Document:

Prepared and filed by St Ives Financial

Exhibit
      10.3

AMENDMENT TO

APPLERA CORPORATION

DEFERRED
COMPENSATION PLAN

(Amended
and Restated Effective as of January 1,
2002)

WHEREAS, Applera
    Corporation (the “Company”) maintains the Applera Corporation Deferred Compensation Plan (Amended and Restated Effective as of January 1,
  2002) (the “Plan”); and 

  WHEREAS,
      the Board of Directors of the Company desires to amend the Plan to provide
      for the limited exception to the timing of deferrals under the Plan as
  permitted by Internal Revenue Service Notice 2005-1, Q&A-21; and

NOW, THEREFORE, by virtue and in exercise of the power reserved to the Company by Section 10.2 of the Plan and pursuant to the authority delegated to the
  undersigned officer of the Company by resolution of the Board of Directors of the Company, the Plan is amended, effective January 1, 2005, by adding the following new sentence at the end of Section 3.2 of the Plan as a part thereof:

“Notwithstanding
    the foregoing, each Participant and each Employee who is selected to participate
    in the Plan as of January 1, 2005, shall be entitled to make a deferral election
    on or before March 15, 2005 to defer receipt of Base Annual Salary, Annual
    Bonus, and/or Special Incentive Award which (i) relates all or in part to
    services performed on or before December 31, 2005 and (ii) would be subject
    to Code Section 409A upon
  deferral; provided, such Base Annual Salary, Annual Bonus, and/or Special Incentive
    Award has not been paid, or become payable, at the time such deferral election
  is made.”

IN WITNESS WHEREOF,
    the Company has caused this amendment to be executed on its behalf by the
undersigned officer as of the 17th day of November, 2005.

	 	APPLERA
    CORPORATION

	 	 

	 	By:	/s/ Barbara
    J. Kerr
	 	 	

	 	Name:	Barbara J. Kerr
	 	Title:	V.P. Human ResourcesPrepared and filed by St Ives Financial

Exhibit 10.4

	
	
	

AGREEMENT AND PLAN OF MERGER

 

by and among

 

AMBION,
INC.,

 APPLERA
      CORPORATION,

 AMBION
      ACQUISITION CORP.

 

and 

 

MATTHEW M. WINKLER,

in his capacity as Representative

 

Dated as of December 24, 2005

	
	
	

TABLE OF CONTENTS

	 		ARTICLE
	        I 

	        DEFINED
    TERMS			
      Page 
    		
	 		 		 	
	
    1.1	Definitions		
      2	
	 	 		 	
	 	 ARTICLE
          II

          THE
    MERGER 		 	
	 	 		 	
	
    2.1	Merger	17	
	
    2.2	Effective Time	17	
	
    2.3	Effects of the Merger	17	
	
    2.4	Certificate of Incorporation and Bylaws	17	
	
    2.5	Directors and Officers	17	
	
    2.6	Conversion of Outstanding Shares	17	
	
    2.7	Treatment of Options	19	
	
    2.8	Dissenters’ Rights	19	
	
    2.9	Closing of Transfer Books	20	
	
    2.10	Closing Payments	20	
	
    2.11	Payment	
      21	
	2.12	Working Capital Estimate	23	
	
    2.13	Working Capital Determination	23	
	
    2.14	Working Capital Escrow Distributions	25	
	
    2.15	Escrow	
      25	
	 	 		 	
	 	ARTICLE
          III

          REPRESENTATIONS
    AND WARRANTIES 		 	
	 	 		 	
	
    3.1	Representations and Warranties of the Company	27	
	
    3.2	Representations and Warranties of Parent and Merger Subsidiary	41
	 	 		 	
	 	 ARTICLE
          IV 

          COVENANTS
    OF THE COMPANY 		 	
	 	 		 	
	
    4.1	
      Stockholder Approval	43
	4.2	
      Conduct of Business	44
	
    4.3	
      No Negotiation	46
	
    4.4	
      Access and Information	47
	
    4.5	Third Party Consents	47	
	
    4.6	Notification of Certain Matters	48
	
    4.7	
      Bank Accounts	48	
	
    4.8	
      Termination of Agreements	48
	
    4.9	
      Company Transaction Costs	48
	
    4.10	
      Pay-Off Letter	48
	
    4.11	Stockholder Written Consent	48	

i

AMBION, INC. 

  AGREEMENT
        AND PLAN
  OF MERGER

	
    4.12	
      Calculation of Merger Consideration	49
	 	 	 
	 		ARTICLE
        V 

        COVENANTS
        OF PARENT
AND MERGER SUBSIDIARY 		 	
	 		 		 	
	
    5.1	
    Notification of Certain Matters		
    49
	
    5.2	
    Employee Matters		
    49
	
    5.3	
    Indemnification of Officers, Directors, Employees and Agents		
    50
	
    5.4	
    WARN Act		
    51
	 	 		 	
	 	ARTICLE
        VI

        MUTUAL
    COVENANTS 		 	
	 	 		 	
	
    6.1	
    Governmental Consents		
    51
	
    6.2	
    No Other Representations or Warranties		
    52
	
    6.3	
    Sale of Assets to Asuragen and Related Transactions		
    53
	
    6.4	
    Waiver		
    53
	 	 		 	
	 	ARTICLE
        VII

        CONDITIONS
    PRECEDENT 		 	
	 	 		 	
	
    7.1	
    Conditions
    to Each Party’s Obligation		
    53
	
    7.2	
    Conditions to Obligation of Parent and Merger Subsidiary		
    54
	
    7.3	
    Conditions to Obligations of the Company		
    56
	 	 		 	
	 	 ARTICLE
    VIII 

    CLOSING 		 	
	 	 		 	
	
    8.1	
    Closing		
    56	
	
    8.2	
    Actions to Occur at Closing		
    56
	 	 		 	
	 	ARTICLE
        IX

        TERMINATION,
        AMENDMENT
AND WAIVER 		 	
	 	 		 	
	
    9.1	
    Termination		
    57
	
    9.2	
    Effect of Termination		
    58
	
    9.3	
    Return of Information		
    58
	 	 		 	
	 	ARTICLE
    X

   INDEMNIFICATION 		 	
	 	 		 	
	10.1	
    Survival of Representations, Warranties and Agreements		
    59
	10.2	
    Indemnification of the Parent Indemnified Persons		
    59
	
    10.3	
    Limitations		
    60
	
    10.4	
    Third Party Claims		
    62
	
    10.5	
    Direct Claims		
    64
	
    10.6	
    No Circular Recovery, Etc		
    64
	
    10.7	
    No Limitation		
    64

ii

AMBION, INC. 

  AGREEMENT
          AND PLAN
  OF MERGER

	 	ARTICLE
        XI

        GENERAL
    PROVISIONS 	 
	 	  	 
	
    11.1	
    Reasonable Efforts; Further Assurances	
    64	
	
    11.2	
    Amendment and Modification		
    65
	
    11.3	
    Waiver of Compliance		
    65
	
    11.4	
    Severability	
    65
	
    11.5	
    Expenses and Obligations		
    65
	
    11.6	
    Parties in Interest	
    65	
	
    11.7	
    Notices	
    65
	
    11.8	
    Counterparts	
    67
	
    11.9	
    Time	
    67
	
    11.10	
    Entire Agreement	
    67
	
    11.11	
    Public Announcements	
    67	
	
    11.12	
    Attorneys’ Fees	
    68
	
    11.13	
    Assignment	
    68
	
    11.14	
    Rules of Construction	
    68
	
    11.15	
    Joint Liability	
    69	
	
    11.16	
    Governing Law	
    69
	
    11.17	
    Waiver of Jury Trial	
    69
	
    11.18	
    Consent to Jurisdiction; Venue	
    70
	 	 	 
	 	 ARTICLE
        XII

        THE
    REPRESENTATIVE 	 
	 	 	 
	
    12.1	
    Authorization of the Representative		
    70
	
    12.2	
    Compensation; Exculpation; Indemnity		
    73

	 
	THE
    FOLLOWING SCHEDULES AND EXHIBITS HAVE BEEN OMITTED FROM THIS EXHIBIT.
	 	 	 
	Schedules
          and exhibits are omitted in accordance with Item 601(b)(2) of Regulation
          S-K. Schedules and exhibits will be provided by the Registrant to the
    Securities and Exchange Commission upon request. 
	 	 	 
	EXHIBITS	 	 
		 	 
	
Exhibit A	
-		
Asset Purchase Agreement
	
Exhibit B	
-		
Key Employee
	
Exhibit C	
-		
Form of Employment and Noncompetition Agreement
	
Exhibit D	 

		
Reserved
	
Exhibit E	
-		
Form of Escrow Agreement
	
Exhibit F	
-		
Working Capital Example
	
Exhibit G	
-		
Form of Letter of Transmittal
	
Exhibit H	
-		
Stockholder Written Consent
	 	 	 

iii

AMBION, INC. 

  AGREEMENT AND PLAN
  OF MERGER

	Disclosure
    Schedule	 	 
	 	 	 
	
Schedule 4.2	 		
Conduct of the Business
	Schedule
      4.5	 	Third
    Party Consents
	Schedule
    7.2(e)	 	Third
    Party Consents
	Schedule
    7.2(f)	 	Employees
	Schedule
    7.2(g)	 	Amendments
    to Certain Agreements

 

iv

  AMBION, INC. 

  AGREEMENT AND PLAN
  OF MERGER

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AGREEMENT AND
PLAN OF MERGER

THIS
      AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated
      as of December 24, 2005, is made by and among Ambion, Inc., a Delaware
      corporation (the “Company”),
      Applera Corporation, a Delaware corporation (“Parent”),
      Ambion Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
      of Parent (“Merger
Subsidiary”),
and Matthew M. Winkler, in his capacity as Representative (as hereinafter defined).

  RECITALS

WHEREAS, the Boards of Directors of the Company, Parent and Merger Subsidiary deem it
    advisable and in the best interest of their respective stockholders to consummate the transactions contemplated by this Agreement on the terms and subject to the conditions provided for herein;

WHEREAS,
      in furtherance thereof it is proposed that the acquisition be accomplished
      by the merger of Merger Subsidiary with and into the Company, with the
      Company being the surviving corporation, in accordance with the General
      Corporation Law of the State of Delaware (the “DGCL”); 

WHEREAS, the Boards of Directors of the Company, Parent (on its own behalf and as sole
    stockholder of Merger Subsidiary) and Merger Subsidiary have each approved this Agreement, the Merger (as hereinafter defined) and the other transactions contemplated hereby;

WHEREAS,
        simultaneously with the execution and delivery of this Agreement, the
        Company and
Asuragen, Inc., a Delaware corporation (“Asuragen”),
are entering into (i) an Asset Purchase
Agreement in the form of Exhibit
A hereto
(including all schedules and exhibits attached thereto, the “Asset Purchase Agreement”),
pursuant to which the Surviving Corporation will sell, transfer and assign to
Asuragen and Asuragen will purchase and assume from the Surviving Corporation
certain assets and liabilities relating to the Diagnostics Business, following
the Closing, (ii) one or more licensing agreements pursuant to which the Surviving
Corporation and Asuragen will license to one another the right to use certain
intellectual property, (iii) a transition services agreement whereby the Surviving
Corporation will provide certain IT, accounting and other services to Asuragen
for a
specified period of time after Closing, and (iv) such other strategic arrangements
mutually agreed to between the Surviving Corporation and Asuragen (the matters
set forth in clauses (i) through (iv) being referred to herein collectively as
the “Divestiture”);

WHEREAS, simultaneously with the execution and delivery of this Agreement, and as a
condition and inducement to Parent to enter into this Agreement, the employee of the Company identified on Exhibit
B (the “Key Employee”)
is executing an Employment and Noncompetition Agreement in the form of Exhibit
C (the “Employment and
Noncompetition Agreement”)
to be effective upon the Closing; and 

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

 

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AGREEMENTS

NOW, THEREFORE, in consideration of the representations, warranties, covenants and
agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and upon the terms and subject to the conditions hereinafter set forth, the parties hereto, intending to be
legally bound hereby, agree as follows:

ARTICLE I

DEFINED TERMS

1.1 Definitions. The following terms shall have the following meanings in this Agreement:

“280G Approval” has
      the meaning set forth in Section
4.1(c).

“280G Waiver” means
        a written waiver agreement pursuant to which certain payments and/or
        benefits in the nature of compensation arising as a result of the transactions
        contemplated by this Agreement are waived, subject to the Stockholder
        vote described in Section
4.1(c).

“Acquisition Transaction” shall
      mean any transaction or series of related transactions involving: (a) the
      disposition or acquisition of all or substantially
        all of the business or assets of the Company; (b) the sale, issuance,
        grant, disposition or acquisition of (i) any capital stock or other equity
        security of the Company, (ii) any option, call, warrant or right (whether
        or not immediately exercisable) to acquire any capital stock or other
        equity security of the Company, or (iii) any
security, instrument or obligation that is or may become convertible into or
        exchangeable for any capital stock or other equity security of the Company;
        or (c) any merger, consolidation, business combination, tender offer,
        share exchange,
reorganization or similar transaction involving the Company; provided, however,
(i) the issuance of stock by the Company upon the exercise of Options or warrants
outstanding as of the date hereof or upon the conversion of any Preferred Stock
will not be deemed to be an Acquisition Transaction and (ii) the Merger and the
other transactions contemplated hereby will not be deemed an Acquisition Transaction
in any case. 

  “Affiliate”
means, with respect to any Person, any other Person controlling, controlled by or under common control with such Person. For purposes of this definition, the term “control” (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a Person.

  “Aggregated Group” has
        the meaning set forth in Section
  3.1(r)(i)(A).

“Agreement” has
  the meaning set forth in the Preamble.

“Antitrust Laws” means,
        collectively, (a) the HSR Act; (b) the Sherman Antitrust Act of 1890,
        as amended; (c) the Clayton Act of 1914, as amended; (d) the Federal
        Trade Commission Act of 1914, as amended; and (e) any other Applicable
        Laws designed to prohibit, restrict, or regulate actions for the purpose
or effect of monopolization or restraint of trade.

