section 5.09 Letters of the Company's Accountants. *

Section 5.10 Rights Agreement. *

Section 5.11 Convertible Notes. *

Section 5.12 Non-solicitation of Employees. *

Section 5.13 Stock Options. *

Article VI CONDITIONS PRECEDENT *

Section 6.01 Conditions to Each Party's Obligation To Effect the Merger. *

Section 6.02 Conditions to Obligations of Parent and Merger Sub. *

Section 6.03 Conditions to Obligation of the Company. *

Article VII TERMINATION, AMENDMENT AND WAIVER *

Section 7.01 Termination. *

Section 7.02 Effect of Termination. *

Section 7.03 Amendment. *

Section 7.04 Extension; Waiver. *

Section 7.05 Procedure for Termination, Amendment, Extension or Waiver. *

Article VIII GENERAL PROVISIONS *

Section 8.01 Nonsurvival of Representations and Warranties. *

Section 8.02 Fees and Expenses. *

Section 8.03 Notices. *

Section 8.04 Interpretation. *

Section 8.05 Counterparts. *

Section 8.06 Entire Agreement; No Third-Party Beneficiaries. *

Section 8.07 GOVERNING LAW. *

Section 8.08 Assignment. *

Section 8.09 Enforcement. *

Index of Defined Terms

Term

Section

2000 Balance Sheet

2.07

AB Stock

3.02(a)

Action

5.04(a)

Acquisition Agreements

2.17(a)(vii)

Affiliate

2.20

Bylaws

2.01

Certificate of Incorporation

2.01

Certificate of Merger

1.03

Certificates

1.08(d)

Closing

1.02

Closing Date

1.02

Code

Recitals

Company

Preamble

Company Common Stock

Recitals

Company Disclosure Schedule

Article II

Company Insurance

5.04(b)

Company Material Adverse Effect

2.01

Company Permits

2.12

Company Plans

2.13(a)

Company SEC Documents

2.06

Company Stock Option

1.10(a)

Company Stock Plans

1.10(a)

Company Stockholder Approval

Recitals

Company Warrants

1.11(b)

Confidentiality Agreement

5.02

Contract

2.17(a)

Control

2.20

Controlled Group

2.13(c)

Convertible Notes

1.11(a)

Convertible Notes Indenture

1.11(a)

DGCL

Recitals

Effective Time

1.03

Environmental Laws

2.16(c)(i)

Environmental Report

2.16(c)(ii)

Equity Interest

2.02(b)(ii)

ERISA

2.13(a)

Exchange Act

2.05(b)

Exchange Agent

1.09(a)

Exchange Fund

1.09(a)

Exchange Ratio

1.08(c)

Final Offering Period

1.10(d)

Form S-4

2.08

GAAP

2.06(b)

Governmental Entity

2.05(b)

HSR Act

2.05(b)

Incentive stock options

1.10(a)

Indebtedness

2.03(c)

Indenture

1.11(a)

Indemnified Party

5.04(a)

Intellectual Property

2.18(a)

JP Morgan

2.19

Knowledge of the Company

2.02(a)

Knowledge of Parent

3.09(a)

Laws

2.05(a)

Licensed Patent Intellectual Property

2.18(a)

Liens

2.02(a)

Material Contracts

2.17(a)

Material Intellectual Property

2.18(a)

Materials of Environmental Concern

2.16(c)(iii)

Merger

Recitals

Merger Consideration

1.08(c)

Merger Sub

Preamble

Minority Investment

2.02(b)(iii)

Minority Investment Documents

2.02(a)

Morgan Stanley

3.10

NYSE

1.09(c)

Parent

Preamble

Parent Common Stock

1.08(c)

Parent Common Stock Price

1.08(c)

Parent Disclosure Schedule

Article III

Parent Material Adverse Effect

3.01

Parent Preferred Stock

3.02(a)

Parent SEC Documents

3.05

Parent Stock Option

1.10(a)

Parent Stock Plans

3.02(a)

Parent Subsidiaries

3.01

Person

1.09(g)

Proxy Statement

5.01(a)

Registered Intellectual Property

2.18(a)

Remedial Action

2.16(c)(iv)

Rights

1.09(d)

Rights Agreement

1.09(d)

SEC

2.05(b)

Securities Act

2.06(a)

Stock Purchase Plan

2.03

Stockholders Meeting

5.01(c)

Subsidiary

2.02(b)(i)

Subsidiary Documents

2.02(a)

Superior Proposal

5.06

Surviving Company

1.01

Taxes

2.14

Tax Return

2.14

Third Party

8.02(a)(i)(A)

Transaction Proposals

5.06

Transactions

1.02

Trustee

1.11(a)

Voting Debt

2.03(a)

WARN

2.11

   

 

AGREEMENT AND PLAN OF MERGER, dated as of June 12, 2001, among Applera
Corporation, a Delaware corporation ("Parent"), Angel Acquisition Sub, Inc., a
Delaware corporation and a direct wholly owned subsidiary of Parent ("Merger
Sub"), and Axys Pharmaceuticals, Inc., a Delaware corporation (the "Company").

W I T N E S S E T H:

WHEREAS, the respective boards of directors of Parent, Merger Sub and the
Company have determined that the merger of Merger Sub with and into the Company
(the "Merger"), upon the terms and subject to the conditions set forth in this
Agreement, would be fair and in the best interests of their respective
stockholders;

WHEREAS, such boards of directors have approved the Merger, pursuant to which
each share of common stock, par value $.001 per share, of the Company (the
"Company Common Stock," which term also refers to and includes, unless the
context otherwise requires, the associated Rights (as defined below)), other
than shares owned by the Company, Parent or Merger Sub, will be converted into
the right to receive the Merger Consideration (as defined below), upon the terms
and subject to the conditions set forth herein and in accordance with the
applicable provisions of the General Corporation Law of the State of Delaware
(the "DGCL") and Certificate of Incorporation (as defined below);

WHEREAS, the Merger and this Agreement require the vote of the holders of a
majority of the outstanding shares of the Company Common Stock for the approval
thereof (the "Company Stockholder Approval");

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

WHEREAS, for federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

THE MERGER

 1. The Merger.

    Upon the terms and subject to the conditions set forth in this Agreement,
    and in accordance with the DGCL, Merger Sub shall be merged with and into
    the Company at the Effective Time. At the Effective Time, the separate
    corporate existence of Merger Sub shall cease, and the Company shall
    continue as the surviving corporation (hereinafter sometimes referred to as
    the "Surviving Company").

 2. Closing.

    Unless this Agreement shall have been terminated and the Merger and the
    other transactions contemplated by this Agreement (collectively, the
    "Transactions") shall have been abandoned pursuant to Section 8.01, and
    subject to the satisfaction or waiver of the conditions set forth in Article
    VI, the closing of the Merger (the "Closing") will take place at 10:00 a.m.
    on the second business day after satisfaction of the conditions set forth in
    Section 6.01 (or as soon as practicable thereafter following satisfaction or
    waiver of the conditions set forth in Sections 6.02 and 6.03) (the "Closing
    Date"), at the offices of Simpson Thacher & Bartlett, 3330 Hillview Avenue,
    Palo Alto, California 94304, unless another date, time or place is agreed to
    in writing by the parties hereto.

 3. Effective Time of the Merger.

    On the Closing Date, the parties shall cause the Merger to be consummated by
    filing with the Secretary of State of the State of Delaware a certificate of
    merger as contemplated by the DGCL (the "Certificate of Merger") executed in
    accordance with the relevant provisions of the DGCL and shall make all other
    filings or recordings required under the DGCL to be filed on such date. The
    Merger shall become effective at such time (the "Effective Time") as the
    Certificate of Merger is duly filed with the Secretary of State of the State
    of Delaware, or at such other time as is permissible in accordance with the
    DGCL and as Merger Sub and the Company shall agree should be specified in
    the Certificate of Merger.

 4. Effects of the Merger.

    At the Effective Time, the Merger shall have the effects set forth in this
    Agreement, the Certificate of Merger and the applicable provisions of the
    DGCL. Without limiting the generality of the foregoing, and subject thereto,
    at the Effective Time (a) the Surviving Company shall possess all rights,
    privileges, powers and franchises, both public and private, and all of the
    property, real, personal, and mixed of each of the Company and Merger Sub
    and all obligations belonging to or due to Merger Sub or the Company, all of
    which shall be vested in the Surviving Company without any further act or
    deed; and (b) the Surviving Company shall be liable for all the obligations
    of Merger Sub and the Company.

 5. Certificate of Incorporation; By-laws.

    (a) At the Effective Time, and without any further action on the part of the
    Company or Merger Sub, the certificate of incorporation of the Company, as
    in effect at the Effective Time, shall be the certificate of incorporation
    of the Surviving Corporation until thereafter amended as provided therein or
    by the DGCL.

    (b) At the Effective Time, and without any further action on the part of the
    Company or Merger Sub, the by-laws of Merger Sub as in effect at the
    Effective Time shall be the by-laws of the Surviving Corporation until
    thereafter changed or amended as provided therein or by the DGCL.

 6. Directors.

    The directors of Merger Sub at the Effective Time shall be the directors of
    the Surviving Corporation, until the earlier of their resignation or removal
    or until their respective successors are duly elected and qualified, as the
    case may be.

 7. Officers.

    The officers of the Company at the Effective Time shall be the officers of
    the Surviving Corporation, until the earlier of their resignation or removal
    or until their respective successors are duly elected and qualified, as the
    case may be.

 8. Effect on Capital Stock.

    As of the Effective Time, by virtue of the Merger and without any action on
    the part of the Company, Merger Sub or any holder of any shares of Company
    Common Stock or any shares of capital stock of Merger Sub:

    Common Stock of Merger Sub
    . Each share of common stock of Merger Sub issued and outstanding
    immediately prior to the Effective Time shall be converted into one share of
    the common stock, par value $.01 per share, of the Surviving Corporation
    with the same rights, powers and privileges as the shares so converted and
    shall constitute the only outstanding shares of capital stock of the
    Surviving Corporation;
    Cancellation of Treasury Stock and Parent-Owned Company Common Stock
    . Each share of Company Common Stock that is owned by the Company, Parent or
    Merger Sub shall automatically be cancelled and retired and shall cease to
    exist, and no cash, Parent Common Stock or other consideration shall be
    delivered or deliverable in exchange therefore; and
    Conversion of Company Common Stock
    . Subject to the provisions of Section 1.09(e) hereof, each issued and
    outstanding share of Company Common Stock (other than shares cancelled
    pursuant to Section 1.08(b) hereof) shall be converted into a fractional
    number of shares of Applera Corporation -Celera Genomics Group Common Stock,
    par value $.01 per share (including the rights associated with such shares
    pursuant to Parent's Shareholders' Protection Rights Plan) (the "
    Parent Common Stock
    ") equal to the Exchange Ratio (the amount of Parent Common Stock into which
    each such share of Company Common Stock is converted, together with the cash
    amount referenced in Section 1.09(e) being referred to herein as the "
    Merger Consideration
    "). As used herein, "
    Exchange Ratio
    " means the following:
    if the Parent Common Stock Price is equal to or greater than $45.77 and less
    than or equal to $48.23 then the Exchange Ratio will mean 0.1016; if the
    Parent Common Stock Price is greater than $48.23 then the Exchange Ratio
    will mean $4.90 divided by the Parent Common Stock Price, but in no event
    shall the Exchange Ratio be less than 0.0813; if the Parent Common Stock
    Price is less than $45.77, then the Exchange Ratio will mean $4.65 divided
    by the Parent Stock Price, but in no event shall the Exchange Ratio be
    greater than 0.1355.
    
    As used herein, "Parent Common Stock Price" means the average of the closing
    sales prices of Parent Common Stock on the New York Stock Exchange (the
    "NYSE") Composite Transactions Tape (as reported by The Wall Street Journal,
    or, if not reported thereby, as reported by any other authoritative source)
    on each of the 10 consecutive trading days immediately preceding the second
    trading day prior to the Effective Time.
    
    Cancellation and Retirement of Company Common Stock
    . As of the Effective Time, all shares of Company Common Stock issued and
    outstanding immediately prior to the Effective Time shall no longer be
    outstanding and shall automatically be cancelled and retired and shall cease
    to exist, and each holder of a certificate representing any such shares of
    Company Common Stock (collectively, the "
    Certificates
    ") shall, to the extent such Certificate represents such shares, cease to
    have any rights with respect thereto, except the right to receive the Merger
    Consideration (including cash in lieu of fractional shares of Parent Common
    Stock pursuant to Section 1.09(e) hereof) to be issued or paid in
    consideration therefor upon surrender of such certificate in accordance with
    Section 1.09 hereof.

 9. Exchange of Certificates.

Exchange Agent. As of or as soon as reasonably practicable after the Effective
Time, Parent shall enter into an agreement with such bank or trust company as
may be designated by Parent (the "Exchange Agent") which shall provide that
Parent shall deposit with the Exchange Agent, for the benefit of the holders of
Certificates, for exchange in accordance with this Article I, certificates
representing the shares of Parent Common Stock, together with any dividends or
distributions with respect thereto with a record date after the Effective Time,
and any cash payable in lieu of any fractional shares of Parent Common Stock
(such shares of Parent Common Stock and cash being hereinafter referred to as
the "Exchange Fund") issuable pursuant to Section 1.08 in exchange for
outstanding shares of Company Common Stock.

Exchange Procedures
. As soon as reasonably practicable after the Effective Time, the Exchange Agent
shall mail to each holder of record of Certificates immediately prior to the
Effective Time whose shares were converted into shares of Parent Common Stock
pursuant to Section 1.08, (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 which
shall be in customary form and have such other provisions as Parent may
reasonably specify and be reasonably acceptable to the Company) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such holder has the right to
receive in respect of the Certificate surrendered pursuant to the provisions of
this Article I (after taking into account all shares of Company Common Stock
then held by such holder), certain dividends and other distributions in
accordance with Section 1.09(c) hereof and cash in lieu of any fractional shares
in accordance with Section 1.09(e) hereof, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of shares
of Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock may be issued to a transferee if the Certificate is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 1.09 each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender Parent Common Stock into which the shares of
Company Common Stock represented by such Certificate have been converted as
provided in this Article I and the right to receive upon such surrender cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this
Section 1.09.
Distributions with Respect to Unexchanged Shares
. No dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 1.09(e) until the surrender of such
Certificate in accordance with this Article I. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
issued or paid to the holder of such certificate, a certificate representing the
number of whole shares of Parent Common Stock issued in exchange therefor
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.09(e) and the amount of any dividends
or other distributions with a record date after the Effective Time theretofore
paid (but withheld pursuant to the immediately preceding sentence) with respect
to such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of any dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such whole shares of Parent
Common Stock.
No Further Ownership Rights in Company Common Stock
. All shares of Parent Common Stock issued upon conversion of shares of Company
Common Stock in accordance with the terms hereof, and all cash paid pursuant to
Sections 1.09(c) and 1.09(e) hereof, shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock
(including with respect to the rights to acquire one one-hundredth of a share of
Series A Junior Participating Preferred Stock of the Company (the "
Rights
") issued pursuant to the Rights Agreement dated as of October 8, 1998, as
amended, between the Company and Computershare Investor Services, L.L.C., as
rights agent (the "
Rights Agreement
")), and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock that were outstanding prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article I.
No Fractional Shares
.

No certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to vote or to any
rights of a stockholder of Parent. In lieu of such issuance of fractional
shares, the Exchange Agent shall pay each holder of Certificates an amount in
cash equal to the product obtained by multiplying (A) the fractional share
interest to which such holder (after taking into account all shares of Company
Common Stock held immediately prior to the Effective Time by such holder) would
otherwise be entitled by (B) the Parent Common Stock Price.

(ii)  As soon as practicable after the determination of the amount of cash, if
any, to be paid to holders of Certificates with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to such holders
of Certificates, subject to and in accordance with the terms of Section 1.09(c).

Termination of Exchange Fund
. Any portion of the Exchange Fund deposited with the Exchange Agent pursuant to
this Section 1.09 which remains undistributed to the holders of the Certificates
for six months after the Effective Time shall be delivered to the Parent, upon
demand, and any holders of Certificates prior to the Merger who have not
theretofore complied with this Article I shall thereafter look only to the
Parent and only as general creditors thereof for payment of their claim for
Parent Common Stock, cash in lieu of fractional shares of Parent Common Stock
and any dividends or distributions with respect to Parent Common Stock to which
such holders may be entitled.
No Liability
. None of Parent, Merger Sub, the Company or the Exchange Agent shall be liable
to any individual, corporation, limited liability company, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act) (a "
Person
") in respect of any shares of Parent Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to three
years after the Effective Time, or immediately prior to such earlier date on
which any Merger Consideration, or any dividends or distributions with respect
to Parent Common Stock would otherwise escheat to or become the property of any
Governmental Entity, any such Merger Consideration or cash 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.
Investment of Exchange Fund
. The Exchange Agent shall invest any cash included in the Exchange Fund, as
directed by Parent on a daily basis. Any interest and other income resulting
from such investments shall be paid to Parent.
Withholding of Tax
. Parent or the Exchange Agent will be entitled to deduct and withhold from the
Merger Consideration otherwise payable pursuant to this Agreement to any holder
of Company Common Stock such amounts as Parent (or any Affiliate thereof) or the
Exchange Agent are required to deduct and withhold with respect to the making of
such payment under the Code, or any applicable provision of U.S. federal, state,
local or non-U.S. tax law. To the extent that such amounts are properly withheld
by Parent or the Exchange Agent, such withheld amounts will be treated for all
purposes of this Agreement as having been paid to the holder of the Company
Common Stock in respect of whom such deduction and withholding were made by
Parent or the Exchange Agent.
Lost Certificates
. If any Certificate shall have been lost, stolen or destroyed, upon the making
of any affidavit of that fact by the Person claiming such Certificate to be
lost, stolen or destroyed, the indemnification by such Person of the Surviving
Company and, if required by the Surviving Company, the posting by such Person of
a bond in such reasonable amount as the Surviving Company may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
shares of Company Common Stock formerly represented thereby.

 1. Treatment of Options.

(a) At the Effective Time, each outstanding option to purchase Company Common
Stock (a "Company Stock Option") issued pursuant to the Company's 1989 Stock
Option Plan, 1997 Equity Incentive Plan and 1997 Non- Officer Equity Incentive
Plan (collectively with the 1994 Non-Employee Directors' Stock Option Plan, the
"Company Stock Plans"), whether vested or unvested, shall be converted into an
option (a "Parent Stock Option") to acquire, on the same terms and conditions as
were applicable under such Company Stock Option, a number of shares of Parent
Common Stock equal to (1) the number of shares of Company Common Stock subject
to such Company Stock Option multiplied by (2) the Exchange Ratio, rounded down
to the nearest whole share, at a price per share equal to (x) the exercise price
per share for such Company Stock Option divided by (y) the Exchange Ratio,
rounded up to the nearest whole cent; provided, however, that the exercise price
per share of each Parent Stock Option held by an individual who is an employee
of or consultant to the Company or any Subsidiary as of the Effective Time will
not exceed the closing price of a share of Parent Common Stock on the NYSE
Composite Transaction Tape on the date immediately prior to the Closing Date.

 b. Prior to the Effective Time, the board of directors of Parent and its
    compensation committee, as applicable, shall take all necessary action to
    assume and adopt, as of the Effective Time, the Company's 1997 Equity
    Incentive Plan, and shall have the discretion to assume and adopt, as of the
    Effective Time, each other Company Stock Plan in which a Parent Stock Option
    is outstanding following the Effective Time and which has not terminated by
    its terms. Within ten (10) business days after the Effective Time, Parent
    shall deliver to the holders of Company Stock Options appropriate notices
    pursuant to the Company Stock Plans. If necessary, Parent shall comply with
    the terms of the Company Stock Plans and ensure, to the extent required by,
    and subject to the provisions of, the Company Stock Plans and applicable
    law, that Company Stock Options that qualified as incentive stock options
    prior to the Effective Time continue to qualify as incentive stock options
    after the Effective Time.
 c. Parent shall take all corporate action necessary to reserve for issuance a
    sufficient number of shares of Parent Common Stock for delivery upon
    exercise of Parent Stock Options. No later than five business days after the
    Effective Time, Parent shall file a registration statement on Form S-3 or
    Form S-8, as the case may be (or any successor or other appropriate forms),
    or another appropriate form, with respect to the shares of Parent Common
    Stock subject to such options to the fullest extent permitted by law and
    shall use its reasonable best efforts to maintain the effectiveness of such
    registration statement or registration statements (and maintain the current
    status of the prospectus or prospectuses contained therein) for so long as
    such options remain outstanding.
 d. Each outstanding purchase right under the Stock Purchase Plan shall be
    exercised for the purchase of shares of Company Common Stock at the price
    per share determined pursuant to the Stock Purchase Plan on the date
    immediately prior to the Closing Date, pursuant to Section 12(b)(iii) of the
    Stock Purchase Plan (the "Final Offering Period"). Immediately following the
    Final Offering Period and upon or prior to the Effective Time, the Company
    shall take all action necessary to provide that the Stock Purchase Plan
    shall be terminated and that no Person has any further right to purchase
    Company Common Stock under the Stock Purchase Plan.

 1. Treatment of Debt Securities, Convertible Notes and Company Warrants.

(a) All debt securities of the Company that are outstanding as of the Effective
Time shall remain outstanding after the Effective Time in accordance with their
respective terms and provisions. Pursuant to the Indenture, dated as of
September 22, 2000 (the "Indenture") between the Company and U.S. Bank Trust
National Association, as trustee (the "Trustee") and to Section 8.04 of the
First Supplemental Indenture, dated as of September 22, 2000 (together with the
Indenture, the "Convertible Notes Indenture"), between the Company and the
Trustee relating to the Company's 8% Senior Secured Convertible Notes (the
"Convertible Notes"), prior to the Effective Time, the Company and Parent shall
enter into an agreement providing that (i) each holder of Convertible Notes
outstanding at the Effective Time shall have the right to convert such
Convertible Notes into the number of shares of Parent Common Stock which would
be receivable at the Effective Time by a holder of the number of shares of
Company Common Stock deliverable upon conversion of such Convertible Notes
immediately prior to the Effective Time, and subject to future adjustments of
the conversion price of the Convertible Notes as provided for in Section 8.03 of
the Supplemental Indenture and (ii) Parent shall be jointly and severally liable
with the Company for the payment and performance by the Company of all of the
Company's obligations under the Convertible Notes Indenture, the Notes, the
related note purchase agreements and warrants and the other agreements,
instruments and documents contemplated thereby.

 a. At the Effective Time, each of the warrants to purchase shares of Company
    Common Stock (the "Company Warrants") which is outstanding and unexercised
    immediately prior thereto shall, pursuant to the terms of such Company
    Warrant, cease to represent a right to acquire shares of Company Common
    Stock and shall be converted automatically into a warrant to purchase such
    number of shares of Parent Common Stock as the holder of such Company
    Warrant would have been entitled to receive pursuant to the Merger had such
    holder exercised such warrant in full immediately prior to the Effective
    Time, at a price per share equal to (y) the aggregate exercise price for the
    shares of Company Common Stock otherwise purchasable pursuant to such
    Company Warrant divided by (z) the number of full shares of Parent Common
    Stock deemed purchasable pursuant to such Company Warrant, and subject to
    future adjustments in accordance with the terms of such Company Warrant,
    provided however that with respect to the Company Warrants issued to members
    of Reedland Capital Partners, if the value of Parent Common Stock issuable
    with respect to one share of Company Common Stock immediately prior to the
    Effective Time is greater than the stock purchase price as defined in such
    Company Warrants effective at the Effective Time (which price as defined in
    such Company Warrants is currently $4.0625), such Company Warrants will
    expire unless exercised prior to the Effective Time.
 b. Prior to the Effective Time, the Company shall deliver to the holders of
    Convertible Notes and Company Warrants appropriate notices (in form and
    substance reasonably satisfactory to Parent) setting forth such holders'
    rights pursuant to the Convertible Notes Indenture and the applicable
    warrant agreements with respect thereto to the extent required by the terms
    of the Convertible Notes Indenture and the applicable warrant agreements.
 c. Parent shall take all corporate action necessary to reserve for issuance a
    sufficient number of shares of Parent Common Stock for delivery upon
    conversion of the Convertible Notes and exercise of the Company Warrants.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the written disclosure schedule dated as of the date of
this Agreement and previously delivered by the Company to Parent (the "Company
Disclosure Schedule") (it being understood that the Company Disclosure Schedule
shall be arranged in sections corresponding to the sections contained in this
Agreement, and the disclosures in any section of the Company Disclosure Schedule
shall qualify the representations in the corresponding section of this Article
II and all applicable representations in other sections of this Article II to
the extent that such qualification is readily apparent), the Company hereby
represents and warrants to Parent and Merger Sub as follows:

 1.  Organization, Standing and Corporate Power.

     Each of the Company and each of its Subsidiaries is duly organized, validly
     existing and in good standing under the laws of the jurisdiction of its
     incorporation and has the requisite corporate and authority necessary to
     own, lease and operate its properties and to carry on its business as it is
     now being conducted. Each of the Company and each of its Subsidiaries is
     duly qualified or licensed as a foreign corporation or entity to do
     business, and is in good standing, in each jurisdiction where the character
     of its properties owned, leased or operated by it or the nature of its
     activities makes such qualification or licensing necessary, except where
     the failure to be so duly qualified or licensed and in good standing would
     not, individually or in the aggregate, reasonably be expected to have any
     materially adverse effect on the business, assets, liabilities, financial
     condition or results of operations of the Company and its Subsidiaries
     taken as a whole other than any such effect resulting from any change,
     effect, event, occurrence, state of facts or development relating to the
     industry in which the Company operates in general and not specifically
     relating to the Company or on the ability of the Company to perform its
     obligations under this Agreement (a "Company Material Adverse Effect").
     Attached to Section 2.01 of the Company Disclosure Schedule are complete
     and correct copies of the Company's certificate of incorporation, as
     amended (the "Certificate of Incorporation"), and the Company's by-laws, as
     amended (the "By-Laws"), as currently in effect.

 2.  Subsidiaries and Minority Investments.

     (a) Section 2.02 of the Company Disclosure Schedule sets forth a list of
     (i) all Subsidiaries of the Company together with the jurisdiction of
     incorporation or formation of each such Subsidiary and the percentage of
     each class or type of each such Subsidiary's outstanding Equity Interests
     owned by the Company or another Subsidiary of the Company and (ii) all
     Minority Investments of the Company together with the percentage of each
     class or type of outstanding Equity Interests owned by the Company or
     another Subsidiary of the Company. Section 2.02 of the Company Disclosure
     Schedule identifies (i) the certificates of incorporation and by-laws (or
     equivalent organizational documents) of, and any investor rights, voting,
     co-sale or other similar agreements applicable to, each of its Subsidiaries
     (the "Subsidiary Documents") and (ii) any investor rights, voting, co-sale
     or other agreements to which the Company or its Subsidiaries are party and,
     to the Knowledge of the Company, the certificates of incorporation and
     by-laws (or equivalent organizational documents), in each case with respect
     to each of its Minority Investments (the "Minority Investment Documents"),
     and the Company has heretofore made available to Parent a true and correct
     copy of each such Subsidiary Document and Minority Investment Document.
     Such Subsidiary Documents and Minority Investment Documents are in full
     force and effect and no other charter or organizational documents or
     investor rights, voting, co-sale or other similar agreements are applicable
     to or binding on the Company or its Subsidiaries with respect to the Equity
     Interests of the Subsidiaries or Minority Investments. None of the
     Company's Subsidiaries nor, to the knowledge of the employees of the
     Company set forth on Schedule 2.02 hereto (the "Knowledge of the Company"),
     any Minority Investment is in violation of any provision of its certificate
     of incorporation of bylaws or equivalent organizational documents. Neither
     the Company nor any Subsidiary owns any Equity Interests in any Person
     other than the Subsidiaries and the Minority Investments. All of the
     outstanding Equity Interests of the Company's Subsidiaries owned by the
     Company or its Subsidiaries are duly authorized, validly issued, fully-paid
     and nonassessable, and all such Equity Interests and all of the Equity
     Interests of the Minority Investments owned or held by the Company or its
     Subsidiaries are owned by the Company or another Subsidiary of the Company,
     free and clear of all security interests, liens, claims, pledges, charges
     or other encumbrances of any nature whatsoever ("Liens") or any restriction
     on the right to vote, sell or otherwise dispose of such Equity Interests
     and were issued in compliance with all applicable federal and state
     securities Laws.

     (b) As used herein: (i) "Subsidiary" of the Company or any other Person
     means any corporation, limited liability company, partnership, joint
     venture or other entity of which the Company or such other Person, as the
     case may be (either alone or through or together with any other
     Subsidiaries), (A) owns, directly or indirectly, 50% or more of the stock
     or other interests the holders of which are generally entitled to vote for
     the election of the board of directors or other governing body of such
     Person (or, if there are no such voting interests, 50% or more of the
     Equity Interests) or (B) serves as a general partner or managing member;
     (ii) "Equity Interest" means with respect to any Person, any and all
     shares, interests, participations, rights in, or other equivalents (however
     designated and whether voting or non-voting) of, such Person's capital
     stock or other equity interests (including, without limitation, partnership
     or membership interests in a partnership or limited liability company or
     any other interest or participation that confers on a Person the right to
     receive a share of the profits and loss, or distributions of assets, of the
     issuing Person) whether outstanding on the date hereof or issued after the
     date hereof, and any and all warrants, options or other rights to acquire
     (including without limitation, any securities convertible into or
     exchangeable for) any such Equity Interests; and (iii) "Minority
     Investment" of the Company or any other Person means any corporation,
     limited liability company, partnership, joint venture or other entity of
     which the Company or such other Person, as the case may be (either alone or
     through or together with any other Subsidiary), owns, directly or
     indirectly, more than 5% of the Equity Interests but which is not a
     Subsidiary of the Company or such other Person.

 3.  Capital Structure.

     (a) The authorized capital stock of the Company consists of 100,000,000
     shares of Company Common Stock, par value $.001 per share, and 10,000,000
     shares of Company Preferred Stock, par value $.001 per share. As of the
     close of business on June 7, 2001, there were: (i) 40,048,880 shares of
     Company Common Stock issued and outstanding; (ii) 9,886 shares of Company
     Common Stock held in the treasury of the Company and no shares of Company
     Common Stock held by Subsidiaries of the Company; (iii) 10,644,566 shares
     of Company Common Stock reserved for issuance upon exercise of Company
     Stock Options available for grant pursuant to the Company Stock Plans;
     (iv) 5,260,447 shares of Company Common Stock issuable upon exercise of
     awarded but unexercised Company Stock Options, with an exercise price per
     each awarded but unexercised Company Stock Option as set forth in the
     Company Disclosure Schedule; (v) 289,532 shares of Company Common Stock
     reserved for issuance pursuant to the Company's Employee Stock Purchase
     Plan (the "Stock Purchase Plan"); (vi) 1,899,234 shares of Company Common
     Stock issuable upon exercise of Company Warrants then outstanding and with
     an exercise price for each such Company Warrant as is set forth in the
     Company Disclosure Schedule; (vii) 3,682,720 shares of Company Common Stock
     issuable upon conversion of the Convertible Notes (for which Convertible
     Notes the conversion price under the Convertible Notes Indenture is $7.06);
     (viii) no shares of Preferred Stock issued and outstanding; (ix) 500,000
     shares of Series A Junior Participating Preferred Stock reserved for
     issuance pursuant to the Rights Agreement; and (x) no shares of Company
     Preferred Stock in the treasury of the Company. Except as set forth above,
     as of June 7, 2001, there were no shares of capital stock or other equity
     securities of the Company issued, reserved for issuance or outstanding.

     (b) All outstanding shares of capital stock of the Company are, and all
     shares which may be issued pursuant to the Company Stock Plans and the
     Company Warrants will be, when issued and paid for in accordance with the
     terms of the Company Warrants and the Company Stock Plans, duly authorized,
     validly issued, fully paid and nonassessable and not subject to preemptive
     rights. All securities issued by the Company were issued in compliance in
     all material respects with all applicable federal and state securities laws
     and all applicable rules and regulations promulgated thereunder. No shares
     of capital stock of the Company are owned by any Subsidiary of the Company.