   

  2

  
    AMBION, INC.

  AGREEMENT AND PLAN
  OF MERGER

  

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“Applicable Laws” means
      all laws, statutes, rules, regulations, ordinances, judgments, orders,
      decrees, injunctions and writs of any Governmental
        Authority having jurisdiction over, and applicable to, the business and
        operations of the
Company or any of its Subsidiaries.

“Appraised Amount” means
      the higher of (i) the Uhy Valuation and (ii) the Houlihan Valuation. In
      the event that the Houlihan Valuation is not
        obtained prior to the Closing, the Appraised Amount shall be equal to
the Uhy Valuation.

“Asserted Liability” has
the meaning set forth
in Section
10.4(a).

“Asset Purchase
  Agreement” has
  the meaning set forth in the Recitals.

“Asuragen” has the meaning
    set forth
    in the Recitals.

“Balance Sheet” has
the meaning set forth in Section
3.1(h)(i).

“Balance Sheet Date” has
the meaning set forth
in Section
3.1(h)(ii).

“Business Day” means
        any day other than (a) a Saturday, Sunday or federal holiday or (b) a
        day on which commercial banks in New York, New York are authorized or
required to be closed. 

“CERCLA” means
        the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended.

“CERCLIS” has
the meaning set forth in Section
3.1(o)(v).

“Certificate” means
        a certificate representing Outstanding Common Shares or Outstanding Preferred
Shares, as the case may be.

“Certificate of Merger” has
the meaning set
forth in Section
2.2. 

“Claims
  Notice” has
  the meaning set forth in Section 10.4(a).

 “Closing” has
    the meaning set forth in Section 8.1. 

“Closing Balance Sheet” has
the meaning set
forth in Section
2.13(a).

 “Closing
  Capitalization Certificate” has
  the meaning set forth in Section 4.12.

 “Closing Date” has
    the meaning set forth in Section 8.1. 

“Closing Merger
      Consideration” means an amount (not less than zero) equal to (a) $273,000,000, plus (b)
      the Appraised Amount, plus    (c) the amount, if any, by which the
      Estimated Working Capital exceeds the
      Working Capital Target, minus (d) the amount, if any, by which the
      Working Capital Target exceeds the Estimated Working Capital, minus (e)
      any outstanding Debt as set forth on the
Company’s balance sheet as of the Closing Date, minus (f) any Debt
paid
by Parent at Closing
(including the Debt Pay-Off Amount), minus (g) Paid

   

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    AMBION, INC.

  AGREEMENT AND PLAN
  OF MERGER

  

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Company Transaction
Costs,
minus (h)
the Escrow Amount. and minus (i) the Working Capital Escrow Amount.

“Closing Per Share Merger Consideration” means
      the quotient (rounded to the second decimal place) equal to (a) the sum
      of the (i) the Closing Merger Consideration, plus
        (ii) the aggregate exercise price of all Outstanding Options to the extent
        that they have become vested and exercisable in accordance with their
        terms at the time of Closing (including Options that vest and become
        exercisable as a result of the Merger), divided by (b) an amount equal
        to the sum of the number of (i) the Outstanding Shares, plus (ii) the
Outstanding Option Shares. 

“Closing Working Capital” has
the meaning set
forth in Section
2.13(a).

“Code” means
        the United States Internal Revenue Code of 1986, as amended. All references
        to the Code, U.S. Treasury regulations or other governmental pronouncements
        shall be deemed to include references to any applicable successor regulations
        or amending
pronouncement.

“Common Stock” means the common stock of the
Company, par value $0.01 per share.

“Common Stockholders” means
the holders of
shares of Common Stock.

“Company” has
the meaning set forth in the
Preamble.

“Company Constituent Documents” has
the
meaning set forth in Section
3.1(b).

“Company Disclosure Schedule” means
      that certain disclosure letter of even date with this Agreement from the
      Company to Parent delivered concurrently with
the execution and delivery of this Agreement.

“Company IP” shall
        mean all Intellectual Property Rights and Intellectual Property owned
by or exclusively licensed to the Company or any of its Subsidiaries.

“Company IP Contract” shall
      mean any Contract to which the Company or any of its Subsidiaries is a
      party or by which the Company or any of its
        Subsidiaries is bound, that contains any assignment or license of, or
        covenant not to assert or enforce, any Intellectual Property Right of
        any Person, or that otherwise relates to any Company IP or any Intellectual
Property developed by, with, or for the Company or any of its Subsidiaries.

“Company Permits” has
the meaning set forth in Section
3.1(i).

“Company Stockholder Approval” means
      the affirmative vote (in person or by proxy) or action by written consent
      of the holders of a majority of the outstanding
        shares of Common Stock and shares of Preferred Stock (voting on an as
        converted basis as a single class with the holders of Common Stock) and
        the affirmative vote (in person or by proxy) of the holders of a majority
        of the outstanding shares of Series B Preferred Stock (voting as a separate
class).

“Company Transaction Costs” means
      all fees, costs and expenses of any brokers, financial advisors, consultants,
      accountants, attorneys or other professionals
        engaged by the

 

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    AMBION, INC.

  AGREEMENT AND PLAN
  OF MERGER

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Company in connection
    with the structuring, negotiation or consummation of the transactions contemplated
    by this Agreement and
        the other Transaction Documents, whether or not such costs, fees and
expenses have been paid prior to Closing.

“Company Transaction Costs Certificate” has
the meaning set forth in Section
4.9.

“Confidentiality Agreement” means
      the Confidentiality Agreement, dated as of September 14, 2005, by and between
      J.P. Morgan Securities, Inc., on behalf of the
Company, and Parent.

“Consents” means
        all authorizations, consents, orders or approvals of, or registrations,
        declarations or filings with, or expiration of waiting periods imposed
        by, any Governmental Authority, in each case that are necessary in order
        to consummate the transactions
contemplated by this Agreement and the other Transaction Documents, and all consents
        and approvals of third parties necessary to prevent any conflict with,
violation or breach of, or default under, the Material Contracts.

“Contract” shall
        mean any written, oral or other agreement, contract, subcontract, lease,
        understanding, instrument, note, warranty, license, sublicense or legally
binding commitment or undertaking of any nature, whether express or implied.

“Cure Period” has
the meaning set forth in Section
9.1(b)(i).

“Current Assets” as
        of 11:59 p.m. on the date immediately prior to the Closing Date shall
        mean the amount equal to the sum and/or difference (as applicable) of
        the amounts of the following line items as set forth in the balance sheet
        of the Company and its Subsidiaries to the extent they relate exclusively
        to the Research Products Business, each as of such date and as determined
        in accordance with this Agreement and GAAP applied on a basis consistent
        with the preparation of the Balance Sheet: (i)
Petty Cash; plus(ii)
Cash in Banks; plus (iii)
Money Market Funds; plus (iv) Trade Receivables; minus(v) Allowance for Bad Debts; plus (vi) Bad Debt Write-Offs; plus (vii) SBIR Receivables;
plus (viii)
Employee Advances & Other
Accounts; plus (ix) Total Inventory; minus (x)
Inventory Reserve; plus (xi) Prepaid Insurance; plus (xii) Prepaid Other; plus (xiii)
Prepaid Catalog; plus (xiv) Prepaid Royalties; plus (xv) Prepaids – Japan; plus (xvi)
Prepaids – UK; plus (xvii) Intercompany Receivable Diagnostics, Net; provided,
however, that no reserves reflected on such balance sheet shall be reduced or
eliminated, except in the case of a reduction or elimination by reason of a payment
or credit occurring in the ordinary course of business and consistent with past
practice.

“Current Liabilities” as of 11:59 p.m. on the date immediately prior to the Closing Date shall mean the amount equal to the sum of the following line items as set forth in the balance sheet of the Company and its Subsidiaries to the extent they
relate exclusively to the Research Products Business, each as of such date and as determined in accordance with this Agreement and GAAP applied on a basis consistent with the preparation of the Balance Sheet: (i) Total Accounts Payable – Trade; plus(ii)
Misc Accruals (including UK/Japan plus Cenix
Accruals); plus (iii)
Accrued Payroll; plus (iv) Accrued Vacation Pay; plus (v)
Accrued Bonus and Commission; plus (vi) Accrued Employee Benefits; plus (vii)
Accrued Royalties; plus (viii)

 

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    AMBION, INC.

  AGREEMENT AND PLAN
  OF MERGER

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   Sales & Use Taxes
      Payable; plus (ix) Accrued
Personal Property Taxes; plus (x) Payroll Taxes
Payable. 

  “Debt” means
          (a) all indebtedness of the Company and its Subsidiaries for the repayment
          of borrowed money, whether or not represented by bonds, debentures, notes
          or similar instruments, all accrued and unpaid interest thereon, (b)
          all other indebtedness of the
  Company and its Subsidiaries evidenced by bonds, debentures, notes or similar
          instruments, including all accrued and unpaid interest thereon, and (c)
          all obligations of the Company and its Subsidiaries as lessee or lessees
          under leases that have been recorded as capital leases in accordance
          with GAAP. Debt shall include the current portion of Debt. Notwithstanding
          the foregoing, Debt shall not include accounts and obligations owed by
          the Company to any of its Subsidiaries or owed by a
  Subsidiary of the Company to the Company and/or one or more of its Subsidiaries.

“Debt Pay-Off Amount” has
the meaning set forth in Section
2.10(a).

“DGCL” has
the meaning set forth in the Recitals.
  

“Diagnostics Business” shall mean collectively, the divisions of the Company
        dedicated to human clinical diagnostics and therapeutics, and to providing
        related services.

“Disclosure Schedules” means the Company Disclosure Schedule and the Parent
      Disclosure Schedule. 

“Dissenting Shares” has
the meaning set forth in Section
2.8(b). 

“Divestiture” has
the meaning set forth in the Recitals.
  

  “D&O
        Indemnified Liabilities” has
  the meaning set forth in Section
  5.3(a). 

  
    “D&O Indemnified Persons” has
            the meaning set forth in Section
    5.3(a). 

  

    “DOJ” means
      the United States Department of Justice.

  

  

“Effective Time” has
the meaning set forth in Section
2.2.

“Employee Benefit Plan” means any “employee benefit plan” within
        the meaning of Section 3(3) of ERISA and any bonus, deferred compensation,
        incentive compensation, stock ownership, stock purchase, stock option,
        restricted stock, phantom stock, vacation, severance, disability, death
        benefit, hospitalization or insurance plan providing benefits
to any present or former employee, director or contractor of the Company or any
        member of the Aggregated Group maintained by any such entity.

“Employee Confidentiality and Inventions Agreement” has the meaning set forth
        in Section
        3.1(s)(xiv).

“Employment and Noncompetition Agreement” has
the meaning set forth in the Recitals.

  
  6

AMBION, INC. 

AGREEMENT
AND PLAN
OF MERGER

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  “Environmental
          Costs or Liabilities” means any losses or liabilities in connection with
        (a) any violation of any Environmental Laws or (b) a claim by any Person
        arising out of any exposure of any Person to Hazardous Substances, or
        the presence of Hazardous
Substances on any property.

“Environmental Laws” means the Applicable Laws pertaining to the environment,
        environmental matters, natural resources, and health and safety (to the
        extent such Applicable Laws pertaining to health and safety relate to
        Hazardous Substances), including without limitation the following: (a)
        the CERCLA, (b) the Emergency Planning and Community Right to Know Act,
        as amended, (c) the Solid Waste Disposal Act, as amended, (d) the Clean
        Air Act, as amended, (e) the Clean Water Act, as amended,
(f) the Toxic Substances Control Act, as amended, (g) the Occupational Safety
        and Health Act of 1970, as amended, (h) the Oil Pollution Act of 1990,
        as amended, (i) the Federal Hazardous Materials Transportation Law, as
        amended, (j) the International Air Transportation Association (IATA)
        and International Civil Aviation Organization (ICAO) Safe Transport of
        Dangerous Goods regulations, and (k) Nuclear Regulatory Commission (NRC)
        regulations, as each of these are in effect on the
date of this Agreement.

“ERISA” means
the Employee Retirement Income
Security Act of 1974, as amended.

“ESA Reports” has
the meaning set forth in Section
7.2(h).

“Escrow Account” has
the meaning set forth in
the Escrow Agreement.

“Escrow Agent” means
JPMorgan Chase Bank,
N.A.

“Escrow Agreement” means the escrow agreement in substantially the form
        of Exhibit
        E entered into on or prior
to the Closing by and among Parent, the Representative and the Escrow Agent.

“Escrow Amount” has
the meaning set forth in Section
2.15(a).

   “Estimated Balance
  Sheet” has
  the meaning set forth in Section 2.12. 

  

    “Estimated Working Capital” has
    the meaning set forth in Section 2.12. 

    

“Exchange Account” has the meaning set forth
      in Section
      2.11(a). 

“Exchange Agent” means
        EquiServe Trust Company, N.A. or its affiliate Computershare Shareholder
        Services, Inc.

“Expiration Date” has
the meaning set forth in Section
10.1(a).

“FASB” means
the Financial Accounting
Standards Board.

“FIN 45” has
the meaning set forth in the
definition of “Off-Balance Sheet Arrangement.”

   “Final Working Capital” has
  the meaning set forth in Section
  2.13(b).

  

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     “Financial Statements” has
    the meaning set forth
    in Section
    3.1(h)(i). 

    

      
        “FTC” means
      the United States Federal Trade Commission. 

“GAAP” means
        generally accepted accounting principles in the United States, consistently
applied.

“Governmental Authority” means any governmental department, commission, board,
        bureau, agency, court or other instrumentality, whether foreign or domestic,
        of any country, nation, republic, federation or similar entity or any
        state, county, parish or municipality, jurisdiction or other political
        subdivision thereof.