     (c) Except as set forth in Section 2.03(a), there is no outstanding
     Indebtedness of the Company having the right to vote (or convertible into,
     or exchangeable for, securities having the right to vote) on any matters on
     which stockholders of the Company may vote (collectively, "Voting Debt").
     As used herein, "Indebtedness" means, with respect to any Person, without
     duplication, (i) all obligations of such Person for borrowed money, or with
     respect to deposits or advances of any kind to such Person, (ii) all
     obligations of such Person evidenced by bonds, debentures, notes or similar
     instruments, (iii) all obligations of such Person under conditional sale or
     other title retention agreements relating to property purchased by such
     Person, (iv) all obligations of such Person issued or assumed as the
     deferred purchase price of property or services (excluding obligations of
     such Person to creditors for raw materials, inventory, services and
     supplies incurred in the ordinary course of such Person's business),
     (v) all capitalized lease obligations of such Person, (vi) all obligations
     of others secured by any Lien on property or assets (excluding encumbrances
     in the form of restrictions on use of Intellectual Property contained in
     license agreements or scientific collaboration agreements) owned or
     acquired by such Person, whether or not the obligations secured thereby
     have been assumed, (vii) all obligations of such Person under interest rate
     or currency hedging transactions (valued at the termination value thereof),
     (viii) all letters of credit issued for the account of such Person and (ix)
     all guarantees and arrangements having the economic effect of a guarantee
     of such Person of any Indebtedness of any other Person. Except as set forth
     in Section 2.03(a), there are no options, warrants or other rights,
     agreements, arrangements or commitments of any character binding on the
     Company or any of its Subsidiaries relating to the issued or unissued
     Equity Interests of the Company or any of its Subsidiaries or obligating
     the Company or any of its Subsidiaries to issue, sell, repurchase, redeem
     or otherwise acquire or make any payment with respect to any Equity
     Interests of the Company or any of its Subsidiaries or any Minority
     Interests held by the Company or any of its Subsidiaries. To the Knowledge
     of the Company as of the date hereof, there are no irrevocable proxies with
     respect to shares of capital stock of the Company or any of its
     Subsidiaries. There are no agreements or arrangements pursuant to which the
     Company is or could be required to register shares of Company Common Stock
     or other securities under the Securities Act of 1933, as amended (the
     "Securities Act").

     (d) Between June 7, 2001 and the date of this Agreement, the Company has
     not issued or reserved for issuance any Company Common Stock, Company Stock
     Options or other Equity Interests of the Company, except (i) the issuance
     of Company Common Stock as a result of the exercise of Company Stock
     Options outstanding at June 7, 2001 and (ii) upon conversion or exercise of
     Convertible Notes or Company Warrants outstanding on the date of this
     Agreement. Between December 31, 2000 and the date of this Agreement,
     neither the Company nor any of its Subsidiaries has (A) repurchased,
     redeemed or otherwise acquired any Equity Interests of the Company or any
     of its Subsidiaries or (B) declared, set aside, made or paid any dividend
     or distribution in respect of any of its Equity Interests and the board of
     directors of the Company has not resolved to do any of the foregoing.

 4.  Authority.

     The Company has all necessary corporate power and authority to execute and
     deliver this Agreement and to perform its obligations hereunder and to
     consummate the Transactions. The execution and delivery of this Agreement
     by the Company and the consummation by the Company of the Transactions have
     been duly and validly authorized by all necessary corporate action of the
     Company other than the adoption of this Agreement by the Company's
     stockholders in accordance with the DGCL and the Certificate of
     Incorporation and Bylaws, and no other corporate proceedings on the part of
     the Company are necessary to authorize this Agreement or to consummate the
     Merger (other than the adoption of this Agreement by the Company's
     stockholders in accordance with the DGCL and the Certificate of
     Incorporation and Bylaws and the filing and recordation of the appropriate
     documents with respect to the Merger in accordance with the DGCL). This
     Agreement has been duly and validly executed and delivered by the Company
     and, assuming the due authorization, execution and delivery hereof by
     Parent and Merger Sub, constitutes the legal, valid and binding obligation
     of the Company, enforceable against the Company in accordance with its
     terms, except to the extent limited by bankruptcy, insolvency, moratorium,
     fraudulent conveyance, or other Laws affecting the rights of creditors
     generally, and to the extent that the availability of equitable remedies
     may be limited by equitable principles.

 5.  Noncontravention.

     (a) The execution and delivery of this Agreement by the Company does not,
     and the performance of this Agreement by the Company and the consummation
     of the Transactions will not, (i) conflict with or violate the Certificate
     of Incorporation or Bylaws or the certificate of incorporation or bylaws
     (or equivalent formation documents) of each of the Subsidiaries of the
     Company, (ii) assuming that all consents, approvals and authorizations
     contemplated by clauses (i)-(iv), inclusive, of Section 2.05(b) hereof have
     been obtained and all filings described in such clauses have been made (and
     declared effective, if applicable), conflict with or violate any law,
     statute, ordinance, rule, regulation, order, judgment or decree
     (collectively, "Laws") applicable to the Company or any of its Subsidiaries
     or, to the Knowledge of the Company, any of its Minority Investments or by
     which any of their respective properties is bound or affected, or
     (iii) result in any breach of or constitute a default (or an event that
     with notice or lapse of time or both would become a default) under, or give
     to others any rights of termination, amendment, acceleration or
     cancellation of, or alteration of rights under or require the consent or
     approval of any Person under, or result in the creation of a Lien on any of
     the properties or assets of the Company or any of its Subsidiaries pursuant
     to, any note, bond, mortgage, indenture, contract, agreement, lease,
     license, permit, franchise, joint venture, limited liability or partnership
     agreement or other instrument to which the Company or any of its
     Subsidiaries is a party or by which the Company or any of its Subsidiaries
     or any of their respective properties is bound or affected, including any
     Subsidiary Document and any Minority Investment Document, except, in the
     case of clauses (ii) and (iii) of this Section 3.05(a), for any conflict,
     violation, breach, default, impairment, right or lack of consent or
     approval that would not, individually or in the aggregate, reasonably be
     expected to have a Company Material Adverse Effect.

     (b) The execution and delivery of this Agreement by the Company does not,
     and the performance of this Agreement by the Company and the consummation
     of the Transactions by the Company will not, require any consent, approval,
     authorization or permit of, or filing with or notification to, any federal,
     state or local court or governmental or regulatory authority or agency,
     domestic or foreign (each, a "Governmental Entity"), except (i) the filing
     of a premerger notification and report form by the Company under the HSR
     Act, (ii) the filing of the Certificate of Merger with the Secretary of
     State of the State of Delaware and appropriate documents with the relevant
     authorities of other states in which the Company is qualified to do
     business, (iii) the filing with the Securities and Exchange Commission (the
     "SEC") of the Form S-4 and such reports under the Securities Exchange Act
     of 1934, as amended, and the SEC rules and regulations promulgated
     thereunder (the "Exchange Act") as may be required in connection with this
     Agreement and the Transactions, (iv) consents, approvals, authorizations,
     permits, filings or notifications which have heretofore been obtained or
     made, as the case may be, by the Company and are in full force and effect
     or (v) where the failure to obtain such consents, approvals, authorizations
     or permits, or to make such filings or notifications, would not,
     individually or in the aggregate, reasonably be expected to have a Company
     Material Adverse Effect.

 6.  SEC Documents; Financial Statements.

     (a) The Company has filed on a timely basis all forms, reports and
     documents required to be filed with the SEC since January 1, 1998 (all
     forms, reports and documents filed by the Company with the SEC since
     January 1, 1998, in each case including all exhibits and schedules thereto
     and documents incorporated by reference therein, such documents together
     with any documents filed during such period by the Company with the SEC on
     a voluntary basis on Current Reports on Form 8-K are referred to herein as
     the "Company SEC Documents"). The Company SEC Documents (i) complied as to
     form in all material respects with the requirements of the Securities Act
     of 1933, as amended, and the SEC rules and regulations promulgated
     thereunder (the "Securities Act") or the Exchange Act, as the case may be,
     and the rules and regulations thereunder, each as in effect on the date so
     filed or amended, and (ii) did not at the time they were filed (or if
     amended or superseded by a filing then on the date of such filing, which
     filing must have occurred prior to the date of this Agreement for the
     Company SEC Documents otherwise filed prior to the date of this Agreement)
     contain any untrue statement of a material fact or omit to state a material
     fact required to be stated therein or necessary in order to make the
     statements therein, in the light of the circumstances under which they were
     made, not misleading.

     (b) Each of the audited and unaudited consolidated financial statements
     (including, in each case, any related notes thereto) contained in the
     Company SEC Documents were prepared in accordance with United States
     generally accepted accounting principles ("GAAP") applied on a consistent
     basis throughout the periods involved (except as may be indicated in the
     notes thereto or in the Company SEC Documents), and each fairly presents
     the consolidated financial position of the Company and its Subsidiaries at
     the respective dates thereof and the consolidated results of their
     operations and cash flows for the periods indicated, except that the
     unaudited interim financial statements were or are subject to normal and
     recurring year-end adjustments and do not contain all of the footnote
     disclosures required by GAAP.

 7.  Undisclosed Liabilities.

     Neither the Company nor any of its Subsidiaries has any liabilities or
     obligations of any nature (whether accrued, absolute, contingent or
     otherwise) required by GAAP to be recognized or disclosed on a consolidated
     balance sheet of the Company and its Subsidiaries or in the notes thereto,
     except (i) liabilities reflected in the consolidated audited balance sheet
     of the Company as of December 31, 2000 or the notes thereto (the "2000
     Balance Sheet") and (ii) liabilities incurred since December 31, 2000 in
     the ordinary course of business consistent with past practice that,
     individually or in the aggregate, would not reasonably be expected to have
     a Company Material Adverse Effect.

 8.  Information Supplied.

     None of the information supplied or to be supplied by the Company for
     inclusion or incorporation by reference in (i) the registration statement
     on Form S-4 to be filed with the SEC by Parent in connection with the
     issuance of Parent Common Stock in the Merger (the "Form S-4"), at the time
     the Form S-4 is filed with the SEC, at any time it is amended or
     supplemented or at the time it becomes effective under the Securities Act,
     or (ii) the Proxy Statement, at the date it is first mailed to the
     Company's stockholders or at the time of the Stockholders Meeting, will
     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 Proxy Statement will comply as to form in all
     material respects with the requirements of the Exchange Act and the rules
     and regulations promulgated thereunder, except that no representation is
     made by the Company with respect to statements made or incorporated by
     reference therein based on information supplied in writing by Parent or
     Merger Sub specifically for inclusion or incorporation by reference
     therein.

 9.  Absence of Certain Changes or Events.

     Since December 31, 2000, the Company has conducted its business only in the
     ordinary course consistent with past practice, and there is not and has not
     been: (a) any condition, event or occurrence, individually or in the
     aggregate, resulting in a Company Material Adverse Effect, (b) any
     condition, event or occurrence which, individually or in the aggregate,
     would reasonably be expected to have or give rise to a Company Material
     Adverse Effect; or (c) any action which, if it had been taken or occurred
     after the execution of this Agreement, would have required the consent of
     Parent pursuant to this Agreement.

 10. Litigation.

     There is no suit, claim, action, proceeding or investigation pending or, to
     the Knowledge of the Company, threatened against the Company or any of its
     Subsidiaries, or against or involving any properties or rights of the
     Company or any of its Subsidiaries, which would, individually or in the
     aggregate, reasonably be expected to result in a Company Material Adverse
     Effect. Section 2.10 of the Company Disclosure Schedule sets forth as of
     the date of this Agreement the suits, claims, actions, proceedings and
     investigations pending, or to the Knowledge of the Company, threatened
     against the Company or any of its Subsidiaries which if adversely
     determined would result in a liability to the Company in excess of
     $500,000. To the Knowledge of the Company, neither the Company nor any of
     its Subsidiaries nor any of their respective properties is or are subject
     to any order, writ, judgment, injunction, decree, determination or award
     having, or which would reasonably be expected to have a Company Material
     Adverse Effect. To the Knowledge of the Company, as of the date of this
     Agreement, no officer or director of the Company or any of its Subsidiaries
     has been served with or otherwise has written notice of a written complaint
     naming such officer or director as a defendant in any litigation commenced
     by stockholders of the Company or any of its Subsidiaries with respect to
     the performance of his or her duties as an officer and/or director of the
     Company or any of its Subsidiaries under any federal or state Law
     (including litigation under federal and state securities Laws).

 11. Labor Matters.

     Neither the Company nor any of its Subsidiaries is a party to, or bound by,
     any collective bargaining agreement, contract or other agreement or
     understanding with a labor union or labor organization. To the Knowledge of
     the Company, neither the Company nor any of its Subsidiaries is the subject
     of any proceeding asserting that it or any Subsidiary has committed an
     unfair labor practice or seeking to compel it to bargain with any labor
     organization as to wages or conditions of employment. There is no strike,
     work stoppage, lock-out or other similar labor dispute involving it or any
     of its Subsidiaries pending or, to the Knowledge of the Company,
     threatened; and no employee grievance pending or, to the Knowledge of the
     Company, threatened against the Company or any of its Subsidiaries which,
     individually or in the aggregate, would reasonably be expected to have a
     Company Material Adverse Effect. The Company and each Subsidiary is in
     compliance with all applicable Laws, agreements, contracts, and policies
     relating to employment, employment practices, wages, hours, and terms and
     conditions of employment except for failures so to comply, if any, that
     individually or in the aggregate would not reasonably be expected to have a
     Company Material Adverse Effect. The Company and its Subsidiaries have
     complied in all material respects with their payment obligations to all
     employees of the Company and its Subsidiaries in respect of all wages,
     salaries, commissions, bonuses, benefits and other compensation due and
     payable to such employees under any Company policy, practice, agreement,
     plan, program or any Law. The Company and its Subsidiaries are not liable
     for any severance pay or other payments to any employee or former employee
     arising from the termination of employment under any benefit or severance
     policy, practice, agreement, plan, or program of the Company or any of its
     Subsidiaries, nor to the Knowledge of the Company will the Company or any
     of its Subsidiaries have any liability which exists or arises, or may be
     deemed to exist or arise, under any applicable law or otherwise, as a
     result of the Transactions. The Company and its Subsidiaries are in
     compliance with its obligations pursuant to the Worker Adjustment and
     Retraining Notification Act of 1988 ("WARN"), to the extent applicable.
     Each employee of the Company or any of its Subsidiaries has signed an
     agreement with respect to confidentiality, nonsolicitation and assignment
     of inventions with the Company or such Subsidiary, which agreements are
     each in the form heretofore provided to Parent.

 12. Permits; Compliance with Laws.

     (a) The Company and its Subsidiaries hold all permits, licenses, variances,
     exemptions, orders and approvals of all Governmental Entities other than
     those the failure of which to hold would not reasonably be expected to have
     a Company Material Adverse Effect (the "Company Permits"). The Company and
     its Subsidiaries are in material compliance with the terms of the Company
     Permits.

     (b) The businesses of the Company and its Subsidiaries are not being
     conducted in violation of any law (domestic or foreign), ordinance or
     regulation of any Governmental Entity, except for possible violations that,
     individually or in the aggregate, do not and would not reasonably be
     expected to have a Company Material Adverse Effect.