“Hazardous Substances” means (a) any hazardous materials, hazardous wastes,
        hazardous substances, toxic wastes and toxic substances as those or similar
        terms are defined under any Environmental Laws; (b) any asbestos or any
        material that contains any hydrated mineral silicate, including chrysolite,
        amosite, crocidolite, tremolite, anthophylite and/or actinolite, whether
        friable or non-friable; (c) PCBs or PCB-containing materials or fluids;
        (d) radon; (e) any other hazardous, radioactive,
toxic or noxious substance, material, pollutant, contaminant, constituent, or
        solid, liquid or gaseous waste, including medical wastes, regulated under
        any Environmental Law; (f) any petroleum, petroleum hydrocarbons, petroleum
        products, crude oil and any fractions or derivatives thereof, any oil
        or gas exploration or production waste and any natural gas, synthetic
        gas and any mixtures thereof; (g) any biological hazardous materials,
        including but not limited to blood, blood products, bodily
fluids, tissues, or other similar materials which may contain potentially infectious
        materials; and (h) any substance that, whether by its nature or its use,
        is subject to regulation under any Environmental Laws or with respect
        to which any Environmental Laws or Governmental Authority requires environmental
        investigation, monitoring or remediation.

“Houlihan Valuation” means the value ascribed to the Diagnostics Business by the valuation thereof to be prepared by Houlihan Lokey Howard & Zukin.

“HSR Act” means
        the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 

“Information Statement” means an information statement including information
        regarding the Company, the terms of the Merger and this Agreement and
        the transactions contemplated hereby, including each of the matters set
        forth in Section 4.1(a) hereof.

  “Intellectual Property” shall mean and includes all apparatus, assay components,
        biological materials, cell lines, clinical data, chemical compositions
        or structures, databases and data collections, diagrams, formulae, inventions
        (whether or not patentable), know-how, logos, marks (including brand
        names, product names, logos, and slogans), methods, processes, proprietary
        information, protocols, schematics, specifications, software, software
        code (in any form including source code and
executable or object code), techniques, URLs, web sites, works of authorship,
        and other forms of technology (whether or not embodied in any tangible
        form and including all tangible embodiments of the foregoing such as
        instruction manuals, laboratory notebooks, prototypes, samples, studies,
and summaries).

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“Intellectual
        Property Rights” shall mean and includes all past, present, and future
        rights of the following types, which may exist or be created under the
        laws of any jurisdiction in the world: (a) rights associated with works
        of authorship, including  exclusive exploitation rights, copyrights,
        moral rights, and mask works; (b) trademark and trade name rights and
        similar rights; (c) Trade Secret rights; (d) patents, utility models
        and industrial property rights; (e) other proprietary rights in
Intellectual Property of every kind and nature; and (f) all registrations, renewals,
extensions, combinations, continuations, continuations-in-part, divisions, reexaminations
or reissues of, and applications for, any of the rights referred to in clauses
(a) through (e)
above. 

“Investor Rights Agreement” means the Investor Rights Agreement dated April 22, 2003 among the Company, the Preferred Stockholders, Matthew M. Winkler, Daniel Winkler 2000 Trust, John Winkler 2000 Trust and Joshua Winkler 2000 Trust.

“Key Employee” has the meaning set forth in
the Recitals.

“Knowledge”
means (i) with respect to the Company, the actual knowledge of the following individuals after reasonable investigation: Chief Executive Officer, President, Chief Financial Officer, Chief Scientific Officer, Vice President of Business Development,
General Counsel and Vice President of Research and Development of the Company; and (ii) with respect to Parent or Merger Subsidiary, the actual knowledge of the following individuals: Senior Vice President and President, Applied Biosystems Group;
Senior Vice President and Chief Financial Officer; and Vice President and President, Molecular Biology Division of Applied Biosystems.

“Leased Real Property” means all of the real property leased, subleased or licensed to or by the Company or any of its Subsidiaries.

“Leases” has the meaning set forth in
Section
3.1(l)(ii). 

“Letter of Transmittal” has the meaning set
forth in Section
2.11(b)(i).

“Liens” means
any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, option, right of first refusal, preemptive right or restriction of any nature affecting property, real or personal, tangible or intangible, including any
restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset, any restriction on the
possession, exercise or transfer of any other attribute of ownership of any asset, any lease in the nature thereof and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statute of any
jurisdiction).

  “Loan Agreement”
means the Amended and Restated Credit Agreement dated as of July 31, 2004 between the Company and JPMorgan Chase Bank, as amended by that certain First Amendment dated June 30, 2005, and related General Security Agreement, Advancing Promissory Note
Converting to a Term Note and Revolving Credit Note.

“Losses” means
       any and all claims, demands, suits, Proceedings, judgments, losses, damages,
      Taxes, Settlements, charges, penalties, and fees, costs and expenses (including
      reasonable attorneys’ fees and expenses) sustained, suffered or incurred
  by any Parent  

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Indemnified
      Person in connection with, or related to, any matter which is the subject
      of indemnification under Article
      X; provided, however, that in computing the amount of any Losses
      for purposes of determining the liability of any Securityholder Indemnifying
      Person under Article
X, the amount of any Losses in the form of consequential or punitive Losses
and Losses for lost profits shall not be included in Losses for which a Parent
Indemnified Person may seek
indemnification under Article X, other than consequential and punitive
Losses and Losses for lost profits actually  paid to a third party that is not
a Parent Indemnified Person pursuant to an Asserted Liability.

“Material Adverse Effect” means any change, circumstance, effect, event or fact that has, or could reasonably be expected to have, a material and adverse effect on the business, assets, financial condition, operations or financial performance of the
Company and its Subsidiaries, taken as a whole; provided, however, that no change, circumstance, effect, event or fact shall be deemed (individually or in the aggregate) to constitute, nor shall any of the foregoing be taken into account in
determining whether there has been or may be, a Material Adverse Effect, to the extent that such change, circumstance, effect, event or fact results from, arises out of, or relates to (a) a general deterioration in the economy or in the economic
conditions prevalent in the industry in which the Company and its Subsidiaries operate that does not disproportionately affect the Company when compared to other companies in the industry, (b) the outbreak or escalation of hostilities involving the
United States, the declaration by the United States of a national emergency or war or the occurrence of any other calamity or crisis, including acts of terrorism, (c) the disclosure of the fact that Parent is the prospective acquirer of the Company,
(d) the announcement or pendency of the transactions contemplated by this Agreement or any other Transaction Document, (e) the announcement or disclosure of the Company’s intention to review the possibility of selling itself, (f) any change in
accounting requirements or principles imposed by the AICPA upon the Company, its Subsidiaries or their respective businesses or any change in Applicable Laws, or the interpretation thereof, (g) actions taken by Parent or any of its Affiliates, or
(h) compliance with the terms of, or the taking of any action required by, this Agreement or any other Transaction Document.

“Material
Contract” means:

(a) each Contract that is executory in whole or
in part and that involves expenditures or receipts of the Company or any of its Subsidiaries for goods or services of an amount in excess of $250,000 after the date of this Agreement;

(b) each option, license or Contract of any kind
relating to Intellectual Property that (i) individually resulted in payments to or from the Company during the fiscal year ended December 31, 2004 in an amount greater than $150,000 or that, during the current fiscal year, is reasonably expected
by the Company to involve payments to or from the Company equal to or greater than $150,000 or (ii) if lost, impaired or terminated, would reasonably be expected to have a Material Adverse Effect on the business, properties or financial
condition of the Company and its Subsidiaries taken as a whole (other than such agreements related to off-the-shelf software or shrink wrap licenses available to the general public at a cost of less than $100,000);

 

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(c)     each lease, rental or occupancy agreement,
installment and conditional sale agreement, and any other Contract, in each case, affecting the ownership of, leasing of, title to or use of any Leased Real Property;

(d)     each joint venture, partnership or any other
material Contract or agreement involving a sharing of profits, losses, costs or liabilities by the Company or any of its Subsidiaries with any other Person;

(e)    each
      Contract containing covenants that (A) limit, or purport to limit, the
      ability of the Company, or, immediately following the Effective Time, Parent
      or any of Parent’s Affiliates or the Surviving Corporation to compete
      in any line of business or with any Person or in any geographic area or
      during any period of time, (B) would by their terms purport to be binding
      upon or impose any obligation upon Parent or any of its Affiliates (other
      than the Surviving Corporation or its Subsidiaries), (C) contain any so
      called “most favored nation” provisions
      or any similar provision requiring the Company (or after the Merger, Parent
      or any of its Affiliates or, immediately after the Effective Time, the
      Surviving Corporation) to offer a third party terms or concessions (including
      levels of service or content offerings) at least as favorable as offered
      to one or more other
parties or (D) provide for “exclusivity,” preferred
treatment or any similar requirement or under which the Company is restricted,
or which after the Closing would restrict Parent or any of its Affiliates, with
respect to distribution, licensing, marketing, co-marketing or development;

(f)     each
      term employment Contract or agreement with any director, officer or employee
      of the Company or any of its Subsidiaries that requires “good cause” for termination;

(g)     the Loan Agreement and each other indenture,
mortgage, promissory note or other agreement or commitment for the borrowing of money, for a line of credit or for any capital leases;

(h)     all agreements, Contracts or commitments
currently in force relating to the licensing in, licensing out, disposition or acquisition by the Company after the date of this Agreement of a material amount of assets or operating business not in the ordinary course of business consistent with
past practice or pursuant to which the Company has a material ownership interest; 

(i)     all distribution, OEM (original equipment
manufacturer) partnership, co branding, sponsorship, advertising or other similar agreements to which the Company is a party which provide for payments, or potential payments, by or to the Company; and

(j)     all other Contracts and arrangements, whether
or not made in the ordinary course of business, which are material to the Company or the conduct of its business, or the absence of which would, individually or in the aggregate, have a Material Adverse Effect on the Company.

  “Merger” has
        the meaning set forth in Section
  2.1.

  

  “Merger
          Subsidiary” has
        the meaning set forth
  in the Preamble.

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“Minimum Loss” has
the meaning set forth in Section 10.3(a). 

“NPL” has the meaning set forth
          in Section
        3.1(o)(v). 

“NPV” has
          the meaning set forth in Section 7.2(h).

 “Objection Notice” has the meaning set forth in Section
            2.13(b).

“Off-Balance Sheet Arrangement” means any transaction, agreement or other contractual
        arrangement to which an entity unconsolidated with the Company is a party,
        under which the Company has:

(a)     Any
    obligation under a guarantee contract that has any of the characteristics
      identified in paragraph 3 of FASB Interpretation No. 45, Guarantor's Accounting
      and Disclosure Requirements for Guarantees, Including Indirect Guarantees
      of Indebtedness of Others (November 2002) (“FIN
      45”), as may be modified or supplemented, and that is not
      excluded from the initial recognition and measurement provisions of FIN
      45 pursuant to paragraphs 6 or 7 of that Interpretation;

(b)     A
    retained or contingent interest in assets transferred to an unconsolidated
    entity or similar arrangement that serves as credit, liquidity or market
    risk
support to such entity for such assets; 

(c)     Any
    obligation, including a contingent obligation, under a Contract that would
    be accounted for as a derivative instrument, except that it is both indexed
    to  the Company's own stock and classified in stockholders' equity in the
    Company's statement of financial position, and therefore excluded from the
    scope of FASB Statement of Financial Accounting Standards No. 133, Accounting
    for Derivative Instruments
and Hedging Activities (June 1998), pursuant to paragraph 11(a) of that Statement,
    as may be modified or supplemented; or

(d)     Any obligation, including a contingent obligation, arising out of a variable interest (as referenced in FASB Interpretation No. 46, Consolidation of Variable
Interest Entities (January 2003), as modified or supplemented through the date hereof) in an unconsolidated entity that is held by, and material to, the Company, where such entity provides financing, liquidity, market risk or credit risk support to,
or engages in leasing, hedging or research and development services with, the Company;

provided that any contingent
  liabilities arising out of litigation, arbitration or regulatory actions are
  not considered to be “Off-Balance Sheet Arrangements.”

“Option Consideration” has
the meaning set
forth in Section
2.7.

“Optionholder” has
the meaning set forth in Section
2.7.

  “Options” means
  the collective reference to all options to purchase shares of Common Stock
        issued pursuant to the Stock Plans and any and all other options to purchase
        shares
of Common Stock.

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“Outstanding Common Share” has
the meaning set
forth in Section
2.6(b).

“Outstanding Option” has
the meaning set forth
in Section
2.7. 

“Outstanding Option Shares” means the number of shares of Common Stock issuable
        immediately prior to the Effective Time if the Outstanding Options were
        exercised immediately prior to the Effective Time (assuming that the
        vesting of all of the Outstanding Options is accelerated as set forth
        in Company
        Disclosure Schedule 2.7).

“Outstanding Preferred Shares” means the Outstanding Series A Preferred Shares and
        the Outstanding Series B Preferred Shares.

“Outstanding Series A Preferred Share” has
the
meaning set forth in Section
2.6(c).

“Outstanding Series B Preferred Share” has
the
meaning set forth in Section
2.6(d).

“Outstanding Shares” means the Outstanding Common Shares and the Outstanding
        Preferred Shares. For purposes of determining the Closing Per Share Merger
        Consideration, the Per Share Working Capital Distribution Amount and
        the Per Share Escrow Distribution Amount, the number of Outstanding Preferred
        Shares shall be calculated on an as-converted to Common Stock basis.

“Paid Company Transaction Costs” has
the
meaning set forth in Section
2.10(c).

“Parent” has
the meaning set forth in the
Preamble. 

“Parent Disclosure Schedule” means the disclosure letter of even date with this
        Agreement from Parent to the Company delivered concurrently with the
        execution and delivery with this Agreement.

“Parent Indemnification Claim” has
the meaning
set forth in Section
10.2.

“Parent Indemnified Persons” means (a) Parent, (b) Merger Subsidiary, (c) the Surviving
        Corporation and each of its Subsidiaries, (d) with respect to the Persons
        set forth in clauses (a) through (c), each of their respective Affiliates,
        assigns and successors in interest, and (e) with respect to the Persons
        set forth in clauses (a) through (d), each of their respective securityholders,
        members, partners, directors, officers, employees, agents, attorneys
        and representatives.

“Pay-Off Letter”
means the letter, and any updates thereto, to be sent by the Company’s lender
under the Loan Agreement to Parent prior to Closing, which letter shall specify
the aggregate amount of Debt that will be outstanding as of the Closing Date
under the
Loan Agreement and wire transfer information for such lender.