 13. Employee Benefit Plans.

(a) The Company Disclosure Schedule contains a true and complete list of each
"employee benefit plan" (within the meaning of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (including,
without limitation, multiemployer plans within the meaning of Section 3(37) of
ERISA)), stock purchase, stock option, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs, policies or other
arrangements relating to compensation, benefits or entitlements, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the Transactions or otherwise), whether
formal or informal, oral or written, legally binding or not under which any
employee or former employee or director or former director of the Company or any
of its Subsidiaries, or any consultant or independent contractor to the Company
or any of its Subsidiaries, has any present or future right to benefits or under
which the Company or any of its Subsidiaries has any present or future
liability. All such plans, agreements, programs, policies and arrangements are
herein collectively referred to as the "Company Plans."

 b. With respect to each Company Plan, the Company has delivered or made
    available to Parent a current, accurate and complete copy (or, to the extent
    no such copy exists, an accurate description) thereof and, to the extent
    applicable, (i) any related trust agreement, annuity contract or other
    funding instrument; (ii) the most recent IRS determination letter; (iii) the
    current summary plan description and other written communications (or a
    description of any oral communications) by the Company to its employees
    concerning the extent of the benefits provided under a Company Plan; and
    (iv) for the three most recent years (A) the Form 5500 and attached
    schedules; (B) audited financial statements; (C) actuarial valuation
    reports; and (D) attorney's response to an auditor's request for
    information.
 c. Each Company Plan has been established and administered in material
    compliance with its terms and with the applicable provisions of ERISA, the
    Code and other applicable laws, rules and regulations (including the
    applicable laws, rules and regulations of any foreign jurisdiction), in each
    case, in all material respects. Each Company Plan that is intended to be
    qualified within the meaning of Code Section 401(a) is so qualified and has
    received a favorable determination letter as to its qualification and to the
    Knowledge of the Company nothing has occurred, whether by action or failure
    to act, which would cause the loss of such qualification. With respect to
    any Company Plan, no actions, suits or claims (other than routine claims for
    benefits in the ordinary course) are pending or, to the best Knowledge of
    the Company, threatened; to the Knowledge of the Company no facts or
    circumstances exist which could give rise to any such actions, suits or
    claims and the Company will promptly notify Parent in writing of any pending
    claims or, to the Knowledge of the Company, any threatened claims arising
    between the date hereof and the Effective Time. Neither the Company nor, to
    the Knowledge of the Company, any other party has engaged in a non- exempt
    prohibited transaction, as such term is defined under Code Section 4975 or
    ERISA Section 406, which would subject the Company or Parent or its
    Subsidiaries to any material taxes, penalties or other liabilities under the
    Code or ERISA. To the Knowledge of the Company, no event has occurred and no
    condition exists that would subject the Company, either directly or by
    reason of its affiliation with any member of its "Controlled Group" (defined
    as any organization which is a member of a controlled group of organizations
    within the meaning of Code Sections 414(b), (c), (m) or (o)), to any
    material tax, fine or penalty imposed by ERISA, the Code or other applicable
    laws, rules and regulations (including the applicable laws, rules and
    regulations of any foreign jurisdiction). All insurance premiums required to
    be paid and all contributions required to be made under the terms of any
    Company Plan, the Code, ERISA or other applicable laws, rules and
    regulations (including the applicable laws, rules and regulations of any
    foreign jurisdiction) as of the Effective Time have been or will be timely
    paid or made prior thereto and adequate reserves have been provided for on
    the Company's balance sheet for any premiums (or portions thereof) and for
    all benefits attributable to service on or prior to the Effective Time. For
    each Company Plan with respect to which a Form 5500 has been filed, no
    material change has occurred with respect to the matters covered by the most
    recent Form since the date thereof. No Company Plan provides for an increase
    in benefits on or after the Effective Time.
 d. No Company Plan is subject to Title IV of ERISA, and no Company Plan is a
    multiemployer plan as defined in Section 4001(A)(3) of ERISA. The Company
    has never contributed to or sponsored any multiemployer plan or any plan
    subject to Title IV of ERISA. No Company Plan or related trust is intended
    to meet the requirements for tax-favored treatment under Code Section
    501(c)(9).
 e. No unfunded Company Plan exists that must be accounted for in accordance
    with SFAS No. 87, 106 or 112.
 f. No Company Plan exists which could result in the payment to any Company
    employee of any money or other property or rights or accelerate or provide
    any other rights or benefits to any Company employee as a result of the
    Transactions, whether or not such payment would constitute a parachute
    payment within the meaning of Code section 280G, and there is no contract,
    plan or arrangement (written or otherwise) covering any employee or former
    employee of the Company or any of its Subsidiaries that, individually or
    collectively, could give rise to the payment of any amount or receipt of any
    other rights or benefits that would not be deductible pursuant to the terms
    of Code section 280G or limitations on deductibility under Code section
    162(m).

 1.  Taxes.

     Each of the Company and each of its Subsidiaries has timely filed or had
     filed on its behalf all Tax Returns required to be filed by it and all such
     returns are true, complete and correct, or requests for extensions to file
     such Tax Returns have been timely filed, granted and have not expired and
     has paid all Taxes shown as due on such returns. The Company has provided
     adequate reserves in its financial statements for any Taxes that have not
     been paid, whether or not shown as being due on such Tax Returns. No claim
     for unpaid Taxes has been asserted in writing by a Tax authority or has
     become a lien against the property of the Company or any of its
     Subsidiaries (other than with respect to Taxes not yet due and payable). No
     audit or other proceeding with respect to any Taxes due from or with
     respect to the Company or any of its Subsidiaries or any Tax Return filed
     by the Company or any of its Subsidiaries is being conducted by any
     Governmental Entity or Tax authority and the Company and its Subsidiaries
     have not received notification in writing that any such audit or other
     proceeding with respect to Taxes or any Tax Return is pending. No extension
     of the statute of limitations on the assessment of any Taxes has been
     granted by the Company or any of its Subsidiaries. Neither the Company nor
     any of its Subsidiaries is subject to liability for Taxes of any Person
     (other than the Company or its Subsidiaries), arising from the application
     of Treasury Regulation section 1.1502-6 or any analogous provision of
     state, local or foreign law, or as a transferee or successor, by contract,
     or otherwise. None of the Company or any of its Subsidiaries is a party to,
     is bound by or has any obligation under any Tax sharing or Tax indemnity
     agreement or similar contract or arrangement. None of the Company or any of
     its Subsidiaries has been a party to any distribution occurring during the
     last two years in which the parties to such distribution treated the
     distribution as one to which Section 355 of the Code is applicable. All
     Taxes required to be withheld, collected or deposited by or with respect to
     the Company and each Subsidiary have been timely withheld, collected or
     deposited as the case may be, and to the extent required, have been paid to
     the relevant taxing authority. As used herein: (i) "Taxes" shall mean all
     taxes of any kind, including, without limitation, those on or measured by
     or referred to as income, gross receipts, sales, use, ad valorem,
     franchise, profits, license, withholding, payroll, employment, excise,
     severance, stamp, occupation, premium, value added, property or windfall
     profits taxes, customs, duties or similar fees, assessments or charges of
     any kind whatsoever, together with any interest and any penalties,
     additions to tax or additional amounts imposed by any Governmental Entity,
     and (ii) "Tax Return" shall mean any return, declaration, report, claim for
     refund, information return or statement relating to Taxes, including any
     schedule or attachment thereto, and including any amendment thereof.

 2.  Properties.

     Except where the failure to have good and valid title would not interfere
     in any material respect with the conduct of the business of the Company and
     its Subsidiaries as currently conducted, the Company and each of its
     Subsidiaries have good title to, or valid leasehold interests in, or
     otherwise the right to use all their material properties and assets, and
     such assets and properties at the Effective Time will be free and clear of
     any Liens except for (a) Liens for current Taxes which are not delinquent,
     or are being contested in good faith, (b) mechanics', workers',
     materialmen's and other like Liens arising in the ordinary course of
     business, (c) zoning ordinances, rights of way, easements, licenses,
     reservations, covenants, conditions or restrictions on the use of any of
     the real property which do not, individually or in the aggregate,
     materially interfere with the use of such real property and (d)
     encumbrances in the form of restrictions on use of Intellectual Property
     contained in license agreements or scientific collaboration agreements.
     Neither the Company nor any of its Subsidiaries is obligated under or bound
     by any option, right of first refusal, purchase contract, or other
     contractual right to sell or dispose of any real or personal tangible
     property or any portions thereof or interests therein which property,
     portions and interests, either individually or in the aggregate, are
     material to the Company.

 3.  Environmental Matters.

     (a) Except as could not, individually or in the aggregate, reasonably be
     expected to result in a Company Material Adverse Effect: (i) the Company
     and each of its Subsidiaries are in compliance with all applicable
     Environmental Laws, and during all applicable statute of limitations
     periods have complied with all applicable Environmental Laws; and (ii)
     neither the Company nor any of its Subsidiaries has, nor would reasonably
     be expected to have, any obligation to undertake any Remedial Activity, at
     any property owned or leased by any of them or at any other property.

     (b) The Company has furnished, or made available to Buyer, or to its
     representatives, true and complete copies of all material Environmental
     Reports in the possession or control of the Company or of its Subsidiaries,
     or fairly described to Buyer or to its representatives the contents of such
     reports.

     (c) As used herein: (i) "Environmental Laws" means any and all Laws or
     other legally enforceable requirements (including, without limitation,
     common law) of any Governmental Entity, regulating, relating to or imposing
     liability or standards of conduct concerning protection of the environment
     or of human health, or employee health and safety; (ii) "Environmental
     Report" means any report, study, assessment or audit that addresses any
     issue of actual or potential noncompliance with, actual or potential
     liability under or cost arising out of, or actual or potential impact on
     the business of the Company or any of its Subsidiaries in connection with,
     any Environmental Law or any proposed or anticipated change in or addition
     to any Environmental Law relating to the Company or any of its Subsidiaries
     or any entity for which any of them may be liable; (iii) "Materials of
     Environmental Concern" means any gasoline or petroleum (including crude oil
     or any fraction thereof) or petroleum products, polychlorinated biphenyls,
     urea-formaldehyde insulation, asbestos, pollutants, contaminants and
     radioactivity that is regulated pursuant to or could result in liability
     under any Environmental Law; and (iv) "Remedial Action" means any action to
     (A) investigate, clean up, remove or treat any Materials of Environmental
     Concern, or (B) prevent the release or threat of release of any Materials
     of Environmental Concern.

 4.  Contracts; Debt Instruments.

     (a) Section 2.17(a) of the Company Disclosure Schedule accurately lists as
     of the date hereof the following contracts, agreements, commitments,
     arrangements, leases, licenses, policies and instruments, whether written
     or oral (a "Contract") to which the Company or any of its Subsidiaries is a
     party or by which it or any of its Subsidiaries is bound (collectively,
     "Material Contracts"):

     (A) any Contract relating to any direct or indirect Indebtedness (including
     but not limited to loan or credit agreements, notes, bonds, mortgages,
     indentures, lease-purchase arrangements, guarantees, agreements to purchase
     goods or services or to supply funds or other undertakings on which others
     rely in extending credit) in an aggregate principal amount in excess of
     $250,000 is outstanding or may be incurred, or (B) any conditional sales
     contracts, chattel mortgages, equipment lease agreements, and other
     security arrangements with respect to personal property with a value in
     excess of $250,000 in each instance used or owned by the Company or any of
     its Subsidiaries; any Contract containing covenants limiting the ability of
     the Company or any of its Subsidiaries to compete in any line of business
     with any Person or in any area or territory or which would so limit the
     Surviving Company or Parent or any of their respective Subsidiaries after
     the Effective Time; any lease for real property; any Contract involving
     commitments to others to make capital expenditures involving an aggregate
     amount in excess of $250,000 or more in any one case, except Contracts that
     may be terminated without liability, obligation or penalty by the Company
     or its Subsidiary on not more than 30 days' notice; any material licenses,
     assignments, consents, royalty, development, research or other similar
     agreements concerning any Intellectual Property owned or used by the
     Company or any of its Subsidiaries, other than licenses generally
     commercially available on standard terms, and any agreements concerning the
     enforcement or waiver of any rights with respect to any Intellectual
     Property owned or used by the Company or any of its Subsidiaries, other
     than confidentiality or non-disclosure agreements entered into in the
     ordinary course of the Company's business; any joint venture, limited
     liability, partnership, limited partnership or similar agreements relating
     to the formation, creation, operation, management or control of any
     corporation, company, partnership or joint venture, and any investor
     rights, voting, co-sale or other shareholder agreements, including the
     Subsidiary Documents and the Minority Investment Documents, with respect to
     any Equity Interests of the Company or any of its Subsidiaries or to which
     the Company or any of its Subsidiaries is a party or by which their
     respective properties are bound; any agreements entered into since
     January 1, 1999 relating to the acquisition or disposition of any business
     or any corporation, partnership, joint venture, association or other
     business organization or division thereof by the Company or any of its
     Subsidiaries, whether by merger, sale of Equity Interests, sale of assets
     or otherwise and any other such agreements under which the Company or any
     of its Subsidiaries currently have indemnification obligations or similar
     liabilities, whether entered into prior to or since January 1, 1999
     (collectively, "Acquisition Agreements"); any joint development,
     collaboration, research or material similar agreements involving the
     Company or any of its Subsidiaries or their respective properties; any
     Contract not covered by any of the other items of this Section 2.17 that
     (i) provides for payments by the Company or any of its Subsidiaries,
     whether in cash or Equity Interests, in excess of $250,000, (ii) is not in
     the ordinary course of business or (iii) is material to the business,
     operations, properties, liabilities or condition (financial or otherwise)
     of the Company and its Subsidiaries, taken as a whole.

     (b) Neither the Company nor any of its Subsidiaries is, and to the
     Knowledge of the Company no other party is, in default or breach of any
     Material Contract, except for those defaults which would not, individually
     or in the aggregate, reasonably be expected to have a Company Material
     Adverse Effect, and there has not occurred any event that with the lapse of
     time or the giving of notice or both would constitute such a default,
     except for those defaults which would not, individually or in the
     aggregate, reasonably be expected to have a Company Material Adverse
     Effect. Each Material Contract constitutes the legal, valid and binding
     obligation of the Company, enforceable against the Company in accordance
     with its terms, except to the extent limited by bankruptcy, insolvency,
     moratorium, fraudulent conveyance, or other Laws affecting the rights of
     creditors generally, and to the extent that the availability of equitable
     remedies may be limited by equitable principles, and no Person has the
     right to terminate or repudiate any Material Contract on less than 30 days
     prior notice or, to the Knowledge of the Company as of the date hereof, has
     repudiated any provision of any Material Contract. No claim of a breach of
     any representation, warranty or covenant and no other claim for
     indemnification has been made by or against the Company or any of its
     Subsidiaries under any Acquisition Agreement prior to the date hereof that
     has not been fully resolved prior to the date hereof. The Company is not a
     party to any Material Contract that is required to be disclosed as an
     exhibit to the SEC Documents in accordance with the rules and regulations
     of the SEC that has not been so disclosed.

 5.  Intellectual Property.

     (a) Section 2.18(a) of the Company Disclosure Schedule sets forth all
     Intellectual Property owned by the Company or its Subsidiaries that is
     registered or filed with any Governmental Entity (the "Registered
     Intellectual Property"), all licenses of patented Intellectual Property to
     or from third parties (the "Licensed Patent Intellectual Property") and all
     other licenses of Intellectual Property other than licenses generally
     commercially available on standard terms to or from third parties by the
     Company or any of its Subsidiaries that are material to the business of the
     Company and its Subsidiaries (together with the Registered Intellectual
     Property and the Licensed Patent Intellectual Property, the "Material
     Intellectual Property"). As used herein, "Intellectual Property" means all
     rights, privileges and priorities provided under federal, state, foreign
     and multinational law relating to intellectual property, including without
     limitation all (i) (A) inventions, discoveries, processes, formulae,
     designs, methods, techniques, procedures, concepts, developments,
     technology, new and useful improvements thereof and know-how relating
     thereto, whether or not patented or eligible for patent protection; (B)
     copyrights and copyrightable works, including computer applications,
     programs, software, databases and related items; (C) trademarks, service
     marks, trade names, brand names, corporate names, logos and trade dress,
     the goodwill of any business symbolized thereby, and all common-law rights
     relating thereto; (D) trade secrets and other confidential information; and
     (ii) all registrations, applications, recordings, and licenses or other
     similar agreements related to the foregoing.

     (b) The Company and its Subsidiaries own or have the right to use all
     Intellectual Property necessary for the Company and its Subsidiaries to
     conduct their business substantially as it is currently conducted and
     consistent with past practice.

     (c) All of the Registered Intellectual Property owned by the Company or any
     of its Subsidiaries is subsisting and unexpired, has not been abandoned
     and, to the Knowledge of the Company, does not infringe or otherwise impair
     the intellectual property rights of any third party. To the Knowledge of
     the Company, all of the Registered Intellectual Property licensed or used
     by the Company or any of its Subsidiaries is subsisting and unexpired, has
     not been abandoned and, to the Knowledge of the Company, does not infringe
     or otherwise impair the intellectual property rights of any third party.
     None of the Material Intellectual Property owned by the Company or any of
     its Subsidiaries is the subject of any license, security interest, Lien or
     other agreement granting rights therein to any third party other than the
     Material Contracts. To the Knowledge of the Company, the Company has not
     misappropriated the trade secrets, technology, know-how, inventions or the
     like of any third party. No judgment, decree, injunction, rule or order has
     been rendered by any Governmental Entity which would limit, cancel or
     question the validity of, or the Company's or its Subsidiaries' rights in
     and to any Intellectual Property in any respect that could reasonably be
     expected to have, individually or in the aggregate, a Company Material
     Adverse Effect. The Company has not received written notice, and does not
     otherwise have knowledge, of any pending or threatened suit, action or
     proceeding that seeks to limit, cancel or question the validity of, or the
     Company's or its Subsidiaries' rights in and to any Intellectual Property,
     which, if adversely determined, could reasonably be expected to have,
     individually or in the aggregate, a Company Material Adverse Effect. The
     Company and its Subsidiaries have taken reasonable steps to protect,
     maintain and safeguard their material Intellectual Property, including any
     Material Intellectual Property for which improper or unauthorized
     disclosure would impair its value or validity, and have executed
     appropriate nondisclosure agreements and made appropriate filings and
     registrations in connection with the foregoing.

 6.  Brokers and Other Advisors.

     No broker, investment banker, financial advisor or other Person, other than
     JP Morgan Chase & Co. ("JP Morgan"), the fees and expenses of which will be
     paid by the Company (pursuant to fee agreements, copies of which have been
     provided to Parent), is entitled to any broker's, finder's, financial
     advisor's or other similar fee or commission in connection with the
     Transactions based upon arrangements made by or on behalf of the Company or
     any of its Subsidiaries.

 7.  Opinion of Financial Advisor.

     The Company has received as of the date of this Agreement the opinion of JP
     Morgan to the effect that, as of such date, the Merger Consideration is
     fair, from a financial point of view, to the holders of Company Common
     Stock (other than Parent and its Affiliates). As used herein,
     (i) "Affiliate" means a Person that directly or indirectly, through one or
     more intermediaries, Controls, is controlled by, or is under common control
     with, the first mentioned Person; and (ii) "Control" (including the terms
     "controlled by" and "under common control with") means the possession,
     directly or indirectly or as trustee or executor, of the power to direct or
     cause the direction of the management or policies of a Person, whether
     through the ownership of stock, as trustee or executor, by contract or
     credit arrangement or otherwise.

 8.  Board Recommendation; State Antitakeover Law.

     The board of directors of the Company, at a meeting duly called and held,
     has by unanimous vote of those directors present (i) determined that this
     Agreement and the Transactions, including the Merger, are fair to and in
     the best interests of the stockholders of the Company and has taken all
     actions necessary on the part of the Company to render the restrictions on
     business combinations contained in Section 203 of the DGCL inapplicable to
     this Agreement and the Merger, and (ii) resolved to recommend that the
     holders of the shares of Company Common Stock approve this Agreement and
     the Transactions, including the Merger.

 9.  Required Company Vote.

     The Company Stockholder Approval, being the affirmative vote of a majority
     of the outstanding shares of the Company Common Stock, is the only vote of
     the holders of any class or series of the Company's securities necessary to
     approve this Agreement, the Merger and the other Transactions.

 10. Rights Agreement.

     The Rights Agreement has been amended so as to provide that neither Parent
     nor Merger Sub will become an "Acquiring Person" or a "Principal Party" and
     that no "Shares Acquisition Date" or "Distribution Date" (as such terms are
     defined in the Rights Agreement) will occur as a result of the approval,
     execution, delivery or performance of this Agreement or the consummation of
     the Merger. A true and correct copy of the Rights Agreement as so amended
     has been delivered to Parent.

 11. Affiliate Transactions.

As of the date hereof, there are no existing Contracts, transactions,
indebtedness or other arrangements, or any related series thereof, between the
Company or any of its Subsidiaries, on the one hand, and any of the directors,
officers or other Affiliates of the Company and its Subsidiaries, on the other
hand.

     
     
     REPRESENTATIONS AND WARRANTIES OF PARENT

     Except as set forth in the written disclosure schedule dated as of the date
     of this Agreement and previously delivered by Parent to the Company (the
     "Parent Disclosure Schedule") (it being understood that the Parent
     Disclosure Schedule shall be arranged in sections corresponding to the
     sections contained in this Agreement, and the disclosures in any section of
     the Parent Disclosure Schedule shall qualify all of the representations in
     the corresponding section of this Article III and all applicable
     representations in other sections of this Article III to the extent that
     such qualification is readily apparent ), Parent hereby represents and
     warrants to the Company as follows:

      1.  Organization, Standing and Corporate Power.
     
          Each of Parent, Merger Sub and each of Parent's "significant
          Subsidiaries" (within the meaning of Rule 1-02 of Regulation S-X of
          the SEC) (collectively, the "Parent Subsidiaries") is duly organized,
          validly existing and in good standing under the laws of the
          jurisdiction of its incorporation or formation and has the requisite
          corporate or other power and authority necessary to own, lease and
          operate its properties and to carry on its business as it is now being
          conducted. Each of Parent, Merger Sub and each of the Parent
          Subsidiaries is duly qualified or licensed as a foreign corporation or
          entity to do business, and is in good standing, in each jurisdiction
          where the character of its properties owned, leased or operated by it
          or the nature of its activities makes such qualification or licensing
          necessary, except where the failure to be so duly qualified or
          licensed and in good standing would not, individually or in the
          aggregate, reasonably be expected to have any materially adverse
          effect on the business, assets, liabilities, financial condition or
          results of operations of Applera Corporation-Celera Genomics Group,
          taken as a whole, other than any such effect resulting from any
          change, effect, event, occurrence, state of facts or development
          relating to the industry in which Parent operates in general and not
          specifically relating to Parent or on the ability of Parent and Merger
          Sub to perform its obligations under this Agreement (a "Parent
          Material Adverse Effect"). Parent has made available to the Company
          complete and correct copies of its certificate of incorporation and
          by-laws and the certificate of incorporation and by-laws of Merger
          Sub.
     
      2.  Capital Structure.
     
          (a) As of the date of this Agreement, the authorized capital stock of
          Parent consists of 1,255,000,000 shares of common stock of Parent
          (consisting of 1,000,000,000 shares of Parent Common Stock and
          225,000,000 shares of Applera Corporation-Applied Biosystems Group
          Common Stock, par value $.01 per share ("AB Stock")) and 10,000,000
          shares of preferred stock of Parent (the "Parent Preferred Stock"). As
          of the close of business on June 11, 2001, there were:
          (i) 61,561,502.74 shares of Parent Common Stock issued and
          outstanding; (ii) 13,717 shares of Parent Common Stock held in the
          treasury of Parent; (iii) 14,127,347.26 shares of Parent Common Stock
          reserved for issuance pursuant to Parent's stock option plans,
          Parent's employee stock purchase plans and Parent's Director Stock
          Purchase and Deferred Compensation Plan (collectively, the "Parent
          Stock Plans"); (iv) 13,018,883 shares of Parent Common Stock issuable
          upon exercise of awarded but unexercised stock options; (v) 56,350
          shares of Parent Common Stock issuable upon exercise of currently
          outstanding warrants to purchase Parent Common Stock; (vi) 1,432,200
          shares of Parent Common Stock issuable upon exercise of an option held
          by a third party; (vii) 211,265,745.85 shares of AB Stock issued and
          outstanding; (viii) 5,105 shares of AB Stock held in the treasury of
          Parent; (ix) 31,613,807.05 shares of AB Stock reserved for issuance
          pursuant to Parent Stock Plans; (x) 27,811,815 shares of AB Stock
          issuable upon exercise of awarded but unexercised stock options; (xi)
          214,794 shares of AB Stock issuable upon exercise of currently
          outstanding warrants to purchase AB Stock; and (xii) no shares of
          Parent Preferred Stock outstanding. Except as set forth above and
          except for shares of participating junior preferred stock issuable
          pursuant to the Shareholders' Protection Rights Plan, dated as of
          April 28, 1999 between Parent and BankBoston, N.A., as of the close of
          business on June 11, 2001, there were no shares of capital stock or
          other equity securities of Parent issued, reserved for issuance or
          outstanding.
     
          (b) All outstanding shares of capital stock of Parent are, and all
          shares which may be issued as described above will be, when issued,
          duly authorized, validly issued, fully paid and nonassessable and not
          subject to preemptive rights.
     
          (c) There is no outstanding Voting Debt of Parent. Except as set forth
          above, there are no options, warrants or other rights, agreements,
          arrangements or commitments of any character binding on Parent
          relating to the issued or unissued Equity Interests of Parent or
          obligating Parent to issue, sell, repurchase, redeem or otherwise
          acquire or make any payment with respect to any Equity Interests of
          Parent or any of its Subsidiaries.
     
          (d) Between June 11, 2001 and the date of this Agreement, Parent has
          not issued or reserved for issuance any Parent Common Stock or other
          Equity Interests of Parent, except pursuant to or as permitted by the
          terms of the Parent Stock Plans. Between December 31, 2000 and the
          date of this Agreement, Parent has not (A) repurchased, redeemed or
          otherwise acquired any Equity Interests of Parent or (B) declared, set
          aside, made or paid any dividend or distribution in respect of any of
          its Equity Interests (other than regular quarterly cash dividends on
          AB Stock), and the board of directors of Parent has not resolved to do
          any of the foregoing.
     
          (e) As of the date hereof, the authorized capital stock of Merger Sub
          consists of 1,000 shares of common stock, par value $.01 per share,
          all of which have been validly issued, are fully paid and
          nonassessable and are owned by Parent, free and clear of any Lien, and
          as of the Closing Date, all the issued and outstanding shares of the
          common stock of Merger Sub will be owned by Parent free and clear of
          any Lien.
     
      3.  Authority.
     
          Parent and Merger Sub have all necessary corporate power and authority
          to execute and deliver this Agreement and to perform their respective
          obligations hereunder and to consummate the Transactions. The
          execution and delivery of this Agreement by Parent and Merger Sub and
          the consummation by Parent and Merger Sub of the Transactions have
          been duly and validly authorized by all necessary corporate action on
          the part of Parent and Merger Sub. This Agreement has been duly and
          validly executed and delivered by each of Parent and Merger Sub and,
          assuming the due authorization, execution and delivery hereof by the
          Company, constitutes the legal, valid and binding obligation of each
          of Parent and Merger Sub, enforceable against such parties in
          accordance with its terms, except to the extent limited by bankruptcy,
          insolvency, moratorium, fraudulent conveyance, or other Laws affecting
          the rights of creditors generally, and to the extent that the
          availability of equitable remedies may be limited by equitable
          principles. All shares of Parent Common Stock that may be issued
          pursuant to the Agreement shall when issued in accordance with this
          Agreement be duly authorized, validly issued, fully paid and
          nonassessable and not be subject to preemptive rights. The board of
          directors of Parent has made a determination that as of the Effective
          Time the assets, business and liabilities of the Company shall be for
          the benefit of the Celera Genomics Group of Parent and shall be
          attributed in their entirety to the Celera Genomics Group of Parent as
          of the Effective Time, in accordance with the provisions of
          Sections 2.5(a)(i) and 2.6(f) of Parent's certificate of
          incorporation, as in effect as of the date hereof.
     
      4.  Noncontravention.
     
          (a) The execution and delivery of this Agreement by each of Parent and
          Merger Sub does not, and the performance of this Agreement by Parent
          and Merger Sub and the consummation of the Transactions will not,
          (i) conflict with or violate the respective certificates of
          incorporation and by-laws of Parent and Merger Sub, (ii) assuming that
          all consents, approvals and authorizations contemplated by clauses
          (i)-(v), inclusive, of Section 3.04(b) hereof have been obtained and
          all filings described in such clauses have been made (and declared
          effective, if applicable), conflict with or violate any Laws
          applicable to Parent or any Parent Subsidiaries or by which any of
          their respective properties is bound or affected, or (iii) result in
          any breach of or constitute a default (or an event that with notice or
          lapse of time or both would become a default) under, or give to others
          any rights of termination, amendment, acceleration or cancellation of,
          or alteration of rights under or require the consent or approval of
          any Person under, or result in the creation of a Lien on any of the
          properties or assets of Parent or any Parent Subsidiaries pursuant to,
          any note, bond, mortgage, indenture, contract, agreement, lease,
          license, permit, franchise, joint venture, limited liability or
          partnership agreement or other instrument to which Parent or any of
          its Subsidiaries is a party or by which Parent or any Parent
          Subsidiaries or any of their respective properties is bound or
          affected, except, in the case of clauses (ii) and (iii) of this
          Section 3.04(a), for any conflict, violation, breach, default,
          impairment, right or lack of consent or approval that would not,
          individually or in the aggregate, reasonably be expected to have a
          Parent Material Adverse Effect.
     
          (b) The execution and delivery of this Agreement by Parent and Merger
          Sub do not, and the performance of this Agreement by Parent and Merger
          Sub and the consummation of the Transactions by Parent and Merger Sub
          will not, require any consent, approval, authorization or permit of,
          or filing with or notification to, any Governmental Entity, except
          (i) the filing of a premerger notification and report form by Parent
          under the HSR Act, (ii) the filing of the Certificate of Merger with
          the Secretary of State of the State of Delaware and appropriate
          documents with the relevant authorities of other states in which the
          Company is qualified to do business, (iii) the filing with the SEC of
          the Form S-4 and such reports under the Exchange Act as may be
          required in connection with this Agreement and the Transactions,
          (iv) consents, approvals, orders, authorizations, registrations,
          declarations, filings or notices as may be required under the
          "takeover" or "blue sky" laws of various states, (v) consents,
          approvals, authorizations, permits, filings or notifications which
          have heretofore been obtained or made, as the case may be, by Parent
          and are in full force and effect or (vi) where the failure to obtain
          such consents, approvals, authorizations or permits, or to make such
          filings or notifications, would not, individually or in the aggregate,
          reasonably be expected to have a Parent Material Adverse Effect.
     
      5.  Parent SEC Documents; Financial Statements.
     
          (a) Parent and its predecessors have filed on a timely basis all
          forms, reports and documents required to be filed with the SEC since
          January 1, 1998 (all forms, reports and documents filed by Parent and
          its predecessors with the SEC since January 1, 1998, in each case
          including all exhibits and schedules thereto and documents
          incorporated by reference therein, such documents together with any
          documents filed during such period by Parent with the SEC on a
          voluntary basis on Current Reports on Form 8K are referred to herein
          as the "Parent SEC Documents"). The Parent SEC Documents (i) complied
          as to form in all material respects with the requirements of the
          Securities Act or the Exchange Act, as the case may be, and the rules
          and regulations thereunder, each as in effect on the date so filed or
          amended, and (ii) did not at the time they were filed (or if amended
          or superseded by a filing, which filing must have occurred prior to
          the date of this Agreement for the Parent SEC Documents otherwise
          filed prior to the date of this Agreement, then on the date of such
          filing) contain any untrue statement of a material fact or omit to
          state a material fact required to be stated therein or necessary in
          order to make the statements therein, in the light of the
          circumstances under which they were made, not misleading.
     
          (b) Each of the audited and unaudited consolidated financial
          statements (including, in each case, any related notes thereto)
          contained in the Parent SEC Documents were prepared in accordance with
          GAAP applied on a consistent basis throughout the periods involved
          (except as may be indicated in the notes thereto or in the Parent SEC
          Documents), and each fairly presents the consolidated financial
          position of Parent and the Parent Subsidiaries at the respective dates
          thereof and the consolidated results of their operations and cash
          flows for the periods indicated, except that the unaudited interim
          financial statements were or are subject to normal and recurring
          year-end adjustments and do not contain all of the footnote
          disclosures required by GAAP.
     
      6.  Undisclosed Liabilities.
     
          Neither Parent nor any Parent Subsidiary has any liabilities or
          obligations of any nature (whether accrued, absolute, contingent or
          otherwise) required by GAAP to be recognized or disclosed on a
          consolidated balance sheet of Parent and its Subsidiaries or in the
          notes thereto, except (i) liabilities reflected in the audited
          consolidated balance sheet of the Parent as of June 30, 2000, and
          (iii) liabilities incurred since June 30, 2000 in the ordinary course
          of business consistent with past practice that, individually or in the
          aggregate, would not reasonably be expected to have a Parent Material
          Adverse Effect.
     
      7.  Information Supplied.
     
          None of the information supplied or to be supplied by Parent or Merger
          Sub for inclusion or incorporation by reference in (i) the Form S-4
          will, at the time the Form S-4 is filed with the SEC, at any time it
          is amended or supplemented or at the time it becomes effective under
          the Securities Act, or (ii) the Proxy Statement will, at the date it
          is first mailed to the Company's stockholders or at the time of the
          Stockholders Meeting, 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 Form S-4
          will comply as to form in all material respects with the requirements
          of the Securities Act and the rules and regulations promulgated
          thereunder, except that no representation is made by Parent or Merger
          Sub with respect to statements made or incorporated by reference
          therein based on information supplied in writing by the Company
          specifically for inclusion or incorporation by reference therein.
     