“Permitted Encumbrances” means (a) statutory Liens for current Taxes either (i) not yet due and payable or (ii) being contested in good faith by appropriate Proceedings, and for which adequate reserves (as determined in accordance with GAAP,
consistently applied) have been established on the Company's books with respect thereto, (b) mechanics’, carriers’, workers’, repairers’ and
other similar Liens imposed by Applicable Law arising or incurred in the ordinary

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course
of business and consistent with past practices of the Company or any of its Subsidiaries for amounts that are not overdue and that do not materially detract from the value of the property subject thereto or materially interfere with the manner in
which it is currently used, (c) in the case of leases of vehicles, rolling stock and other personal property, encumbrances that do not materially impair the operation of the business at the facility at which such leased equipment or other personal
property is located, (d) zoning, entitlement, building, business licenses, use permits or other land use regulations imposed by any Governmental Authority having jurisdiction over the real property owned, leased or used by the Company which are not
violated by the current or contemplated use and operation of such real property, and (e) restrictive covenants and easements of record that do not detract in any material respect from the value of the real property owned, leased or used by the
Company and do not materially and adversely affect, impair or interfere with the occupancy, use or marketability of such real property which they encumber for the purposes for which it is currently used by the Company in connection with its
business, (f) landlords’ liens in favor of landlords under the Leases with
respect to the Leased Real Property, and (g) mortgages, deeds of trust and other
security instruments, and ground leases or underlying leases covering the title,
interest or estate of such landlords with respect to the Leased Real Property
and to which the Leases with respect to the Leased Real Property are subordinate.

“Permitted Liens” has
the meaning set forth in Section
3.1(n).

“Per Share Escrow Distribution Amount” means the quotient (rounded to the second decimal place)
        equal to (a) the total amount then held in the Escrow Account and for
        which no claim has been properly made and is outstanding pursuant to Article X, divided by (b) an amount equal to the sum of (i) the Outstanding Shares plus        (ii) the Outstanding Option
Shares.

“Per Share Working Capital Distribution Amount” means the quotient (rounded
        to the second decimal place) equal to (a) the total amount paid to the
        Exchange Agent in accordance with Section 2.14(a) or
        2.14(b) of this Agreement, as applicable, divided by (b) an amount equal
        to the
        sum of (i) the Outstanding Shares plus (ii) the Outstanding Option Shares.

“Person” means
        an individual, corporation, partnership, limited liability company, association,
        trust, unincorporated organization or other entity.

“Preferred Stock” has
the meaning set forth in Section
3.1(c). 

“Preferred Stockholders” means
the holders of
shares of Preferred Stock.

 “Premium Cap” has
  the meaning set forth in Section 5.3(c).

 “Proceeding” has the meaning set forth
    in Section
    3.1(j).

“Referee” has
the meaning set forth in Section
2.13(b).

“Registered
        IP” means
        all Intellectual Property Rights that are registered, filed, or issued
        under the authority of any Governmental Authority, including all patents,
        registered copyrights, registered mask works, and registered trademarks
        and all applications for
any of the foregoing.

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“Related Party” has
the meaning set forth in Section
3.1(v).

“Representative” means
        Matthew M. Winkler, and any successor representative appointed to act
        on his behalf.

“Research Products Business” shall mean the business of the Company other than the
        Diagnostics Business.

“Right of First Refusal Agreement” means the Right of First Refusal and Co-Sale Agreement
        dated April 22, 2003, by and among the Company, the Preferred Stockholders
        and Matthew M. Winkler. 

“Securityholders” means,
collectively, the
Stockholders and the Optionholders.

“Securityholder Affiliates” means (a) the Securityholders, (b) each of the Securityholders’ respective
        Affiliates, assigns and successors in interest; and (c) with respect
        to the Persons set forth in clauses (a) and (b), each of their respective
        securityholders, members, partners, directors, officers, employees, agents,
        attorneys and representatives.

“Series A Preferred Stock” has
the meaning set
forth in Section
3.1(c).

“Series A Preferred Stockholders” means
the
holders of the Series A Preferred Stock.

“Series B Preferred Stock” has
the meaning set
forth in Section
3.1(c).

“Series B Preferred Stockholders” means
the
holders of the Series B Preferred Stock.

“Settlement” or “Settled” means the occurrence of any of the following events (or a combination thereof): (a) an oral
or written agreement in principle on financial arrangements with the relevant Governmental Authorities; (b) a written settlement agreement with the relevant Governmental Authorities; (c) receipt of a closed file or cold comfort letter describing the
government’s present intention not to pursue the matter; or (d) a court
or administrative ruling constituting final action in the matter.

“Side Letter” means
        that certain Side Letter Agreement dated April 22, 2003 among the Company
        and the Stockholders named therein. 

“Signing Stockholder Consent” has
the meaning
set forth in Section
4.11.

 “Stockholder
  Notice” has
  the meaning set forth in Section 4.1(b). 

“Stockholder Written Consent” has
    the meaning set forth in Section 4.11. 

“Stockholders” means the Common Stockholders
      and the Preferred Stockholders.

“Stock
        Plans” means
        the Ambion, Inc. Employee Stock Purchase Plan, the Ambion, Inc. 2000
Stock Incentive Plan and the Ambion, Inc. 1995 Stock Option Plan.

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“Subsidiary” means,
        with respect to any Person, another Person in which such first Person
        owns, directly or indirectly, an amount of the voting securities, other
        voting ownership or voting partnership interests of which is sufficient
        to elect at least a majority of its board of directors or other governing
        body (or, if there are no such voting interests, 50% or more of the equity
interests of such Person).

“Surviving Corporation” has
the meaning set
forth in Section
2.1.

“Tax Returns” means
        any return, report, statement, information return or other document (including
        any related or supporting information) filed or required to be filed
        with any Governmental Authority in connection with the determination,
        assessment, collection or administration of any Taxes or the administration
        of any laws, regulations or administrative requirements relating to any
Taxes.

“Taxes” means
        (i) taxes, charges, fees, imposts, levies, or other assessments or fees
        of any kind, including, but not limited to, income, corporate, capital,
        excise, property, sales, use, turnover, value added and franchise taxes,
        deductions, withholdings and
customs duties, imposed by any Governmental Authority, (ii) all interest, penalties,
        fines, additions to tax or additional amounts imposed by any Governmental
        Authority in connection with any item described in clause (i), and (iii)
        any successor or transferee liability in respect of any items described
in clauses (i) and/or (ii).

“Termination Date” has
the meaning set forth
in Section
9.1(b)(iii).

“Trade Secrets” means
        all trade secrets under Applicable Laws and all other know-how and confidential
        or proprietary information that provide Company or any of its Subsidiaries
with advantages over competitors that do not know or use it.

“Transaction Documents” means, collectively, this Agreement and each other
        agreement, document and instrument required to be executed in accordance
herewith.

“Uhy Valuation”
means the value ascribed to the Diagnostics Business by the valuation thereof to be prepared by Uhy Mann Frankfurt Stein & Lipp
Advisors, LP.

“Voting Agreement” means the Voting Agreement dated April 22, 2003 among
the Company, Matthew M. Winkler and the Preferred Stockholders. 

“Working Capital” as of any specific date shall mean the amount equal to the Current Assets of the Company minus the Current Liabilities of the Company, each as determined as of such specific date. An example of the Company’s
        balance sheet reflecting the items to include in Working Capital is attached
        hereto as Exhibit
F. 

“Working Capital Escrow Account” has the meaning set forth in the Escrow Agreement.

 “Working Capital Escrow Amount” has the meaning set forth in Section
        2.15(a).

  “Working Capital Target” means $13,700,000. 

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ARTICLE
        II

    THE MERGER

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

  2.2     Effective
         Time.     As
  a part of the Closing, the Company, Parent and Merger Subsidiary shall cause
  a Certificate of Merger meeting the requirements of Section 251 of the DGCL
  (the “Certificate
  of Merger”)
  to be properly executed and filed with the Secretary of State of the State
  of Delaware in accordance with the terms and conditions of the DGCL. The Merger
  shall become effective 11:59 p.m. Eastern Time on the date the Certificate
  of Merger is filed with the Secretary of State of the State of Delaware in
  accordance with the
  DGCL (the “Effective
  Time”).

  2.3     Effects
        of  the Merger.     At
        and after the Effective Time, the Merger shall have the effects set forth
        in the DGCL. Without limiting the generality of the foregoing and subject
        thereto, at the  Effective Time all the property, rights, privileges,
        immunities, powers and franchises of the Company and Merger Subsidiary
        shall vest in the Surviving Corporation, and all Debts, liabilities,
        obligations and duties of the Company and Merger
  Subsidiary shall become the debts, liabilities, obligations and duties of the
        Surviving Corporation. 

  2.4     Certificate of Incorporation and Bylaws.     The
      certificate of incorporation and bylaws of the Company in effect immediately
      prior to the Effective Time shall be  the certificate of incorporation
      and bylaws of the Surviving Corporation as of the Effective Time, until
      duly amended in accordance with Applicable Laws.

  2.5     Directors
         and Officers.     The
         directors and officers of Merger Subsidiary immediately prior to the
         Effective Time shall be the directors and officers of the Surviving
         Corporation as of the  Effective Time. 

2.6     Conversion
       of Outstanding Shares.     At
       the Effective Time, by virtue of the Merger and without any action on
       the part of any party:

(a)     Each
      share of common stock, par value $.01 per share, of Merger Subsidiary issued and outstanding immediately prior to the Effective Time shall remain outstanding and shall represent one share of common stock, par value $.01 per share, of the Surviving Corporation, so that,
after the Effective Time, Parent shall be the holder of all of the issued and outstanding shares of the Surviving Corporation’s
common stock.

(b)     Each
      share of Common Stock (other than Dissenting Shares) outstanding immediately
      prior to the Effective Time (each, an “Outstanding Common Share” and collectively, the “Outstanding Common Shares”),
      (i) shall be converted into the right to

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receive
      (A) at the Effective Time, the Closing Per Share Merger Consideration,
      payable (in accordance with Section 2.11) in cash to the holder thereof, without interest thereon, (B) on each date any amounts are paid to the Exchange Agent pursuant to Section
      2.14 of this Agreement, the Per Share Working Capital Distribution Amount,
      if any, payable in cash to the holder thereof, without interest thereon,
      pursuant to this Agreement and the Escrow Agreement, and (C) the Per Share
      Escrow Distribution Amount, if any, payable in cash to the holder thereof,
      without interest thereon, pursuant to this Agreement and the Escrow Agreement,
      and (ii) shall otherwise cease to be outstanding, shall be canceled and
retired and cease to exist.

(c)     Each
      share of Series A Preferred Stock (other than Dissenting Shares) outstanding
      immediately prior to the Effective Time (each, an “Outstanding Series A Preferred Share” and collectively, the “Outstanding Series A Preferred Shares”)
      (i) shall be converted into the right to receive (A) at the Effective Time,
      an amount equal to the product of (1) the Closing Per Share Merger Consideration,
      multiplied by (2) the number of shares of Common Stock into which such
      Outstanding Series A Preferred
Share is convertible as of immediately prior to the Effective Time, payable (in
      accordance with Section
      2.11) in cash
to the holder thereof, without interest thereon, (B) on each date any amounts
      are paid to the Exchange Agent pursuant to Section 2.14 of this Agreement, an amount equal to the product of (1) the Per Share Working Capital Distribution Amount, multiplied by (2) the number of shares of Common Stock into which such Outstanding Series A Preferred Share is
convertible as of immediately prior to the Effective Time, if any, payable in cash to the holder thereof, without interest thereon, pursuant to this Agreement and the Escrow Agreement, and (C) an amount equal to the product of (1) the Per Share
Escrow Distribution Amount, multiplied by (2) the number of shares of Common Stock into which such Outstanding Series A Preferred Share is convertible as of immediately prior to the Effective Time, if any, payable in cash to the holder thereof,
without interest thereon, pursuant to this Agreement and the Escrow Agreement, and (ii) shall otherwise cease to be outstanding, shall be canceled and retired and cease to exist.

(d)     Each
    share of Series B Preferred Stock (other than Dissenting Shares) outstanding
    immediately prior to the Effective Time (each, an “Outstanding
    Series B Preferred Share” and collectively, the “Outstanding
    Series B Preferred Shares”)
    (i) shall be converted into the right to receive (A) at the Effective Time,
    an amount equal to the product of (1) the Closing Per Share Merger Consideration,
    multiplied by (2) the number of shares of Common Stock into which such Outstanding
    Series B Preferred
Share is convertible as of immediately prior to the Effective Time, payable (in
    accordance with Section
    2.11) in cash
to the holder thereof, without interest thereon, (B) on each date any amounts
    are paid to the Exchange Agent pursuant to Section 2.14 of this Agreement, an amount equal to the product of (1)
    the Per Share Working Capital Distribution Amount, multiplied by (2) the
    number of shares of Common Stock into which such Outstanding Series B Preferred
    Share is  convertible as of immediately prior to the Effective Time, if any,
    payable in cash to the holder thereof, without interest thereon, pursuant
    to this Agreement and the Escrow Agreement, and (C) an amount equal to the
    product of (1) the Per Share
Escrow Distribution Amount, multiplied by (2) the number of shares of Common
    Stock into which such Outstanding Series B Preferred Share is convertible
    as of immediately prior to the Effective Time, if any, payable in cash to
    the holder thereof,  without interest thereon, pursuant to this Agreement
    and the Escrow

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Agreement, and (ii) shall otherwise cease to be outstanding,
    shall be canceled and retired and cease to exist.

(e)     Each
      share of Common Stock held in the treasury of the Company or by any of the
      Company’s Subsidiaries immediately prior to the Effective Time shall
      be canceled and retired without any conversion thereof, and no payment or
  distribution shall be made with respect thereto.