      8.  Absence of Certain Changes or Events.
     
          Since December 31, 2000, there is not and has not been: (a) any
          condition, event or occurrence, individually or in the aggregate,
          resulting in a Parent Material Adverse Effect; (b) any condition,
          event or occurrence which, individually or in the aggregate, would
          reasonably be expected to have or give rise to a Parent Material
          Adverse Effect; or (c) any action which, if it had been taken or
          occurred after the execution of this Agreement, would have required
          the consent of the Company pursuant to this Agreement.
     
      9.  Litigation; Compliance with Laws.
     
          (a) There is no suit, action, arbitration, proceeding or investigation
          pending, or, to the knowledge of the employees of Parent set forth on
          Schedule 3.09 hereto (the "Knowledge of Parent"), threatened against
          Parent or any of its Subsidiaries that, individually or in the
          aggregate, would reasonably be expected to have a Parent Material
          Adverse Effect. To the Knowledge of Parent, neither Parent nor any of
          its Subsidiaries nor any of their respective properties is or are
          subject to any order, writ, judgment, injunction, decree,
          determination or award having, or which would reasonably be expected
          to have, a Parent Material Adverse Effect.
     
          (b) The businesses of Parent and its Subsidiaries are not being
          conducted in violation of any law (domestic or foreign), ordinance or
          regulation of any Governmental Entity, except for possible violations
          that, individually or in the aggregate, do not and could not
          reasonably be expected to have a Parent Material Adverse Effect.
     
      10. Brokers.
     
          No broker, investment banker, financial advisor or other Person, other
          than Morgan Stanley and Co. Incorporated ("Morgan Stanley"), the fees
          and expenses of which will be paid by Parent, is entitled to any
          broker's, finder's, financial advisor's or other similar fee or
          commission in connection with the Transactions based upon arrangements
          made by or on behalf of Parent or Merger Sub.
     
      11. Interim Operations of Merger Sub.
     
          Merger Sub was formed on June 8, 2001 solely for the purpose of
          engaging in the Transactions, has engaged in no other business
          activities and has conducted its operations only as contemplated
          hereby.
     
      12. Required Vote.

     This Agreement has been approved by Parent, as the sole stockholder of
     Merger Sub. No other vote of holders of any class or series of securities
     of Parent or Merger Sub is necessary to approve this Agreement and the
     Transactions.

     
     
     COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER.
     
      1. Conduct of Business by the Company

     .

     During the period from the date of this Agreement to the Effective Time,
     the Company shall, and shall cause its Subsidiaries to, act and carry on
     their respective businesses in the ordinary course of business consistent
     with past practice and use its and their respective reasonable best efforts
     to preserve substantially intact their current business organizations, keep
     available the services of their current officers and employees and preserve
     their relationships with customers, suppliers, licensors, licensees,
     development partners, and others having significant business dealings with
     them. Without limiting the generality of the foregoing, during the period
     from the date of this Agreement to the Effective Time, except as provided
     in Section 4.01 of the Company Disclosure Schedule and except as expressly
     provided in this Agreement (but excluding for this purpose any provisions
     of the Company Disclosure Schedule other than those contained in Section
     4.01 or 4.03 thereof) the Company shall not, and shall not permit any of
     its Subsidiaries to:

      a. (i) declare, set aside or pay any dividends on, or make any other
         distributions in respect of, any of its capital stock, (ii) split,
         combine or reclassify any capital stock of the Company or any
         Subsidiary or issue or authorize the issuance of any other Equity
         Interests in respect of, in lieu of or in substitution for shares of
         capital stock of the Company or any Subsidiary, or (iii) purchase,
         redeem or otherwise acquire any Equity Interests of the Company or any
         of its Subsidiaries;
      b. authorize for issuance, issue, deliver, sell, pledge or otherwise
         encumber any Equity Interest of the Company or any of its Subsidiaries,
         other than (i) the issuance of Company Common Stock upon the exercise
         of Company Warrants outstanding on the date of this Agreement in
         accordance with their present terms, (ii) the issuance of Company
         Common Stock upon the exercise of Company Stock Options awarded prior
         to the date of this Agreement but unexercised on the date of this
         Agreement (or granted after the date hereof in accordance with Section
         4.03 hereof) in accordance with their present terms, (iii) the issuance
         of Company Common Stock pursuant to the Company's Employee Stock
         Purchase Plan in accordance with its present terms, (iv) the conversion
         of the Convertible Notes in accordance with their present terms,
         (v) the issuance of Company Common Stock in order to pay interest on
         the Convertible Notes, should the Company so elect, in accordance with
         their present terms and (vi) the sale of shares of capital stock of
         Akkadix Corporation, DNA Sciences, Inc. or Discovery Partners
         International, Inc. upon the exercise of options outstanding as of the
         date hereof pursuant to the 1999 Key Personnel Stock Option Plan;
      c. amend (i) the Certificate of Incorporation or By-Laws or the comparable
         charter or organizational documents of any Subsidiary of the Company or
         (ii) the Rights Agreement;
      d. acquire or agree to acquire by merging or consolidating with, or by
         purchasing a substantial portion of the stock or assets of, or by any
         other manner, any business or any corporation, partnership, joint
         venture, association or other business organization or division
         thereof;
      e. sell, lease, license, mortgage or otherwise encumber or subject to any
         Lien or otherwise dispose of (i) any of its properties or assets, other
         than any such properties or assets the value of which do not exceed
         $50,000 individually and $250,000 in the aggregate, except the granting
         of purchase money security interests in the ordinary course of business
         consistent with past practice or (ii) any Minority Investments or other
         Equity Interests in any other Person (other than as set forth in
         Section 4.01(b)(vi));
      f. (i) incur any Indebtedness for borrowed money or guarantee any such
         Indebtedness of another Person, issue or sell any debt securities or
         warrants or other rights to acquire any debt securities of the Company
         or any of its Subsidiaries, guarantee any debt securities of another
         Person, enter into any "keep well" or other agreement to maintain any
         financial statement condition of another Person or enter into any
         arrangement having the economic effect of any of the foregoing, except
         for short-term borrowings incurred in the ordinary course of business
         consistent with past practice and other than pursuant to equipment
         lease financing not to exceed $250,000, in the aggregate, or (ii) make
         any loans, advances or capital contributions to, or Minority
         Investments or other investments in, any other Person, other than to
         the Company;
      g. make or agree to make any capital expenditures, except capital
         expenditures described in the capital expenditure budget attached as
         Annex A to Section 4.01(g) of the Company Disclosure Schedule and such
         additional capital expenditures as do not exceed $50,000 individually
         and $250,000 in the aggregate; or acquire or agree to acquire any other
         assets, other than inventory and supplies in the ordinary course of
         business consistent with past practice;
      h. (i) waive, release, grant, or transfer any rights of material value or
         modify or change in any material respect any existing material license,
         lease, contract or other document, other than in the ordinary course of
         business consistent with past practice, (ii) pay, discharge or satisfy
         any claims (including claims of stockholders), liabilities or
         obligations (absolute, accrued, asserted or unasserted, contingent or
         otherwise), other than the payment, discharge or satisfaction of
         liabilities or obligations in the ordinary course of business
         consistent with past practice or in accordance with their terms as in
         effect on the date hereof or (iii) settle or compromise any litigation
         or claim other than settlements or compromises of litigation or claims
         that do not relate to this Agreement or the Transactions and do not
         provide for injunctive or similar relief and where the amount paid
         (after giving effect to insurance proceeds actually received) in
         settlement or compromise does not exceed $50,000 individually or
         $250,000 in the aggregate;
      i. adopt a plan of complete or partial liquidation or resolutions
         providing for or authorizing such a liquidation or a dissolution,
         merger, consolidation, restructuring, recapitalization or
         reorganization;
      j. enter into or amend any collective bargaining agreement;
      k. enter into or amend in any material respect any Material Contract of
         the type specified in clause (iii), (v), (vi), (vii) or (viii) of
         Section 2.17(a) hereof, or any Contract, transaction, indebtedness or
         other arrangement of the type described in Section 2.24 hereof; or
         enter into or amend any Material Contract of the type specified in
         Section 2.17(a)(ii) hereof;
      l. change any accounting principle used by it, except as required by GAAP;
      m. transfer to any Person any rights to its Intellectual Property other
         than the granting of end-user licenses and the right to grant end-user
         sublicenses in the ordinary course of business consistent with past
         practice to customers of the Company or its Subsidiaries to the extent
         such licenses are necessary to permit such customers to use products
         purchased from the Company or such Subsidiaries;
      n. enter into or amend any agreement pursuant to which any other party is
         granted exclusive development, marketing or other exclusive rights of
         any type or scope with respect to any of its research, products,
         Intellectual Property or other technology; or
      o. authorize, or commit or agree to take, any of the foregoing actions.

 I.  Conduct of Business by Parent.

     During the period from the date of this Agreement to the Effective Time,
     Parent shall not (a) declare, set aside or pay any dividends on, or make
     any other distributions in respect of, Parent Common Stock or (b) split,
     combine or reclassify the Parent Common Stock or issue or authorize the
     issuance of any other Equity Interests in lieu of or in substitution for
     shares of Parent Common Stock.

 II. Employment Arrangements.

     Except as set forth in Section 4.03 of the Company Disclosure Schedule or
     as expressly provided in this Agreement (but excluding for this purpose any
     provisions of the Company Disclosure Schedule other than those contained in
     Section 4.01 or 4.03 thereof):

      a. Except as may be required by applicable law, neither the Company nor
         any of its Subsidiaries shall (i) adopt or amend (except as may be
         required by law) any bonus, profit sharing, compensation, stock option,
         pension, retirement, deferred compensation, employment or other
         employee benefit plan, agreement, trust, fund or other arrangement for
         the benefit or welfare of any employee, director or former director or
         employee or (ii) increase the compensation or fringe benefits of any
         director, employee or former director or employee or pay any benefit
         not required by any existing plan, arrangement or agreement, in the
         case of clause (ii) other than increases for individuals (other than
         officers and directors) in the ordinary course of business consistent
         with past practice.

 a. neither the Company nor any of its Subsidiaries shall hire or terminate any
    employee or consultant, except in the ordinary course of business consistent
    with past practice, and except to the extent required under applicable law
    or under existing Company Plans.
 b. Except pursuant to the terms of this Agreement, neither the Company nor any
    of its Subsidiaries shall grant any new or modified change in control,
    incentive, severance or termination arrangement or increase or accelerate
    any benefits payable under its change in control, incentive, severance or
    termination pay policies in effect on the date hereof.
 c. Neither the Company nor any of its Subsidiaries shall effectuate a "plant
    closing" or "mass layoff," as those terms are defined in WARN, affecting in
    whole or in part any site of employment, facility, operating unit or
    employee of the Company or any Subsidiary, without notifying Merger Sub or
    its Affiliates in advance and without complying with the notice requirements
    and other provisions of WARN.
 d. Recognizing that the retention of the employees of the Company and its
    Subsidiaries is to the material benefit of Parent, in the event that the
    human resources manager, the vice presidents of human resources, medicinal
    chemistry or biology, the senior vice president of research and pre-clinical
    development or any other officer of the Company more senior than such senior
    vice president, receives any written or oral indication from any employee at
    level 22 or above that such employee intends to terminate his or her
    employment with the Company or any of its Subsidiaries within sixty (60)
    days, the Company shall notify Parent within three (3) business days in
    order that Parent may meet with such employee, provided that in the event
    any such indication is in the form of a formal written notice of
    resignation, the Company shall notify Parent by the next business day.

 1. Tax Elections.

    Neither the Company nor any of its Subsidiaries shall make or change any Tax
    election, settle or compromise any material federal, state, local or foreign
    Tax liability, change any annual Tax accounting period, change any method of
    Tax accounting, file any amended material Tax Return, enter into any closing
    agreement relating to any material Tax, surrender any right to claim a
    material Tax refund, or consent to any extension or waiver of the statute of
    limitations period applicable to any material Tax claim or assessment.

 2. Tax-Free Reorganization Treatment.

    (a) Neither Company nor Parent shall, nor shall they permit any of their
    respective Subsidiaries to, take or cause to be taken any action that would
    disqualify the Merger as a reorganization within the meaning of Section
    368(a) of the Code.

    (b) Each of the Company and Parent shall report the Merger as a
    reorganization within the meaning of Section 368 of the Code, unless
    otherwise required pursuant to a "determination" within the meaning of
    Section 1313(a) of the Code.

 3. Other Actions.

Neither the Company nor Parent shall, or shall permit any of their respective
Subsidiaries to, (a) intentionally take any action that, if taken on or prior to
the date of this Agreement, would have resulted in any of its representations
and warranties set forth in this Agreement being untrue in any material respect,
or (b) intentionally take any action that would or reasonably might be expected
to, result in any of the conditions to the Merger set forth in Article VI not
being satisfied. The Company and Parent shall promptly advise the other party
orally and in writing of (i) any action of the type set forth in clause (a)
above, (ii) the failure by such party to comply with any covenant, condition or
agreement hereunder and (iii) any event which could reasonably be expected to
cause the conditions set forth in Article VI not being satisfied; provided,
however, that no such notice shall affect the representations, warranties,
covenants and agreements of the parties or the conditions to their obligations
hereunder.

ADDITIONAL AGREEMENTS

 1.  Preparation of Form S-4 and Proxy Statement; Stockholder Meeting.

     (a) Promptly following the date of this Agreement, the Company shall
     prepare the proxy statement with respect to the vote by the Company's
     stockholders with respect to the Transactions (the "Proxy Statement"), and
     Parent shall prepare and file with the SEC the Form S- 4, in which the
     Proxy Statement will be included. Parent and the Company shall each use its
     reasonable best efforts to have the Form S-4 declared effective under the
     Securities Act as promptly as practicable after such filing. The Company
     will use its reasonable best efforts to cause the Proxy Statement to be
     mailed to the Company's stockholders as promptly as practicable after the
     Form S-4 is declared effective under the Securities Act. Parent shall also
     take any action (other than qualifying to do business in any state in which
     it is not now so qualified or filing a general consent to service of
     process) required to be taken under any applicable state securities laws in
     connection with the registration and qualification of the Parent Common
     Stock to be issued in the Merger, and the Company shall furnish all
     information relating to the Company and its stockholders as may be
     reasonably requested in connection with any such action. The information
     provided and to be provided by Parent, Merger Sub and the Company,
     respectively, (i) for use in the Form S-4, at the time the Form S-4 becomes
     effective, shall be true and correct in all material respects and shall not
     omit to state a material fact required to be stated therein or necessary to
     make such information not misleading and (ii) for use in the Proxy
     Statement, on the date the Proxy Statement is mailed to the Company's
     stockholders and on the date of the Stockholders Meeting referred to below,
     shall be true and correct in all material respects and shall not omit to
     state any material fact required to be stated therein or necessary in order
     to make such information, in the light of the circumstances under which the
     statements therein were made, not misleading, and the Company and Parent
     each agree to correct any information provided by it for use in the Form
     S-4 and the Proxy Statement which shall have become false or misleading.

     (b) All mailings to the Company's stockholders in connection with the
     Merger, including the Proxy Statement, shall be subject to the prior
     review, comment and approval of Parent (such approval not to be
     unreasonably withheld or delayed).

     (c) The Company will, as promptly as practicable following the date of this
     Agreement and in consultation with Parent, duly call, give notice of,
     convene and hold a meeting of its stockholders (the "Stockholders Meeting")
     for the purpose of approving this Agreement and the Transactions to the
     extent required by the DGCL. The Company will, through its board of
     directors, recommend to its stockholders approval of the foregoing matters,
     as set forth in Section 2.21; provided, however, that, subject to
     compliance with the provisions of Section 5.06 hereof, the board of
     directors of the Company may fail to make or withdraw or modify such
     recommendation to the extent permitted by Section 5.06. Any such
     recommendation, together with a copy of the opinion referred to in Section
     2.20, shall be included in the Proxy Statement. The Company will use its
     best efforts to hold such meeting as soon as practicable after the Form S-4
     shall have been declared effective.