2.7     Treatment

of Options.     Prior
to the Closing, the Company shall give notice in writing to each holder of an
Option (each an “Optionholder” and
collectively, the “Optionholders”)
outstanding immediately prior to the Effective Time (each an “Outstanding Option” and
collectively, the “Outstanding

Options”)
that (a) the vesting of Outstanding Options shall be accelerated immediately
prior to the Effective Time as set forth on Company Disclosure Schedule
2.7 and (b) notwithstanding anything to the contrary in the Stock Plans or in
any stock option agreement, each Outstanding Option shall be deemed to have been
exercised to the extent vested immediately prior to the Effective Time and converted
into the right to receive (i) at the Effective Time, an amount equal to the product
of (A) the
number of shares of Common Stock previously issuable immediately prior to the
Effective Time if such Outstanding Option were exercised immediately prior to
the Effective Time, multiplied by
(B) the excess of (1) the Closing Per Share Merger Consideration over (2) the
exercise price per share of Common Stock previously issuable pursuant to such
Outstanding Option (the “Option
Consideration”),
payable (in
accordance with Section
2.11) in cash to the holder thereof, (ii) on each date any amounts are paid to
the Exchange Agent pursuant to Section 2.14 of this Agreement, an amount equal
to the product of (A) the
Per Share Working Capital Distribution Amount, multiplied by (B) the number of
shares of Common Stock previously issuable immediately prior to the Effective
Time if such Outstanding Option were exercised immediately prior to the Effective
Time, payable in cash to the holder thereof, without interest thereon, pursuant
to this Agreement and the Escrow
Agreement, and (iii) an amount equal to the product of (A) the Per Share Escrow
Distribution Amount, if any, multiplied by (B) the number of shares of Common
Stock previously issuable immediately prior to the Effective Time if such Outstanding
Option were exercised immediately prior to the Effective Time, payable in cash
to the holder thereof, without interest thereon, pursuant to this Agreement and
the Escrow Agreement. The Company shall take such actions, including amending
the Stock
Plans and stock option agreements, as may be required to facilitate the foregoing.

2.8      Dissenters’ Rights.    

(a)      As
      soon as reasonably practicable following the execution of this Agreement,
      the Company shall provide each record holder of Common Stock, Series A Preferred
      Stock, and/or Series B Preferred Stock, who shall not have signed the Signing
      Stockholder Consent, with notice of such holder’s appraisal rights
      pursuant to Section 262(d)(2) of the DGCL. The Company shall give Parent
      prompt notice
      of any demands for appraisal pursuant to Section 262 of the DGCL received
      by the Company from any Stockholders, withdrawals of such demands and any
      other instruments served pursuant to the DGCL and received by the Company
      in connection
    therewith. Not later than ten days following the date on which the Effective
      Time occurs, Parent and the Surviving Corporation shall provide notice
      of the Effective Time to each Stockholder who has neither voted in favor 

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of
the Merger nor consented thereto in writing and has not withdrawn or lost the
right to the appraisal pursuant to Section 262 of the DGCL.

  (b)      Notwithstanding
      any provision of this Agreement to the contrary, no Outstanding Shares that
      are held immediately prior to the Effective Time by holders who have neither
      voted in favor of the Merger nor consented thereto in writing and who have
      demanded and perfected the right, if any,
  for appraisal of such Outstanding Shares in accordance with the provisions of
      Section 262 of the DGCL and have not withdrawn or lost such right to appraisal
      (collectively, the “Dissenting Shares”)
      shall be converted into or represent a right to receive the Closing Per Share
      Merger Consideration, or any other consideration pursuant to Section
      2.6, but the holder of such Dissenting Shares shall only be entitled to such
      appraisal rights as are granted by the DGCL and payment of the fair value
      of such shares in accordance with the provisions of Section 262 of the DGCL
      and Section 2.11(h).  If a holder of Outstanding Shares who demands appraisal of such Outstanding Shares under the DGCL shall thereafter effectively withdraw or lose (through failure to perfect or otherwise) the right to appraisal with respect to
  such Outstanding Shares, then, as of the occurrence of such withdrawal or loss, each such Outstanding Share shall be deemed to have been converted into and represent only the right to receive, in accordance with Sections 2.6 and 2.11, the Closing Per Share Merger Consideration, the Per Share Working Capital Distribution Amount and the Per Share Escrow Distribution Amount. 

2.9      Closing
            of
Transfer Books.      From and after the Effective Time, the stock transfer books of the Company shall be closed and no transfer of Common Stock or Preferred Stock shall thereafter be
made. From and after the Effective Time, the holders of Certificates evidencing ownership of Outstanding Shares immediately prior to the Effective Time shall cease to have any rights with respect to such Outstanding Shares, except as otherwise
provided for in this Agreement or by Applicable Law.

2.10      Closing
            Payments.      At the Closing, Parent shall pay or cause to be paid the following amounts by wire transfers of immediately available funds:

(a)      Parent
    shall pay or cause to be paid to the lender under the Loan Agreement, to
    an account designated by such lender in writing, the amount of Debt specified
    in the Pay-Off Letter (the “Debt Pay-Off
Amount”);

  
(b)      Parent shall deposit or cause to be deposited the Working Capital
Escrow Amount and the Escrow Amount with the Escrow Agent; and

(c)     Parent
      shall pay or cause to be paid all Company Transaction Costs that remain
      outstanding as of the Closing Date to such account or accounts as are designated
      by the Company in accordance with Section 4.9 (collectively, the sum of
      such payments for all payees of Company Transaction Costs being hereinafter
      referred to as the “Paid Company Transaction Costs”);
and

(d)     Parent
      shall deposit or cause to be deposited with the Exchange Agent for payment
      to the Securityholders through the Exchange Agent in accordance with this
      Article II an amount equal to (i) the Closing Merger Consideration,
      minus (ii)
      the amount of

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 the
Closing Merger Consideration, if any, that is concurrently paid directly by Parent
to any Securityholder at Closing.

2.11     Payment

(a)     The
      funds received by the Exchange Agent pursuant to Sections 2.10(d), 2.14    and 2.15 of this Agreement and Article X and the Escrow Agreement shall be
    deposited by the
    Exchange
    Agent
in an account (the “Exchange Account”) established for the benefit
of the Securityholders. The
Exchange Agent shall pay: 

(i)     out
      of the Exchange Account, to each Common Stockholder holding a Certificate
      that immediately prior to the Effective Time represented Outstanding Common
      Shares, (A) as soon as reasonably practicable upon receipt by the Exchange
      Agent of a completed and duly executed Letter of Transmittal and
the Certificate, an amount equal to the product of (1) the number of Outstanding
      Common Shares previously represented by such Certificate, multiplied by
      (2) the Closing Per Share Merger Consideration, and (B) in accordance with
      the terms of this Agreement, the other consideration described in Section
      2.6(b); 

(ii)     out
      of the Exchange Account, to each Series A Preferred Stockholder holding
      a Certificate that immediately prior to the Effective Time represented
      Outstanding Series A Preferred Shares, (A) as soon as reasonably practicable
      upon receipt by the Exchange Agent of a completed and duly executed
Letter of Transmittal and the Certificate, an amount equal to the product of
      (1) the number of Outstanding Common Shares into which the Outstanding
      Series A Preferred Shares previously represented by such Certificate could
      have been converted
immediately prior to the Effective Time, multiplied by (2) the Closing Per Share
Merger Consideration for such shares and (B) in accordance with the terms of
this Agreement, the other consideration described in Section 2.6(c);

(iii)     out
      of the Exchange Account, to each Series B Preferred Stockholder holding
      a Certificate that immediately prior to the
    Effective Time represented Outstanding Series B Preferred Shares, (A) as
    soon as reasonably practicable upon receipt by the Exchange Agent of a completed
    and duly executed
  Letter of Transmittal and the Certificate, an amount equal to the product of
    (1) the number of Outstanding Common Shares into which the Outstanding Series
    B Preferred Shares previously represented by such Certificate could have
    been converted immediately prior to the Effective Time, multiplied by (2)
    the Closing Per Share Merger Consideration for such shares and (B) in accordance
    with the terms of this Agreement, the other consideration described in Section
    2.6(d); 

(iv)     out
      of the Exchange Account, to each Optionholder, as soon as reasonably practicable
      upon receipt by the Exchange
      Agent of a completed and duly executed Letter of Transmittal, an amount
      equal to the aggregate Option Consideration for the Outstanding Options
      surrendered
      pursuant to the Letter of Transmittal.

(b)     As soon as reasonably practicable after the Effective Time, Parent shall
      cause to be delivered: 

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(i)     to
      each record holder of Common Stock or Preferred Stock (A) 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 letter
      shall be substantially in the form attached as Exhibit G hereto (the “Letter of Transmittal”)
      and (B) instructions for effecting the surrender of such Certificates in
      exchange for the consideration such Common Stockholder or Preferred Stockholder
      has the right to receive pursuant to Sections 2.6 and 2.11(a)(i), (a)(ii)    or (a)(iii), as applicable; and

(ii)     to
      each holder of an Option (A) a Letter of Transmittal and (B) instructions
      for effecting the surrender of such Option
    in exchange for the consideration such Optionholder has the right to receive
    pursuant to Sections
  2.7 and 2.11(a)(iv). 

(c)     Each
      of the Surviving Corporation and Parent shall be entitled to deduct and
      withhold from the consideration otherwise
    payable to any Securityholder pursuant to this Article II any amounts as
    the Surviving Corporation or Parent, as the case may be, is required to deduct
    and withhold with respect to payment under any provision of federal, state
    or local income Tax law. If the Surviving Corporation or Parent, as the case
    may be, so withholds amounts, such amounts shall be treated for all purposes
    of this Agreement as having been paid to the Securityholders in respect of
    which the Surviving Corporation or the Parent, as the case may be, made such
    deduction or withholding. No interest shall accrue or be paid on the cash
    payable upon the delivery of Certificates or Letters of Transmittal.

(d)     The
      Exchange Agent will, as soon as reasonably practicable upon receipt thereof,
      deliver to the Surviving Corporation surrendered Certificates received
      by it, and, within five Business Days after the 270th day following the
      Closing Date, return to the Surviving Corporation
any portion of the consideration remaining to be paid to Securityholders pursuant
      to this Article II who
have not yet surrendered their Certificates or Letters of Transmittal, as the
      case may be, and any other funds in the Exchange Account which are to be
      distributed to Securityholders. Any Securityholders shall thereafter be
      entitled to look only to
Parent and the Surviving Corporation
      for payment of their claims for the consideration set forth in Sections
2.6 and 2.7 and in this Section 2.11, without interest thereon.

(e)     None
      of Parent, Merger Subsidiary, the Company, the Surviving Corporation or
      the Exchange Agent shall be liable to any Person in respect of any cash,
      dividends or distributions from the Exchange Account properly delivered
      to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates or Letters of Transmittal
      shall not have been surrendered prior to five years after the Effective
      Time (or immediately prior to such earlier date on which any consideration
      payable to
Securityholders pursuant to this Article II in respect of such Certificate or
Letter of Transmittal would otherwise escheat to or become the property of any
Governmental Authority), any such cash, dividends or distributions payable in
respect of such Certificate or Letter of Transmittal shall, to the extent permitted
by Applicable Law, become property of the
Surviving Corporation, free and clear of all Liens of any Person previously entitled
thereto.

(f)     If
      any portion of the consideration pursuant to this Article II is
      to be paid to a Person other than the Person in whose name
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shall be a condition to
    such payment that (i) either such Certificate shall be properly endorsed
    or shall otherwise
be in proper form for transfer and (ii) the Person requesting such payment shall
pay to the Exchange Agent any
transfer or other Taxes required as a result of such payment to a Person other
than the registered holder of such Certificate or establish to the reasonable
satisfaction of the Exchange Agent that such Tax has been paid or is not payable.

(g)     If
      any Certificate shall have been lost, stolen or destroyed, upon the making
      of an affidavit of that fact by the Person claiming such Certificate to
      be lost, stolen or destroyed and, if required by Parent, agreeing to indemnify
      Parent against any claim that may be made against it with
respect to such Certificate, the Parent or the Exchange Agent, as applicable,
      will issue in exchange for such lost, stolen or destroyed Certificate the
      consideration otherwise payable pursuant to this Article II.

(h)     Any amounts paid to the Exchange Agent for the benefit of a Securityholder
      that is attributable to a Dissenting Share shall be available to pay the
      fair value of such Dissenting Share for which appraisal rights are perfected
      pursuant to Section 262 of the DGCL. With respect to any amounts
received by the Representative for the benefit of a Securityholder pursuant to
      this Agreement that are attributable to a Dissenting Share, such amounts
      shall be paid by the Representative to the Exchange Agent (or, after the
      270th day following the Closing Date, to the Surviving Corporation) for
      distribution to the holder thereof in accordance with Sections 2.6, 2.8    and 2.11 following
      the first to occur, with respect to such Dissenting Share, of either (i)
      the withdrawal of or loss of the right to appraisal pursuant to Section
      262 of the DGCL or (ii) the perfection of appraisal rights pursuant to
      Section 262 of the DGCL.

2.12     Working
        Capital Estimate.     No later than three Business Days before
      the Closing Date, the Company shall deliver to Parent (a) an estimated
      balance sheet of
    the Company and its consolidated Subsidiaries, which estimated balance sheet
    reflects estimated balances as of 11:59 p.m. on the date immediately prior
    to the Closing Date (except as otherwise contemplated by this Agreement)
      (the “Estimated Balance Sheet”),
    which shall set forth a good faith estimate of the amount of Working Capital
    (including the balances of each line item included within the definition
      of Current Assets and Current Liabilities and calculated prior to the application
    of any payments to be made under Section
    2.10) as of 11:59 p.m. on the date immediately prior to the Closing Date
      (“Estimated Working
    Capital”) and (b) a certificate of the Chief Executive Officer and the Chief Financial Officer of the Company to the effect that Estimated Working Capital has been determined in
    good faith in accordance with the Company’s accounting policies and
    this Agreement. The Estimated Balance Sheet shall be prepared by the Company
    in
    accordance with this Agreement and GAAP applied in a manner consistent with
    the preparation of the Balance Sheet, except as otherwise contemplated by
this Agreement.

2.13     Working
          Capital Determination.

(a)     As promptly as practicable
    after the Closing Date (but in no event later than 45 days after the Closing
    Date), the Surviving
    Corporation shall prepare and deliver to the Representative a balance sheet
    of the Surviving Corporation and its consolidated Subsidiaries which shall
    be reviewed by PricewaterhouseCoopers, (the “Closing Balance Sheet”),
    which shall set forth the amount of Working Capital (including the balances
    of each

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line item included within
    the definition of Current Assets and Current Liabilities) as of 11:59 p.m.
    on the date immediately prior to the Closing
    Date (“Closing Working Capital”). The Closing Balance Sheet
    shall be prepared in accordance with this Agreement and GAAP applied in a
    manner consistent with the preparation of the Balance Sheet, except as otherwise
     contemplated by this Agreement. Following the delivery of the Closing Balance
    Sheet to the Representative, Parent and the Surviving Corporation shall afford
    the Representative and its representatives the opportunity to examine the
    Closing Balance
    Sheet and such supporting schedules, analyses, workpapers, including the
    underlying records or documentation as are reasonably necessary and appropriate
    to verify the amounts reflected in the Closing Balance Sheet. Parent and
    the Surviving  Corporation shall cooperate fully and promptly with the Representative
    and its representatives in such examination, including providing answers
    to questions asked by the Representative and its representatives, and Parent
    and the Surviving
    Corporation shall promptly make available to the Representative and its representatives
    any records under Parent’s or the Surviving Corporation’s
    reasonable control that are requested by the Representative and its representatives.

(b)     If within 45 days following delivery of the Closing Balance Sheet to the
      Representative, the Representative has not delivered
    to Parent written notice (the “Objection Notice”) of its
    objections to the Closing Balance Sheet (such Objection Notice must contain
    a statement describing in reasonable detail the basis of such objections),
    then Closing Working Capital as set forth in such Closing Balance Sheet shall
    be deemed final and conclusive and shall be “Final Working Capital.” If the
  Representative delivers the Objection Notice within such 45-day period, then Parent and the Representative shall endeavor in good faith to resolve the objections, for a period not to exceed 15 days from the date of delivery of the Objection Notice.
  If at the end of the 15-day period there are any objections that remain in dispute, then the remaining objections in dispute shall be submitted for resolution to a “big four” accounting
  firm to be selected jointly by the Representative and Parent within the following
  five days or, if the Representative and Parent are unable to mutually agree
  within such five-day period, such accounting firm shall be KPMG (such jointly
  selected accounting firm or KPMG, the “Referee”). The Referee
  shall determine Final Working Capital within 30 days after the objections that
  remain in dispute are submitted to it. If any remaining objections are submitted
  to the Referee for resolution, (i) each party shall furnish to the Referee
  such workpapers and other documents and information relating to such objections
  as the Referee may request and
  are available to that party or its Subsidiaries (or its independent public
  accountants) and will be afforded the opportunity to present to the Referee
  any material relating to the determination of the matters in dispute and to
  discuss such determination with the Referee, (ii) to the extent that a value
  has been assigned to any objection that remains in dispute, the Referee shall
  not assign a value to such objection that is greater than the greatest value
  for such objection claimed by
  either party or less than the smallest value for such objection claimed by
  either party, (iii) the determination by the Referee of Final Working Capital,
  as set forth in a written notice delivered to both parties and the Escrow Agent
  by the Referee, shall be made in accordance with this Agreement and shall be
  binding and conclusive on the parties and shall constitute an arbitral award
  that is final, binding and unappealable and upon which a judgment may be entered
  by a court having jurisdiction
  thereof, and (iv) 50% of the fees and expenses of the Referee shall be paid
  by the Surviving Corporation and the remaining 50% of the fees and expenses
  of the Referee shall be paid out of the Escrow Amount.

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2.14     Working
          Capital Escrow Distributions.

(a)     If the amount of the Closing Working Capital is timely disputed by the Representative, and the amount of the Closing Working Capital is greater than
    the amount of the Estimated Working Capital, and the Estimated Working Capital is less than Working Capital Target, then an amount equal to the difference between the Closing Working Capital and the Estimated Working Capital shall be released as
    soon as reasonably practicable from the Working Capital Escrow Account (as defined in the Escrow Agreement) and paid to the Exchange Agent.

 
 (b)     If
      the Estimated Working Capital is greater than the Final Working Capital,
      then the amount of such excess shall be released promptly from the Working
      Capital Escrow Account and, to the extent necessary, from the Escrow Account
      and paid to Parent with any remaining portion of the Working
  Capital Escrow Amount being released and paid to the Exchange Agent. If the
 Final Working Capital is greater than the Estimated Working Capital, then Parent
      and the Surviving Corporation shall immediately tender payment of such
 difference
      to the Exchange Agent and the Working Capital Escrow Amount shall be released
      and paid to the Exchange Agent. The right of Parent to receive funds from
      the Working Capital Escrow Account and the Escrow Account shall be the
 sole and exclusive remedy of
  Parent and the Surviving Corporation in the event that the Estimated Working
      Capital is greater than the Final Working Capital. Each distribution to
 the Exchange Agent pursuant to this Section 2.14 shall be for the benefit of the Securityholders and for distribution in accordance with Section 2.11.

 
 2.15     Escrow.

 

 
(a)     On
      or prior to the Closing, the Representative, Parent and the Escrow Agent
      shall enter into the Escrow Agreement. $17,500,000 (including all
interest, dividends, and other income earned thereon) (the “Escrow
Amount”)
shall be deposited in
escrow at Closing pursuant to Section 2.10(b) and shall be held in escrow pursuant
to the terms of this Agreement and the Escrow Agreement. The Escrow Amount shall
be used solely to satisfy Losses, if any, for which the Parent Indemnified Persons
are entitled to indemnification or reimbursement pursuant to Article X.
An amount equal to $1,000,000 (including all interest, dividends, and other
income earned thereon) (the “Working Capital Escrow
Amount”)
shall be deposited in escrow at Closing and shall be held in escrow pursuant
to the terms of this Agreement and the Escrow Agreement. The Working Capital
Escrow Amount shall be used solely to satisfy the payment obligations set forth
in Section 2.14.

 (b)     Instructions
  to Escrow Agent.

 

 
 (i)      The
      Representative and Parent covenant and agree to jointly instruct
      the Escrow Agent in writing, (A) as soon as reasonably practicable after
      delivery of the Objection Notice, to make any disbursement required by Section 2.14(a),
  (B) as soon as reasonably practicable after the determination of the Final
  Working Capital to make disbursements required by Section 2.14(b), and (C)
  as soon as reasonably practicable after the determination by the Referee of
  Final Working Capital to release, if applicable, to the Referee out of the
Escrow Amount the amount of 50% of the fees and expenses of the Referee.

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(ii)     Subject
      to the right to contest Parent Indemnification Claims as provided in Section
      3.2 of the Escrow Agreement, the Representative covenants and agrees that
      at any time the Securityholders are obligated to indemnify a Parent Indemnified
      Person for Parent Indemnification Claims under Article X, if requested
      by Parent, the Representative shall execute and deliver to the Escrow Agent
      joint written instructions with Parent to release to the Parent Indemnified
      Person such portion of the Escrow Amount as is necessary to satisfy the
      Securityholders’ indemnification obligations for Parent Indemnification
      Claims under Article X.

(iii)     Subject
      to the limitations set forth in Section 10.4(f), Parent covenants and agrees
      that at any time the Representative requests (A) payment of the fees, costs
      and expenses of the Representative’s legal counsel and experts (including expert witnesses), consultants and other representatives engaged by it in connection with (1) the Representative’s
      assumption of the defense of an Asserted
Liability pursuant to Section 10.4, on behalf of the Securityholder Indemnifying
Persons, or (2) the
Representative’s participation in the defense of an Asserted Liability pursuant
to Section 10.4, on behalf of the
Securityholder Indemnifying Persons, (B) payment of the costs and expenses of
the Parent Indemnified Person, if any, that the Representative on behalf of the
Securityholder Indemnifying Persons becomes obligated to pay pursuant to the
last sentence
of Section 10.4(b), or (C) without duplication of the fees, costs and expenses
described in Sections 2.15(b)(iii)(A) and 2.15(b)(iii)(B), reimbursement or payment
for any reasonable out-of-pocket fees and expenses incurred by the Representative
in connection with exercising its rights or performing its duties under the Merger
Agreement or the Escrow Agreement, in each case, Parent shall execute and deliver
to the Escrow Agent joint written instructions with the Representative to release
to (or at the direction of) the Representative such portion of the Escrow Amount
as
is necessary to pay such fees, costs and expenses. The Representative shall provide
Parent with documentation reasonably substantiating the amount of such fees,
costs and expenses each time that it so requests payment.

(iv)     Parent
      covenants and agrees that at any time the Securityholder Indemnifying Persons
      are obligated to pay the fees, costs and expenses of separate counsel to
      a Parent Indemnified Person pursuant to the last sentence of Section
      10.4(c), if requested by the Representative, Parent shall execute and deliver
to the Escrow Agent joint written instructions with the Representative to release
to such legal counsel such portion of the Escrow Amount as is necessary to pay
such fees, costs and expenses. Parent shall provide the Representative with documentation
reasonably substantiating the amount of such fees, costs and expenses each time
that Parent or another
Parent Indemnified Person requests payment therefor pursuant to Section 10.4(c).

(c)     Disbursements
      Out of Escrow
Amount.     The Representative shall pay any amounts received by it out of the Escrow Amount to the Securityholders in accordance with Sections 2.6,
2.7 and 2.11; provided, however, that, in lieu thereof and in satisfaction of
the Representative’s
obligations to the Securityholders in respect of any amounts to be distributed
from the Escrow Amount, the Representative may remit such amount to, or direct
the Escrow Agent to remit such amounts otherwise distributable to the Representative
to, the Exchange Agent
for distribution to the Securityholders in accordance with Sections 2.6, 2.7 and
2.11.

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 ARTICLE III

    REPRESENTATIONS
  AND WARRANTIES

3.1      Representations
            and Warranties of the Company.     Except
            as set forth on the Company Disclosure Schedule, as of the date of
            this Agreement and as of the Effective  Time (except to the extent
            such representations and warranties speak expressly as of an earlier
            date), the Company represents and warrants to Parent and the Merger
            Subsidiary as follows:

(a)     Organization,
        Good Standing and Other
Matters.

(i)     Each
      of the Company and its Subsidiaries is duly organized, validly existing
      and in good standing under the laws of its respective jurisdiction of incorporation
      or organization, has all requisite corporate power and authority to own,
      lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified to do business as a foreign
      corporation, partnership or limited liability company in good standing
      to conduct business in each jurisdiction in which the business it is conducting,
      or the operation, ownership or leasing of its properties, makes such qualification
      necessary, other than in such jurisdictions where the failure so to qualify
      would not be reasonably likely to have a Material Adverse Effect. All Subsidiaries
      of the
Company, their respective jurisdictions of incorporation or organization and
      their respective jurisdictions where qualified to do business are set forth
      on Company Disclosure Schedule
3.1(a)(i).

(ii)     The
      Company has no Subsidiaries except for
the entities identified in Company Disclosure Schedule 3.1(a)(i). Neither the
Company nor any of its Subsidiaries owns any controlling interest in any entity
and, except for the financial interests identified in Company Disclosure Schedule
3.1(a)(ii), neither the Company nor any of its Subsidiaries
owns, beneficially or otherwise, any shares or other securities of, or any direct
or indirect equity or other financial interest in, any Person. Neither the Company
nor any of its Subsidiaries has agreed or is obligated to make any future investment
in or capital contribution to any Person. Neither the Company nor any of its
Subsidiaries has guaranteed or is responsible or liable for any obligation of
any of the Persons in
which it owns or has owned any equity or other financial interest. Neither the
Company nor any of its Stockholders has ever approved, or commenced any Proceeding
or made any election contemplating, the dissolution or liquidation of the
Company’s business or affairs.

(b)     Certificate
          of Incorporation and
Bylaws; Records.     The Company has delivered to Parent accurate and complete copies
of: (i) the certificate of incorporation and bylaws, including all amendments
thereto of
the Company and each of its Subsidiaries; (ii) the stock records of the Company
and each of its Subsidiaries; and (iii) the minutes and other records of the
meetings and other proceedings (including any actions taken by written consent
or otherwise without a meeting) of the Stockholders of the Company and each of
its Subsidiaries, the board of directors of the Company and each of its Subsidiaries
and all committees of the board of directors of the Company and each of its Subsidiaries
(the items
described in (i), (ii) and (iii) above, collectively, the “Company
Constituent Documents”).
There have been no formal meetings or other proceedings of the Stockholders of
the Company, the board of directors of the Company or its Subsidiaries or any
committee of the board of directors of the Company or its Subsidiaries that are
not fully reflected in the minutes

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of the Company.
    There has not been any violation of the Company Constituent Documents, and
    neither the Company nor any of its
Subsidiaries has taken any action that is inconsistent in any material respect
with the Company Constituent Documents. The books of account, stock records,
minute books and other records of the Company and each of its Subsidiaries are
accurate, up-to-date and complete in all material respects, and have been maintained
in accordance
with
Applicable Laws and prudent business practices.