 2.  Access to Information; Confidentiality.

     The Company shall, and shall cause its Subsidiaries, officers, employees,
     counsel, financial advisors and other representatives to, afford to Parent
     and its representatives reasonable access during normal business hours,
     during the period prior to the Effective Time to its properties, books,
     contracts, commitments, personnel and records, and, during such period, the
     Company shall, and shall cause its Subsidiaries, officers, employees and
     representatives to, furnish or make available promptly to Parent (i) a copy
     of each report, schedule, registration statement and other document filed
     by it during such period pursuant to the requirements of federal or state
     securities laws and (ii) all other information concerning its business,
     properties, financial condition, operations and personnel as Parent may
     from time to time reasonably request. Each of the Company and Parent will
     hold, and will cause their respective directors, officers, employees,
     accountants, counsel, financial advisors and other representatives and
     Affiliates to hold, any nonpublic information with respect to the other
     party in confidence to the extent required by, and in accordance with, the
     provisions of the confidentiality agreement, dated April 2, 2001, between
     Parent and the Company (the "Confidentiality Agreement"). No investigation
     pursuant to this Section 5.02 shall affect any representations or
     warranties of the parties herein or the conditions to the obligations of
     the parties hereto.

 3.  Reasonable Best Efforts.

     Upon the terms and subject to the conditions set forth in this Agreement,
     each of the parties hereto agrees to use its reasonable best efforts to
     take, or cause to be taken, all actions, and to do, or cause to be done,
     and to assist and cooperate with the other parties hereto in doing, all
     things necessary, proper or advisable under applicable laws and regulations
     to consummate and make effective, in the most expeditious manner
     practicable, the Merger and the other Transactions, including (i) obtaining
     all consents, approvals, waivers, licenses, permits or authorizations as
     are required to be obtained (or, which if not obtained, would result in an
     event of default, termination or acceleration of any agreement or any put
     right under any agreement) under any applicable law or regulation or from
     any Governmental Entities or third parties in connection with the
     Transactions and (ii) defending any lawsuits or other proceedings
     challenging this Agreement. Notwithstanding anything to the contrary
     contained herein, no party hereto nor any of their Affiliates shall be
     required to make any disposition of or enter into any agreement to hold
     separate, any Subsidiary, asset or business, or take any other action that
     Parent determines could significantly reduce the value of the Company or
     the benefits that Parent expects to derive from the Merger, and the Company
     and its Subsidiaries shall not agree to take any such action without the
     prior written consent of Parent.

 4.  Indemnification.

     (a) To the fullest extent permitted under applicable law Parent shall, and
     shall cause the Surviving Company to indemnify and hold harmless, each
     present and former director or officer of the Company or any of its
     Subsidiaries and their respective estates, heirs, personal representatives
     successors and assigns (each, an "Indemnified Party," and collectively, the
     "Indemnified Parties ") against any costs or expenses (including reasonable
     fees and expenses of counsel) as incurred, judgments, fines, losses,
     claims, damages, liabilities and amounts paid in settlement in connection
     with any claim, action, suit, proceeding or investigation, whether civil,
     criminal, administrative or investigative (collectively, an "Action") (x)
     arising out of or pertaining to the Transactions, or (y) in whole or in
     part on or arising in whole or in part out of the fact that such Person is
     or was a director, officer or employee of the Company, with respect to any
     acts or omissions occurring at or prior to the Effective Time, to the same
     extent as provided in the Certificate of Incorporation or By-laws as in
     effect on the date hereof, or the Company's indemnification contracts with
     the Indemnified Parties (to the extent such contracts have been disclosed
     to Parent and are identified in Section 5.04 of the Company Disclosure
     Schedule), to the extent permitted by applicable Law in each case for a
     period of six years after the date hereof. In the event of any such Action,
     (whether arising before or after the Effective Time) and subject to the
     specific terms of any indemnification contract, (i) any counsel retained by
     the Indemnified Parties for any period after the Effective Time shall be
     reasonably satisfactory to the Surviving Company (it being understood that
     Latham & Watkins is acceptable to Parent and the Surviving Corporation),
     (ii) after the Effective Time, the Surviving Company shall pay the
     reasonable fees and expenses of such counsel, promptly after statements
     therefor are received, and (iii) the Surviving Company will cooperate in
     the defense of any such Action; provided, however, that in the event any
     claim or claims for indemnification are made within such six year period,
     all rights to indemnification in respect of any such claim or claims shall
     continue until the disposition of any and all such claims; provided,
     further, that: (A) promptly after receipt by an Indemnified Party of notice
     of any such Action, the Indemnified Party shall, if a claim in respect
     thereof is to be made against the Surviving Company notify the Surviving
     Company in writing of this claim or the commencement of that Action and
     shall deliver to Parent and the Surviving Corporation the undertaking, if
     any, required by Section 145(e) of the DGCL; (B) the Surviving Company
     shall be entitled to participate in the defense of any such Action, and, to
     the extent it wishes, assume the defense thereof with counsel reasonably
     satisfactory to the Indemnified Party or Indemnified Parties, as the case
     may be; (C) the Surviving Company shall not, in connection with any one
     such Action or separate but substantially similar or related Actions in the
     same jurisdiction arising out of the same general allegations or
     circumstances, be liable for the reasonable fees and expenses of more than
     one separate firm of attorneys at any time for all such Indemnified Parties
     as a group unless there is, under applicable standards of professional
     conduct, a conflict between the positions of any two or more Indemnified
     Parties that would preclude or render inadvisable joint or multiple
     representation of such parties; (D) no Indemnified Party may settle any
     such Action, without the prior written consent of the Surviving Company;
     and (E) the Surviving Company shall not settle any such Action, unless the
     Indemnified Party that is subject of such action is fully released as a
     result thereof.

     (b) Parent shall cause to be maintained in effect for six years from the
     Effective Time directors' and officers' liability insurance coverage
     covering Persons who are directors and officers of the Company on the date
     of this Agreement, with respect to matters occurring prior to the Effective
     Time, and containing terms and conditions which are not less advantageous
     to such Persons than the policies of the Company in effect on the date
     hereof (the "Company Insurance"); provided that Parent shall not be
     required to spend annually in excess of 200% of the annual premium for the
     Company Insurance paid by the Company as of the date of this Agreement.

     (c) Nothing in this Agreement is intended to, shall be construed to or
     shall release, waive or impair any rights to directors' and officers'
     insurance claims under any policy that is or has been in existence with
     respect to the Company or any of its officers, directors or employees, it
     being understood and agreed that the indemnification provided for in this
     Section 5.04 is not prior to or in substitution for any such claims under
     such policies.

 5.  Public Announcements.

     Neither Parent and Merger Sub, on the one hand, nor the Company, on the
     other hand, will issue any press release or public statement with respect
     to the Transactions without the other party's prior consent (such consent
     not to be unreasonably withheld or delayed), except as may be required by
     applicable law, court process or by obligations pursuant to any agreement
     with any securities exchange or quotation system on which securities of the
     disclosing party are listed or quoted. In addition to the foregoing,
     Parent, Merger Sub and the Company will consult with each other before
     issuing, and provide each other the opportunity to review and comment upon,
     any such press release or other public statements with respect to such
     transactions. The parties agree that the initial press release or releases
     to be issued with respect to the Transactions shall be mutually agreed upon
     prior to the issuance thereof. The provisions of this Section 5.05 shall
     not affect the obligations of the parties under Section 5.02 hereof or
     under the Confidentiality Agreement.

 6.  No Solicitation.

     Neither the Company nor any of its Subsidiaries shall (whether directly or
     indirectly through advisors, agents or other intermediaries), nor shall the
     Company or any of its Subsidiaries authorize or permit any of its or their
     officers, directors, agents, representatives, advisors or Subsidiaries to,
     (a) solicit, initiate or take any action knowingly to facilitate the
     submission of inquiries, proposals or offers from any Person (other than
     Merger Sub or Parent) relating to (i) any acquisition or purchase of 15% or
     more of the consolidated assets of the Company and its Subsidiaries or of
     over 15% of any class of equity securities of the Company or any of its
     Subsidiaries, (ii) any tender offer (including a self tender offer) or
     exchange offer that if consummated would result in any Person beneficially
     owning 15% or more of any class of equity securities of the Company or any
     of its Subsidiaries, or (iii) any merger, consolidation, business
     combination, sale of substantially all assets, recapitalization,
     liquidation, dissolution or similar transaction involving the Company or
     any of its Subsidiaries whose assets, individually or in the aggregate,
     constitute more than 15% of the consolidated assets of the Company other
     than the Transactions (collectively, "Transaction Proposals"), or agree to
     or endorse any Transaction Proposal, or (b) enter into or participate in
     any discussions or negotiations regarding any actual or potential
     Transaction Proposal (other than with Merger Sub or Parent), or furnish to
     any other Person (other than Merger Sub or Parent), any non-public
     information with respect to its business, properties or assets in
     connection with any actual or potential Transaction Proposal, or otherwise
     knowingly assist or participate in, cooperate with, facilitate or
     encourage, any effort or attempt by any other Person (other than Merger Sub
     or Parent) to do or seek any of the foregoing; provided, however, that
     neither the foregoing nor any provision of this Agreement shall prohibit
     the Company (either directly or indirectly through advisors, agents or
     other intermediaries), from taking any of the following actions in the
     event a Third Party has made a bona fide Transaction Proposal that the
     Company's board of directors determines in good faith could result in a
     Superior Proposal, subject in each case to compliance with the other
     provisions of this Section 5.06: (A) furnishing information pursuant to an
     appropriate confidentiality letter (which letter shall not be less
     favorable to the Company in any material respect than the Confidentiality
     Agreement) concerning the Company and its businesses, properties or assets
     to such Third Party, (B) engaging in discussions or negotiations with such
     Third Party, (C) taking and disclosing to its stockholders a position as
     required by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act, or (D)
     failing to make or withdrawing or modifying its recommendation referred to
     in Sections 2.21 and 5.01(c), but in each case referred to in clauses (A)
     through (D) only to the extent that the board of directors of the Company
     shall have concluded in good faith in consultation with outside counsel
     that the failure to take such action would violate the fiduciary duties of
     the board of directors of the Company to the stockholders of the Company
     under applicable law; provided, further, that the board of directors of the
     Company shall not take any of the foregoing actions referred to in clauses
     (A) through (D) until after reasonable notice to Parent with respect to
     such action. If the board of directors of the Company receives a
     Transaction Proposal, then the Company shall promptly inform Parent of all
     of the material terms and conditions of such proposal and the identity of
     the Person making it and shall keep Parent informed on a prompt and current
     basis of the status, terms and content of any discussions regarding such
     Transaction Proposal, including any changes to the terms of such
     Transaction Proposal. The Company will immediately cease and cause its
     advisors, agents and other intermediaries to cease any and all existing
     activities, discussions or negotiations with any parties conducted
     heretofore with respect to any actual or potential Transaction Proposal,
     and shall use its reasonable best efforts to cause any such parties in
     possession of confidential information about the Company that was furnished
     by or on behalf of the Company to return or destroy all such information in
     the possession of any such party or in the possession of any agent or
     advisor of any such party. As used herein, a "Superior Proposal" means any
     of the transactions described in clause (i), (ii) or (iii) of the
     definition of Transaction Proposal (with all of the percentages included in
     the definition of such term raised to 50% for purposes of this definition)
     with respect to which the board of directors of the Company shall have
     concluded in good faith, after consultation with its outside legal counsel
     and its financial advisor(s), is reasonably capable of being completed
     (including the presence of financing commitments, if applicable) and
     represents a financially superior transaction for the holders of Company
     Common Stock to the Merger. Notwithstanding anything to the contrary
     contained in this Section 5.06 or elsewhere in this Agreement, prior to the
     Effective Time, the Company may, in connection with a possible Acquisition
     Proposal, refer any third party to this Section 5.06, Section 7.01 and
     Section 8.02 and make a copy of such sections available to a Third Party.

 7.  Benefit Matters.

     (a) During the period from the Effective Time until July 1, 2002, employees
     of the Company shall participate in employee benefit plans (as defined in
     Section 3(3) of ERISA), but including any vacation or paid time off
     benefits and excluding any stock compensation plans, programs and
     arrangements (collectively, "Included Benefits") maintained by Parent or
     the Surviving Corporation providing benefits no less favorable, in the
     aggregate, than those benefits provided under the Included Benefits of the
     Company in effect on the date hereof. Notwithstanding the foregoing, the
     standard for maintenance of benefits shall apply to the Company's Holiday
     Bonus Plan only until December 31, 2001.

     (b) Parent will cause the Surviving Corporation to (i) waive all
     limitations as to preexisting conditions, exclusions and waiting periods
     with respect to participation and coverage requirements applicable to the
     employees of the Company under any Parent welfare plan that such employees
     may be eligible to participate in after the Effective Time and (ii) provide
     each employee of the Company with credit for any co-payments and
     deductibles paid prior to the Effective Time in satisfying any applicable
     deductible or out-of-pocket requirements under any Parent welfare plans
     that such employees are eligible to participate in after the Effective
     Time.

     (c) On and after the Effective Time, Parent shall cause the Surviving
     Company and any employee benefit plans maintained by Parent or the
     Surviving Company in which employees of the Company and Subsidiaries
     participate to recognize the service with the Company and Subsidiaries of
     each such employee for purposes of determining entitlement to vacation and
     vacation pay and for purposes of vesting and eligibility under any employee
     benefit plan, but not for purposes of benefit accrual under any "employee
     pension benefit plan" as defined in Section 3(2) of ERISA. Such service
     shall be determined in accordance with the practices and procedures of the
     Company and the Company Plans in effect immediately prior to the Effective
     Time, as if such service had been rendered to Parent.

 8.  Stock Exchange Listing.

     Parent shall use all reasonable efforts to cause the shares of Parent
     Common Stock to be issued in the Merger and the shares of Parent Common
     Stock to be reserved for issuance upon exercise of Company Stock Options,
     Company Warrants and the Convertible Notes to be approved for listing on
     the NYSE.

 9.  Letters of the Company's Accountants.

     The Company shall use its reasonable best efforts to cause to be delivered
     to Parent a comfort letter of Ernst & Young LLP, the Company's independent
     public accountants, dated a date within two business days before the Form
     S-4 shall become effective and a comfort letter of Ernst & Young LLP dated
     a date within two business days before the Closing Date, each addressed to
     Parent, in form and substance reasonably satisfactory to Parent and
     customary in scope and substance for letters delivered by independent
     public accountants in connection with registration statements similar to
     the Form S-4.

 10. Rights Agreement.

     The board of directors of the Company shall take all action (in addition to
     that referred to in Section 2.23 hereof) necessary or desirable (including
     amending the Rights Agreement) in order to render the Rights inapplicable
     to the Merger and the other Transactions. Except in connection with the
     foregoing sentence, the board of directors of the Company shall not,
     without the prior written consent of Parent, (a) amend the Rights Agreement
     or (b) take any action with respect to, or make any determination under,
     the Rights Agreement, in each case in order to facilitate any Transaction
     Proposal.

 11. Convertible Notes.

     Prior to the Effective Time, the board of directors of the Company shall
     take all action necessary to determine that the provisions referred to in
     Sections 1.11(a)(i) and 1.11(a)(ii) hereof shall constitute all such
     provisions as are necessary to protect the interest of the holders of the
     Convertible Notes pursuant to the terms thereof, including without
     limitation pursuant to Section 8.04(a) of the Convertible Notes Indenture.

 12. Non-solicitation of Employees.

     Each of Parent and the Company agrees that for a period of one (1) year
     following a termination of this Agreement, such party shall not, and shall
     cause its Subsidiaries not to, raid the employees employed by the other
     party or its Subsidiaries, in violation of California legal principles. For
     the avoidance of doubt, the foregoing provision will not prevent a party
     from hiring any employee (a) as a result of a general public solicitation
     or a solicitation conducted through a third-party recruiter or similar
     agent to whom the soliciting party has not identified such employee, (b)
     who contacts such soliciting party on his or her own initiative without any
     solicitation from the soliciting party, or (c) who has not been employed by
     the other party during the preceding six (6) months.

 13. Stock Options.

In the event the Parent or any of its Subsidiaries terminates the employment of
any employee of the Company without cause within ninety (90) days after the
Effective Time, Parent will cause all vested Parent Stock Options issued
pursuant to Section 1.10 hereof held by such terminated employee to be amended
to provide that the exercise period for such vested Parent Stock Options shall
be extended so as to permit their exercise by such terminated employee for a
period of twelve (12) months after the date of his or her termination of
employment; provided, however, that any such amendment to a Parent Stock Option
intended to qualify as an "incentive stock option" within the meaning of Section
421 of the Code shall be subject to the consent of such terminated employee. For
the avoidance of doubt, this Section 5.13 does not provide for any changes to
the vesting provisions contained in any Parent Stock Option.

CONDITIONS PRECEDENT

 1. Conditions to Each Party's Obligation To Effect the Merger.

    The respective obligation of each party to effect the Merger is subject to
    the satisfaction or waiver on or prior to the Closing Date of the following
    conditions:

    Company Stockholder Approval
    . The Company Stockholder Approval shall have been obtained.
    Antitrust
    . All waiting periods applicable to the consummation of the Merger under the
    HSR Act shall have expired or been terminated, and all clearances and
    approvals required to be obtained in respect of the Merger prior to the
    Effective Time under any other similar applicable Law shall have been
    obtained;
    No Injunctions or Restraints
    . No temporary restraining order, preliminary or permanent injunction or
    other order issued by any court of competent jurisdiction or other legal
    restraint or prohibition preventing the consummation of the Merger shall be
    in effect;
    provided
    ,
    however
    , that the parties hereto shall use their best efforts to have any such
    injunction, order, restraint or prohibition vacated.
    Form S-4
    . The Form S-4 shall have become effective under the Securities Act and
    shall not be the subject of any stop order or proceedings seeking a stop
    order, and any material "blue sky" and other state securities laws
    applicable to the registration and qualification of the Parent Common Stock
    issuable or required to be reserved for issuance pursuant to this Agreement
    shall have been complied with.
    NYSE Listing
    . The shares of Parent Common Stock to be issued in the Merger and reserved
    for issuance upon exercise of Company Stock Options, Company Warrants and
    the Convertible Notes shall have been approved for listing on the NYSE.
    Tax Opinion
    . Parent shall have received from Simpson Thacher & Bartlett, counsel to
    Parent, and the Company shall have received from Latham & Watkins, counsel
    to the Company, on the Closing Date opinions that the Merger will qualify
    for United States federal income tax purposes as a reorganization within the
    meaning of Section 368(a) of the Code. The issuance of such opinions shall
    be conditioned upon the receipt by such tax counsel of customary
    representation letters from each of the Company, Parent and Sub dated as of
    the Closing Date and as of the date that the Form S-4 filed with the SEC
    becomes effective, substantially in the forms attached hereto as
    Exhibits 6.01(f)-A and 6.01(f)-B.

 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 following conditions:

    Representations and Warranties
    . The representations and warranties of the Company contained in this
    Agreement (i) that are qualified as to Company Material Adverse Effect shall
    be true and correct and (ii) that are not so qualified shall be true and
    correct in all material respects, as of the date of this Agreement and as of
    the Effective Time, with the same force and effect as if made on and as of
    the Effective Time, except for those representations and warranties which
    address matters only as of a particular date (which shall have been so true
    and correct as of such date). Parent shall have received a certificate
    signed on behalf of the Company by the chief financial officer of the
    Company to the effect set forth in this Section 6.02(a).
    Performance of Obligations of the Company
    . The Company shall have performed in all material respects all obligations
    required to be performed by it under this Agreement at or prior to the
    Closing Date. Parent shall have received a certificate signed on behalf of
    the Company by the chief executive officer, the president and the chief
    financial officer of the Company to the effect set forth in this Section
    6.02(b).
    Consents, etc
    . Parent and Merger Sub shall have received evidence, in form and substance
    reasonably satisfactory to it, that such licenses, permits, consents,
    approvals, authorizations, qualifications and orders of (i) any Governmental
    Entities and (ii) any other Governmental Entities or third parties as are
    necessary in connection with the Transactions have been obtained, except in
    the case of clause (ii) where the failure to obtain such licenses, permits,
    consents, approvals, authorizations, qualifications and orders could not,
    individually or in the aggregate with all other failures, reasonably be
    expected to have a Company Material Adverse Effect.
    No Litigation
    . There shall not be pending or threatened by any Governmental Entity any
    suit, action or proceeding (i) challenging or seeking to restrain or
    prohibit the consummation of the Transactions or seeking to obtain from the
    Company, Parent, Merger Sub or any of their Affiliates any damages that
    would reasonably be expected to have a Company Material Adverse Effect,
    (ii) seeking to prohibit or limit the ownership or operation by the Company,
    Parent or any of their respective Subsidiaries of any material portion of
    the business or assets of the Company and its Subsidiaries taken as a whole
    or to dispose of or hold separate any material portion of the business or
    assets of the Company and its Subsidiaries taken as a whole, as a result of
    the Transactions, (iii) seeking to impose limitations on the ability of
    Parent to acquire or hold, or exercise full rights of ownership of, any
    shares of the common stock of the Surviving Corporation, including, without
    limitation, the right to vote such common stock on all matters properly
    presented to the stockholders of the Surviving Corporation or (iv) seeking
    to prohibit Parent or any of its Subsidiaries from effectively controlling
    in any material respect the business or operations of the Company and its
    Subsidiaries taken as a whole.
    Rights Agreement
    . None of the events described in Section 3 of the Rights Agreement shall
    have occurred, and the Rights shall not have become nonredeemable and shall
    not become nonredeemable upon consummation of the Merger.

 3. Conditions to Obligation of the Company.

    The obligation of the Company to effect the Merger is further subject to the
    following conditions:

    Representations and Warranties
    . The representations and warranties of the Parent and Merger Sub contained
    in this Agreement (i) that are qualified as to Parent Material Adverse
    Effect shall be true and correct and (ii) that are not so qualified shall be
    true and correct in all material respects, as of the date of this Agreement
    and as of the Effective Time, with the same force and effect as if made on
    and as of the Effective Time, except for those representations and
    warranties which address matters only as of a particular date (which shall
    have been true and correct as of such date). The Company shall have received
    a certificate signed on behalf of Parent and Merger Sub by an authorized
    officer of Parent and Merger Sub to the effect set forth in this Section
    6.03(a).
    Performance of Obligations of Parent and Merger Sub
    . Parent and Merger Sub shall have performed in all material respects all
    obligations required to be performed by each of them under this Agreement at
    or prior to the Closing Date. The Company shall have received a certificate
    signed on behalf of Parent and Merger Sub by an authorized officer of Parent
    and Merger Sub to the effect set forth in this Section 6.03(b).

TERMINATION, AMENDMENT AND WAIVER

 1. Termination.

    This Agreement may be terminated and abandoned at any time prior to the
    Effective Time, whether before or after the Company Stockholder Approval:

     a. by mutual written consent of Parent and the Company;
     b. by either Parent or the Company if any Governmental Entity shall have
        issued an order, decree or ruling or taken any other action permanently
        enjoining, restraining or otherwise prohibiting the Merger and such
        order, decree, ruling or other action shall have become final and
        nonappealable;
     c. by either Parent or the Company if the Merger shall not have been
        consummated on or before December 31, 2001 (other than due to the
        failure of the party seeking to terminate this Agreement to perform its
        obligations under this Agreement required to be performed at or prior to
        the Effective Time);
     d. by either Parent or the Company if at the duly held meeting of the
        stockholders of the Company (including any adjournment thereof) held for
        the purpose of voting on the Merger, this Agreement and the consummation
        of the Transactions, the holders of a majority of the outstanding shares
        of Company Common Stock shall not have approved the Merger, this
        Agreement and the consummation of the Transactions;
     e. by Parent, if the Company or its board of directors shall have
        (i) withdrawn, modified or amended in any respect adverse to Parent its
        approval or recommendation of this Agreement or any of the Transactions,
        (ii) failed as promptly as practicable after the Form S-4 is declared
        effective to mail the Proxy Statement to its stockholders or failed to
        include in such statement such recommendation, (iii) approved or
        recommended any Transaction Proposal from a Third Party, (iv) resolved
        to do any of the foregoing or (v) in response to the commencement of any
        tender offer or exchange offer for more than 15% of the outstanding
        shares of Company Common Stock, not recommended rejection of such tender
        offer or exchange offer;
     f. by the Company, if, pursuant to and in compliance with Section 5.06
        hereof, the board of directors of the Company concludes in good faith,
        in consultation with outside counsel, that in order to avoid violating
        the fiduciary duties of the board of directors of the Company to the
        stockholders of the Company under the DGCL, the board of directors must
        not make or must withdraw or modify its recommendation referred to in
        Section 2.21 and the board of directors does not make or withdraws or
        modifies such recommendation, provided that the Company shall give
        Parent three (3) business days irrevocable written notice prior to such
        termination taking effect; or
     g. (i) by the Company, if Parent breaches any of its representations,
        warranties, covenants or agreements contained in this Agreement the
        result of which breach is that the conditions in Section 6.03 would not
        be satisfied and, with respect to any such breach that is reasonably
        capable of being remedied, the breach is not remedied within 30 days
        after the Company has furnished Parent with written notice of such
        breach or (ii) by Parent, if the Company breaches any of its
        representations, warranties, covenants or agreements contained in this
        Agreement the result of which breach is that the conditions in
        Section 6.02 would not be satisfied and, with respect to any such breach
        that is reasonably capable of being remedied, the breach is not remedied
        within 30 days after Parent has furnished the Company with written
        notice of such breach.

 2. Effect of Termination.

    In the event of termination of this Agreement by either the Company or
    Parent as provided in Section 7.01, this Agreement shall forthwith become
    void and have no effect, without any liability or obligation on the part of
    Parent, Merger Sub or the Company, other than the provisions of Sections
    2.19, 3.10, the penultimate sentence of 5.02, 5.12, 8.02 and 8.07 hereof,
    and this Section 7.02. Nothing contained in this Section shall relieve any
    party for any breach of the representations, warranties, covenants or
    agreements set forth in this Agreement.

 3. Amendment.

    This Agreement may be amended by the parties at any time before or after any
    required approval of matters presented in connection with the Merger by the
    stockholders of the Company; provided, however, that after any such
    approval, there shall be made no amendment that by law requires further
    approval by such stockholders 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.

 4. Extension; Waiver.

    At any time prior to the Effective Time, the parties may (a) extend the time
    for the performance of any of the obligations or other acts of the other
    parties, (b) waive any inaccuracies in the representations and warranties
    contained in this Agreement or in any document delivered pursuant to this
    Agreement or (c) subject to the proviso contained in Section 7.03 hereof,
    waive compliance with any of the agreements or conditions contained in this
    Agreement. Any agreement on the part of a party to any such extension or
    waiver shall be valid only if set forth in an instrument in writing signed
    on behalf of such party. The failure of any party to this Agreement to
    assert any of its rights under this Agreement or otherwise shall not
    constitute a waiver of such rights.

 5. Procedure for Termination, Amendment, Extension or Waiver.

A termination of this Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver pursuant to Section
7.04 shall, in order to be effective, require in the case of Parent, Merger Sub
or the Company, action by its board of directors or the duly authorized designee
of its board of directors.

GENERAL PROVISIONS

 1. Nonsurvival of Representations and Warranties.

    None of the representations and warranties in this Agreement or in any
    instrument delivered pursuant to this Agreement shall survive the Effective
    Time and all such representations and warranties will be extinguished on
    consummation of the Merger and neither the Company, the Parent, Merger Sub,
    nor any officer, director or employee or shareholder of any of them shall be
    under any liability whatsoever with respect to any such representation or
    warranty after such time. This Section 8.01 shall not limit any covenant or
    agreement of the parties that by its terms contemplates performance after
    the Effective Time.

 2. Fees and Expenses.

    (a) (i)  If this Agreement shall have been terminated by either party
    pursuant to Section 7.01(d) or by Parent pursuant to Section 7.01(g)(ii) as
    a result of a willful breach by the Company of this Agreement following the
    occurrence of any event specified in clause (x) below) and the following
    shall have occurred:

    (x) prior to such termination, any Person (or group of Persons) other than
    Parent and its Affiliates (a "Third Party") shall have made, or proposed,
    communicated or disclosed in a manner which is or otherwise becomes public a
    bona fide intention to make a Transaction Proposal (including by making or
    effecting such a Transaction Proposal) and

    (y) on or prior to twelve (12) months after the date of such termination, a
    Third Party consummates a transaction the proposal of which would otherwise
    qualify as a Transaction Proposal under Section 5.06 or the Company enters
    into a definitive agreement with a Third Party setting forth the terms of a
    transaction the proposal of which would otherwise qualify as a Transaction
    Proposal under Section 5.06 hereof (whether or not such Person is the Person
    referred to in clause (x) above); or

    (ii) if this Agreement is terminated pursuant to Section 7.01(e) or
    Section 7.01(f);

    then the Company shall, (1) in the case of clause (a)(ii) above, promptly,
    but in no event later than one (A) business day after the termination of
    this Agreement pursuant to Section 7.01(e) or (B) the date of termination in
    the case of a termination under Section 7.01(f) and (2) in the case of
    clause (a)(i) above, promptly, but in no event later than one business day
    after an event specified in subclause (y) thereof shall have occurred, pay
    Parent a fee in cash of $5,600,000 plus out-of-pocket fees and expenses
    incurred by Parent not exceeding $900,000, which amount shall be payable in
    same day funds. No termination of this Agreement shall be effective until
    such fee is paid. For purposes of clauses (a)(i)(y) above, the term
    "Takeover Proposal" shall have the same meaning assigned to such term in
    Section 5.06 except that all references therein to "15%" shall be deemed to
    be references to "35%."

    (b) Except as provided otherwise in Section 7.02(a) above, all costs and
    expenses incurred in connection with this Agreement and the Transactions
    shall be paid by the party incurring such expenses, except that the cost of
    filing, printing and distributing the Proxy Statement and the Form S-4 shall
    be borne seventy-five percent (75%) by Parent and twenty-five percent (25%)
    the Company.

 3. Notices.

    All notices, requests, claims, demands and other communications under this
    Agreement shall be in writing and shall be deemed given if delivered
    personally or sent by overnight courier (providing proof of delivery) to the
    parties at the following addresses (or at such other address for a party as
    shall be specified by like notice):

     a. if to Parent or Merger Sub, to
    
        Applera Corporation
        301 Merrit 7
        Norwalk, CT 06851-1070
        Attention: General Counsel
    
        with a copy to:
    
        Simpson Thacher & Bartlett
        3330 Hillview Avenue
        Palo Alto, CA 94304
        Attention: Richard Capelouto, Esq.
    
     b. if to the Company, to

    Axys Pharmaceuticals, Inc.
    180 Kimball Way
    South San Francisco, CA 94080
    Attention: General Counsel

    with a copy to:

    Latham & Watkins
    135 Commonwealth Drive
    Menlo Park, CA 94025
    Attention: Ora T. Fisher, Esq.

 4. Interpretation.

    When a reference is made in this Agreement to a Section, Exhibit or
    Schedule, such reference shall be to a Section of, or an Exhibit or Schedule
    to, this Agreement unless otherwise indicated. The table of contents and
    headings contained in this Agreement are for reference purposes only and
    shall not affect in any way the meaning or interpretation of this Agreement.
    Whenever the words "include," "includes" or "including" are used in this
    Agreement, they shall be deemed to be followed by the words "without
    limitation".

 5. Counterparts.

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

 6. Entire Agreement; No Third-Party Beneficiaries.

    This Agreement and the Confidentiality Agreement and the other agreements
    referred to herein constitute the entire agreement, and supersede all prior
    agreements and understandings, both written and oral, among the parties with
    respect to the subject matter of this Agreement. This Agreement, other than
    Article I and Section 5.04, is not intended to confer upon any Person other
    than the parties any rights or remedies.

 7. GOVERNING LAW.

    THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
    LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
    GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.

 8. Assignment.

    Neither this Agreement nor any of the rights, interests or obligations under
    this Agreement shall be assigned, in whole or in part, by operation of law
    or otherwise by any of the parties without the prior written consent of the
    other parties. Subject to the preceding sentence, this Agreement will be
    binding upon, inure to the benefit of, and be enforceable by, the parties
    and their respective successors and assigns.

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

APPLERA CORPORATION

By: /s/ Peter Barrett

Name: Peter Barrett

Title: Vice President

ANGEL ACQUISITION SUB, INC.

By: /s/ Peter Barrett

Name: Peter Barrett

Title: President

AXYS PHARMACEUTICALS, INC.

By: /s/ Paul J. Hastings

Name: Paul J. Hastings

Title: President and Chief Executive Officer