(c)     Capitalization
        of the
Company.      As
of the date of this Agreement, the authorized capital stock of the Company consists
of 75,000,000
shares of Common Stock, par value $0.01 per share, and 4,504,330 shares of preferred stock, par value $0.01
per share, 2,337,663 shares of which are designated as Series A Preferred Stock
(the “Series A Preferred Stock”),
and 2,166,667 shares of which are designated as Series B Preferred Stock (the “Series B Preferred Stock” and,
collectively with the Series A Preferred Stock, the “Preferred Stock”).  As of the date of this Agreement, (i) 46,816,429 shares of Common
Stock are issued and outstanding, (ii) 618,174 shares of Common Stock are held by the Company in treasury; (iii) 1,582,794 shares of Series A Preferred Stock are issued and outstanding, (iv) 754,869 shares of Series A Preferred Stock are held by the
Company in treasury, and (v) 1,861,763 shares of Series B Preferred Stock are issued and outstanding. No bonds, debentures, notes or other instruments or evidence of indebtedness having the right to vote (or convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any matters on which the Company’s
Stockholders may vote are issued or outstanding. All outstanding shares of Common
Stock and Preferred Stock are duly authorized, validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or other similar
rights. All outstanding shares of Common Stock and Preferred Stock have been
issued in compliance with (x) all applicable securities laws and other
Applicable Laws and (y) all requirements set forth in the Company Constituent
Documents and applicable Contracts. Except as set forth above, as of the date
of this Agreement, there are outstanding (A) no shares of capital stock or other
voting securities of the Company, (B) no securities of the Company convertible
into, or exchangeable or exercisable for, shares of capital stock or other voting
securities of the Company, and (C) no options, warrants, calls, rights, commitments
or
agreements to which the Company is a party or by which it is bound, in any case
obligating the Company to issue, deliver, sell, purchase, redeem or acquire,
or cause to be issued, delivered, sold, purchased, redeemed or acquired, shares
of capital stock or other voting securities of the Company, or obligating the
Company to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. The Company has not issued any debt securities which
grant the holder thereof
any right to vote on, or veto, any actions by the Company. Company Disclosure
Schedule 3.1(c) identifies
for each non-U.S. Stockholder, such Stockholder’s country of residence and
the number of Outstanding Shares held by such Stockholder.

(d)     Options.     As
    of the date of this Agreement, 10,450,000 shares of Common Stock are reserved
    for issuance under
    the
        Stock Plans (of which 9,597,106 shares of Common Stock are subject to
        outstanding Options granted under the Stock Plans and as of December
        2, 2005, $50,247 has been contributed by employees under the Ambion,
        Inc. Employee Stock Purchase Plan for the purchase of shares of Common
        Stock). Included in Company Disclosure Schedule 3.1(d) is a correct
        and complete list, as of the date hereof, of all Outstanding Options
        or other
        rights to purchase or receive shares of Common Stock granted under the
        Stock Plans or otherwise, and, for each such Option or other right (i)
        the number of shares of Common Stock subject thereto, (ii) the date of
        grant, (iii) the expiration date, (iv) the exercise price thereof, and
  (v) the number of

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shares of
    Common Stock subject thereto, (ii) the date of grant, (iii) the expiration
    date, (iv) the exercise price thereof, and
        (v) the number of shares in which the Option has vested. All Outstanding
        Options have been granted in compliance with (x) all applicable securities
        laws and other Applicable Laws and (y) all requirements set forth in
        the Company Constituent Documents and applicable Contracts. Company
        Disclosure Schedule 3.1(d) identifies for each
non-U.S. Optionholder, such Optionholder’s country of residence and the
number of Outstanding Option Shares held by such Optionholder.

(e)     Capitalization
of the
Subsidiaries.     As of the date of this Agreement, the authorized capital stock or other voting
securities and the issued and outstanding capital stock or other voting securities
of
each Subsidiary of the Company is listed on Company Disclosure Schedule 3.1(e).
The Company directly or indirectly is the record and beneficial owner of all
issued and outstanding shares of capital stock or other voting securities of
each such Subsidiary and such ownership is free and clear of all Liens. Each
outstanding share of capital stock or other voting
securities of each such Subsidiary is duly authorized, validly issued, fully
paid and nonassessable and no shares of capital stock or other voting securities
of any such Subsidiary have been issued in violation of any preemptive or similar
rights. No shares of capital stock or other voting securities of any such Subsidiary
are reserved for issuance, and there are no Contracts, agreements, commitments
or arrangements obligating any such Subsidiary to issue, deliver, sell, purchase,
redeem or
acquire, cause to be issued, delivered, sold, purchased, redeemed or acquired,
any shares of capital stock or other voting securities, or obligating any such
Subsidiary to grant, extend or enter into any option, warrant, call, right, commitment
or agreement of any kind to acquire any shares of, or any securities that are
convertible into or exchangeable for any shares of, capital stock or other voting
securities of such Subsidiary.

(f)     Authority.     The
    Company has the requisite corporate power and authority to execute and deliver
    this Agreement
    and the
    other Transaction Documents to which it is a party and to perform its obligations
    hereunder  and thereunder and to consummate the transactions contemplated
    herein and therein. The execution, delivery and performance of this Agreement
    and the other Transaction Documents by the Company and the consummation by
    the Company of the transactions
contemplated herein or therein have been duly and validly authorized by all necessary
    corporate action on the part of the Company. The Board of Directors of the
    Company has at a meeting or by unanimous written consent of the directors,
    (i)  determined that this Agreement and the transactions contemplated hereby
    are advisable, fair to and in the best interests of the Company’s Stockholders,
    (ii) approved this Agreement and the transactions contemplated hereby and
    (iii) recommended  that this Agreement and the transactions contemplated
    hereby be approved and adopted by the Common Stockholders, the Series A Preferred
    Stockholders and the Series B Preferred Stockholders, voting together as
    a single class on an as-converted to Common Stock basis and by the Series
    B Preferred Stockholders voting together as a separate class. The Stockholder
    vote set forth in the preceding sentence is the only vote of Stockholders
    of the Company necessary to approve and adopt this Agreement under the DGCL,
    the Company Constituent Documents and any other Contract to which such Stockholders
    or the Company is a party. No other proceedings on the
part of the Company or the Stockholders are necessary to authorize this Agreement
    and the other Transaction Documents to which the Company is a party, perform
    its obligations hereunder or thereunder or for the Company to consummate
  the transactions contemplated

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 herein and
    therein. This Agreement and each of the other Transaction Documents to which
    the Company is or will be a party
    has been, or upon execution and delivery thereof will be, duly and validly
    executed and delivered by the Company
and, assuming that this Agreement and the other Transaction Documents to which
    the Company is a party constitute the valid and binding agreement of the
    other parties hereto and thereto, constitute, or upon execution and delivery
    will constitute, the valid and binding obligations of the Company, enforceable
    against the Company in accordance with their respective terms and conditions,
    except that the enforcement hereof and thereof may be limited by (i) applicable
    bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
    hereafter in effect relating to creditors’ rights generally and (ii)
    general principles of equity (regardless of whether enforceability is considered
    in a Proceeding
at law or in equity).

 (g)     No
          Conflict; Required Filings and
Consents.     The
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party do not, and the consummation
by the Company of the transactions contemplated herein and therein will not,
(i) violate, conflict with, or result in any breach of any provision of the Company’s Certificate of Incorporation or Bylaws, or its Subsidiaries’ respective
certificates of incorporation or bylaws, or other similar organizational documents,
(ii) except for Material Contracts set forth on, or incorporated by reference
into, Company
Disclosure Schedule 3.1(q) with an asterisk, if any, violate, conflict with or
result in a violation or breach of, or constitute a default (with or without
due notice or lapse of time or both) under, any of the terms, conditions or provisions
of any Material Contract, or give rise to or result in a right or option of any
third party to such Material Contract to terminate any such Material Contract
or provide any third party with
a remedy or right to accelerate any performance under or otherwise modify any
such Material Contract, or (iii) subject to obtaining the Consents or making
the registrations, declarations or filings set forth in the next sentence, violate
any Applicable Law binding upon the Company or any of its Subsidiaries or by
which or to which a material portion of the Company’s or any of its Subsidiaries’ respective
assets is bound. No Consent of any Governmental Authority is required by the
Company or any of its Subsidiaries in connection with the execution, delivery
and performance by the Company of this Agreement and the other Transaction Documents
to which it is a party or the consummation by the Company of the transactions
contemplated herein or therein, except for (A) the filing of a pre-merger notification
and report form by the Company under the HSR Act, and the expiration or termination
of the applicable waiting period thereunder, and (B) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware.

(h)     Financial
  Statements.

(i)     The Company has furnished or made available to Parent copies of (A) the
      audited
      consolidated balance sheets of the Company and its Subsidiaries as of December
      31, 2004, 2003 and 2002, together with the audited consolidated statements
      of operations, cash flows and stockholders’ equity of
the Company and its Subsidiaries for the years then ended, and the related notes thereto, accompanied by the reports thereon of Ernst & Young
LLP, independent public accountants and (B) the unaudited consolidated balance
sheet of the Company and
its Subsidiaries as of November 30, 2005 (the “Balance Sheet”), together with the related unaudited
consolidated statements of operations, cash flows and stockholders’

     

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 equity
of the Company and its Subsidiaries for the eleven-month period then ended (such
audited and unaudited financial statements collectively being referred to herein
as the “Financial Statements”). The Financial Statements, together with the notes thereto, have been
prepared in accordance with GAAP (except that the unaudited Financial Statements do not contain all notes required by GAAP and are subject to normal year-end audit adjustments) applied on a consistent basis throughout the periods covered thereby
(except to the extent disclosed therein or required by changes in GAAP) and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries at the dates thereof and the consolidated results of the
operations of the Company and its Subsidiaries for the respective periods indicated. The Financial Statements were prepared from the books and records of the Company, which books and records have been maintained in accordance with Applicable Laws
and sound business practices, and reflect all financial transactions of the Company which are required to be reflected in accordance with GAAP. There are no Off-Balance Sheet Arrangements that have or are reasonably likely to have a current or
future effect on the Company’s financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.

(ii)     As
      of the date of this Agreement there is no liability, contingent or otherwise,
      of the Company or any of its consolidated Subsidiaries that is not reflected
      or reserved against in the Balance Sheet, including without limitation,
      any Off-Balance Sheet Arrangements, other than liabilities that
are either (A) liabilities incurred in the ordinary course of business and consistent
      with past practices of the Company since November 30, 2005 (the “Balance Sheet
Date”),
(B) any such liability that would not be required to be presented in unaudited
interim financial statements prepared in conformity with GAAP, including the
notes thereto, (C) liabilities under this Agreement; or (D) liabilities for fees
and expenses incurred in connection with the transactions contemplated by this
Agreement and the other Transaction Documents.

(iii)     As
      provided in or contemplated by this Agreement or the other Transaction
      Documents, since the Balance Sheet Date and prior to the date of this Agreement,
      the Company and each of its Subsidiaries have conducted their respective
      businesses in all material respects in
the ordinary course of business and consistent with past practices of the Company.
      Since the Balance Sheet Date (A) and prior to the date of this Agreement,
      neither the Company nor any of its Subsidiaries has acted or failed to
      act in a manner that
would have been prohibited by Section 4.2 if the terms of such Section had been
in effect as of and after the Balance Sheet Date and prior to the date of this
Agreement; and (B) there has not occurred, and neither the Company nor any of
its Subsidiaries has incurred or suffered, any change, circumstance, effect,
event or fact that has resulted in
a Material Adverse Effect.

  
(i)     Compliance
        with Applicable
Laws.     Each of the Company and its Subsidiaries
(i) has, in all material respects, complied with, is in compliance with and has
operated its business and maintained its assets in compliance with all Applicable
Laws, and (ii) holds all material permits, licenses, variances, exemptions, orders,
franchises, registrations and approvals of all Governmental Authorities necessary
for the lawful conduct of its business
(the “Company Permits”). The Company and its Subsidiaries are
in material compliance with the terms of the Company Permits. No investigation
or review by any Governmental Authority with respect to the Company or any of
its Subsidiaries is pending or, to the

  

     

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Knowledge of the Company,
    threatened.
For purposes of this Section 3.1(i), the
term “Applicable Laws” as used in clause (i) above, shall not include
any Environmental Law, any Applicable Laws relating to Taxes or the subject matters
of Sections 3.1(o), (p),
or (r). 

  (j)     Absence
              of
    Litigation.     There
    is no claim, action, suit, inquiry, judicial or administrative proceeding,
    grievance, arbitration, review or investigation (each, a “Proceeding”)
    pending or, to the Knowledge of the Company, threatened against the Company
    or any of its Subsidiaries or its present or former officers, directors or
    employees
    (in their capacities as such) by or before any arbitrator or Governmental
    Authority.
  

  

    (k)     Insurance.     Set forth on Company Disclosure Schedule 3.1(k), as of the date of this
      Agreement, is a true,
      correct and complete list
      of all workers’ compensation, title, fire, general liability, fiduciary liability, directors’ and officers’ liability,
      malpractice liability, theft and other forms of property and casualty insurance
      held by the Company and each of its Subsidiaries and all fidelity bonds
      that are material to the Company and its Subsidiaries. Except for policies
      that have been, or are scheduled to be, terminated in the ordinary course
      of
business and consistent with past practices of the Company and in accordance
      with the terms thereof, each of the insurance policies set forth on Company
      Disclosure Schedule
3.1(k) is in full force and effect. Neither the Company nor any of its Subsidiaries
has received any notice or other communication regarding any actual or possible
(i) cancellation or invalidation of any insurance policy, (ii) refusal of any
coverage or rejection of any claim under any insurance policy, or (iii) material
adjustment in the amount of the premiums payable with respect to any insurance
policy.

  
(l)      Leased
          Real Property.

  

  
    (i)     Neither
          the Company nor any of its Subsidiaries owns any real property.

  

    (ii)     Set forth on Company
            Disclosure Schedule 3.1(l)(ii) is a list of all Leased
      Real Property and the leases under which such Leased Real Property is leased,
      subleased or licensed (the “Leases”).
      The Company has made available to Parent complete copies of all Leases.
      The Company is not a party to any lease, license, assignment or similar
      arrangement under which it is a lessor, licensor or assignor of, or otherwise
      makes available for use by any third party of, any portion of the Leased
      Real
Property, and the Company is not in material violation of any zoning, building,
      safety or environmental requirement of Applicable Law with respect to such
      Leased Real Property. With respect to each Lease, (i) the Lease is a legal,
      valid and binding obligation of the Company, and in full force and effect,
      (ii) neither the Company nor, to the Knowledge of the Company, any other
      party to such Lease, is in breach or default under such Lease, and to the
      Knowledge of the Company no event has
occurred which, with notice or lapse of time or both, would constitute a breach
      or default under such Lease, (iii) each Lease will continue to be legal,
      valid and binding in accordance with its terms immediately following the
      Closing, except as may result from actions that may be taken following
      the Closing, (iv) no transaction contemplated by this Agreement or the
      Transaction Documents requires the consent of any other party to such Lease
      and will not result in the right of any landlord under
such Lease to terminate or modify it or increase the rent or security thereunder,
      (v) to the Knowledge of the Company, there is

    

   

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    no
          material commitment to or agreement with any Government Authority affecting
          the Leased Real Property
      related thereto, except for Permitted Encumbrances and (vi) the Company
      does not owe any brokerage commissions or finder's fees with respect to
      any such Lease which is not paid or accrued in full as a current liability
      reflected in the Financial
Statements.

  

      (iii)     To
          the Knowledge of the Company, the Leased Real Property is in good condition
and repair (reasonable or ordinary wear and tear excepted).

(m)     Tangible
          Property.     The Company or one of
          its Subsidiaries has good, valid and marketable title to, or holds
          pursuant to valid and enforceable
leases, all the tangible properties and assets of the Company and its Subsidiaries
(excluding Leased Real Property) that are material to the conduct of the business
of the Company and its Subsidiaries as it is currently conducted, with only such
exceptions as constitute Permitted Liens. Such
tangible properties and assets of the Company and its Subsidiaries are in sufficiently
good operating condition (except for ordinary wear and tear) to allow the business
of the Company and its Subsidiaries to be operated in the ordinary course of
business and consistent with past practices of the Company.

(n)     Liens
        and
Encumbrances.     All of the assets of the Company
and its Subsidiaries are free and clear of all Liens except (i) Permitted Encumbrances
and (ii) Liens
set forth on Company
Disclosure Schedule
3.1(n) (the
Liens referred to in clauses (i) and (ii) being “Permitted Liens”).

(o)     Environmental
        Matters.

(i)     The
    Company and its Subsidiaries and their operations comply with all Environmental
    Laws. 

(ii)     No Proceedings are pending or, to the Knowledge of the Company, threatened
      against the Company or any of its Subsidiaries alleging the violation of
      any Environmental Laws. No written notice from any Governmental Authority
      or any Person has been received by the Company or any of its
Subsidiaries claiming any violation of any Environmental Laws, or requiring any
      remediation, clean-up, modification, repairs, work, construction, alterations,
      installations or any other activities to comply with any Environmental
      Laws and that have not been complied with or otherwise resolved to the
satisfaction of the party giving such notice.

  
		(iii)     All
        permits, registrations, licenses and authorizations required to be obtained
        or filed by the Company or any of its Subsidiaries under any Environmental
        Laws, including without limitation those activities relating to the generation,
        use, storage, treatment, disposal, handling, management, procurement,
        distribution, release, discharge, or remediation of Hazardous Substances
        have been duly obtained or filed, and the Company and each of its Subsidiaries
        is in compliance with the terms and conditions of all such permits, registrations,
        licenses and authorizations, and has resolved any past instances of non-compliance
        with the terms and conditions of all such permits, registrations, licenses
    and

  

   

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		authorizations, to the
		    satisfaction of the Governmental Authority or Governmental Authorities
		    with jurisdiction over such permit, registration,
        license
or authorization.

  

  (iv)     All
      Hazardous Substances generated, used, stored, treated, disposed, handled,
        managed, procured, distributed, released, discharged, or remediated by
        the Company or any of its Subsidiaries have been generated, used, stored,
        treated, disposed, handled, managed, procured, distributed,
  released, discharged, or remediated in such manner as not to result in any
      Environmental Costs or Liabilities. 

  (v)     The Company has no
      Knowledge of, nor has the Company or any of its Subsidiaries received any
      written notification from, any source indicating that (A)
      there has been a release or discharge of Hazardous Substances that could
      result in the Company or any of its Subsidiaries incurring any
Environmental Costs or Liabilities (B) the Company or any of its Subsidiaries
      is a potentially responsible party under CERCLA or any other Environmental
      Laws, (C) any Leased Real Property is identified or proposed for listing
      as a federal National
Priorities List (“NPL”)
(or state-equivalent) site or a Comprehensive Environmental Response, Compensation
and Liability Information System (“CERCLIS”)
(or state-equivalent) site, or (D) any facility to which the Company or any of
its Subsidiaries currently transports or otherwise arranges for the disposal
of Hazardous Substances, or has in the past transported or otherwise arranged
for disposal of Hazardous Substances, is identified or
proposed for listing as an NPL (or state-equivalent) site or CERCLIS (or state-equivalent)
site. 

(vi)     There are no liabilities of or relating to the Company nor any of its Subsidiaries
      of any kind whatsoever, whether accrued, contingent, absolute, determined,
      determinable or otherwise arising under or relating to any Environmental
      Law and there are no facts, conditions, situations or set of
circumstances that could reasonably be expected to result in or be the basis
for any such liability.

  
  
    (p)    Taxes.     Except
with respect to any Taxes arising solely as a result of the   Divestiture: 

  (i)     (A)     All
          Tax Returns which are required to be filed by the Company or
          any of its Subsidiaries on or before the Closing Date have been or
          will be timely filed, (B) all Taxes for Tax periods ending prior to
          the Closing Date have been or will be timely paid in  full, and (C)
          all withholding Tax requirements imposed on or with respect to the
          Company or any of its Subsidiaries on or before the Closing Date have
          been or will be satisfied in full.

(ii)     There is not in force (A) any extension of time with respect to the due date for the filing of any material Tax Return by the Company or any of its Subsidiaries or (B) any waiver or agreement for any extension of time for the assessment or payment of any material Tax by the Company or any of
its Subsidiaries.

(iii)     No outstanding material claim, assessment
or deficiency against the Company or any of its Subsidiaries for any Taxes has been asserted in writing by any Government Authority nor are there any Liens upon any of the assets of the Company or any of its Subsidiaries as a result of any due and
unpaid Taxes.

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(iv)     There is no existing Tax sharing agreement
that may or will require that any payment be made by or to the Company or any of its Subsidiaries on or after the Closing Date.

(v)     There is no Contract, agreement, plan or
arrangement covering any Person that, individually or in the aggregate, as a consequence of the transactions contemplated by this Agreement or otherwise, could give rise to the payment of any amount that would not be deductible by the Company or any
of its Subsidiaries, as the case may be, by reason of Sections 162(m) or 280G of the Code.

(vi)     Neither the Company nor any of its
Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, its taxable income for any taxable period (or portion thereof) ending after the date hereof as a result of any change in method of accounting for
a taxable period ending on or prior to the date hereof under Section 481(c) of the Code (or any similar provision of state, local or foreign law). 

(q)     Material
            Contracts.     Set
forth on Company
Disclosure Schedule 3.1(q), as of the date of this Agreement, is a true, correct
and complete list of all Material Contracts to which the Company or any of its
Subsidiaries is a party or by which any of the Company or any of its Subsidiaries
is otherwise bound. A true, correct and complete copy of each such Material Contract
has been furnished or made available to Parent or its representatives. All of
the Material
Contracts are legal, valid, binding and enforceable by the Company and, to the
Knowledge of the Company, the other parties thereto, in accordance with their
respective terms. Neither the Company nor any of its Subsidiaries is in default
(other than any immaterial default that would not give rise to or result in a
right or option of any third party to such Material Contract to terminate any
such Material Contract or provide any third party with a remedy or right to accelerate
any performance
under or otherwise modify any such Material Contract) under any such Material
Contract and, to the Knowledge of the Company, no other party has defaulted under,
breached or provided notice of termination of any Material Contract. To the
Company’s Knowledge, there has not occurred any event that (with the lapse
of time or the giving of notice or both) would constitute a default under any
Material Contract by the Company or any of its Subsidiaries. 

(r)     ERISA
Compliance; Labor. 

(i)     (A)     Neither the
    Company nor any other entity required to be aggregated
    with the Company
under Section 414(b) or 414(c) of the Code (the “Aggregated Group”) sponsors, and neither
the Company nor any member of the Aggregated Group has sponsored within the last
seven years, an Employee Benefit Plan that is subject to Title IV of ERISA or
Code
Section 412 or a “defined benefit plan” as
such term is defined in Section 3(35) of
ERISA);

        (B)     No “prohibited transaction,” as
        such term is described in Section 4975 of the Code, has occurred with
        respect to any of the Employee Benefit Plans that would subject the Company
        or any member of the Aggregated Group, any officer of the Company or
        any of such plans or any trust to any material Tax or penalty on prohibited
        transactions imposed by Section 4975 of the
Code;

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        (C)     Neither
      the Company nor any member of the Aggregated Group has contributed or been
      obligated to contribute to any “multi-employer plan” as
      such term is defined in Section 3(37) or Section 4001(a)(3) of ERISA, or
      to any “multiple employer welfare arrangements” as such term is defined in Section 3(40) of ERISA;
and

        (D)     There exists no condition that would subject
the Company or any member of the Aggregated Group to any material liability under the terms of the Employee Benefit Plans or Applicable Laws other than any payment of benefits in the normal course of plan operation.

(ii)     True,
      correct and complete copies of each of the Employee Benefit Plans and related
      trust documents and favorable determination letters, if applicable, have
      been furnished or made available to Parent or its representatives, along
      with the most recent report filed on
Form 5500 and summary plan description with respect to each Employee Benefit
      Plan required to file a Form 5500. All material reports and disclosures
      relating to the Employee Benefit Plans required to be filed with or furnished
      to Governmental Authorities or plan participants or beneficiaries have
      been filed or furnished in all material respects in accordance with Applicable
      Laws in a timely manner. Each Employee Benefit Plan has been maintained
      in material compliance with Applicable
Laws, and its financial expense has been accrued and reported on the financial
      statements of the Parent, the Company and its Subsidiaries in accordance
      with GAAP. There are no actions, suits or claims pending (other than routine
      claims for benefits) or, to the Knowledge of the Company, threatened against,
      or with respect to, any of the Employee Benefit Plans. All material contributions
      required to be made to the Employee Benefit Plans pursuant to their terms
      have been timely made. There is no
matter pending with respect to any of the Employee Benefit Plans before the Internal
      Revenue Service or the Department of Labor. The Company and each member
      of its Aggregated Group is in material compliance with all Applicable Laws
      respecting employment and employment practices, terms and conditions of
      employment and wages and hours, including, without limitation, the Immigration
      Reform and Control Act, the Worker Adjustment Retraining and Notification
      Act, any such laws respecting
employment discrimination, disability rights or benefits, equal opportunity,
      plant closure issues, affirmative action, workers’ compensation, employee benefits, severance payments, labor relations, employee leave issues, wage and hour
standards, occupational safety and health requirements and unemployment insurance and related matters. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement. Neither the Company nor any of its Subsidiaries
(A) is engaged in any unfair labor practices, has any unfair labor practice charges or complaints before the National Labor Relations Board pending or, to the Knowledge of the Company, threatened against it, (B) is subject to any proceeding seeking
to compel any of them to bargain with any labor organization as to wages and conditions of employment, nor is there any strike or other labor dispute involving the Company or any of its Subsidiaries, pending or, to their Knowledge, threatened, nor
are they aware of any activity involving any of the Company’s or its Subsidiaries’ employees
seeking to certify a collective bargaining unit or engaging in any other organization
activity, or (C) has any written notice of any charges, complaints or proceedings
pending or, to the Knowledge of the Company, threatened against it before the
Equal Employment Opportunity Commission, Department of Labor or any other Governmental
Authority responsible for regulating employment practices. 

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(iii)     Neither the Company nor any member of its
Aggregated Group has any obligations to provide post-termination health or welfare benefits (other than in accordance with COBRA), nor has any formal plan or commitment (whether legally binding or not) either to create any plan or arrangement that
would constitute an Employee Benefit Plan, or to make any contributions, modifications, or changes to any Employee Benefit Plan outside the ordinary course of business and inconsistent with past practice with regard to amounts. 

(iv)     In
      the past two years, (i) none of the Company or any member of the Aggregated
      Group has effectuated a “plant closing” (as defined in the WARN Act affecting any site of employment or one or more facilities or operating units within any site of employment or facility of its
business, (ii) there has not occurred a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility of the business of the Company or any member of its Aggregated Group, and (iii) none of the Company or any
member of its Aggregated Group has been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state, local or foreign law or regulation. None of the Company or any
member of its Aggregated Group has caused any of its employees to suffer an “employment loss” (as
defined in the WARN Act) during the ninety (90) day period prior to the date
hereof; nor shall do so before the Closing Date.

 (s)    Intellectual
Property.

(i)     Company
      Disclosure Schedule
3.1(s)(i) sets forth a complete and accurate list of all Registered IP owned
by the Company or its Subsidiaries and all license agreements conferring Intellectual
Property Rights to
the Company or its Subsidiaries and such Company Disclosure Schedule 3.1(s)(i) indicates
for each item of such Intellectual Property whether such Intellectual Property
is owned (whether solely or jointly with others) or licensed by the Company or
such Subsidiary.

(ii)     The
      Company and its Subsidiaries own (and immediately after Closing (including
      immediately after the consummation of the Divestiture), the Surviving Corporation
      will own, subject to
      the express provisions of the Contracts set forth in Sections 2.11(b) – (g)
      of the Asset Purchase Agreement and assuming no action that changes such
      ownership
      is taken by Surviving Corporation beyond performance under this Agreement,
      including consummation of the transactions contemplated hereunder), free
      and clear of any Liens, all right, title and interest in and to the Company
      IP (other than Company IP that is licensed to the Company) and all other
      Intellectual Property and Intellectual Property Rights indicated on Company Disclosure Schedule 3.1(s)(i) as
      being owned by the Company. Company
Disclosure Schedule 3.1(s)(i) identifies each option, license or Contract of
any kind relating to Intellectual Property that, (i) individually, resulted in
payments to or from the Company during the fiscal year ended December 31, 2004
in an amount greater than $150,000 or that, during the current fiscal year, is reasonably expected by the Company to involve payments to or from the Company equal to or greater than
$150,000 or (ii) if lost, impaired or terminated, would reasonably be expected
to have a Material Adverse Effect on the business, properties or financial condition
of the Company and its Subsidiaries taken as a whole (including, without limitation,
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excluding
license agreements for non-customized off-the-shelf software or shrink wrap licenses
available to the general public at a cost of less than $100,000).

(iii)     The
        Company IP is not subject to any Contract containing any covenant or other
        provision that in any way limits or restricts the ability of the Company
        or any of its Subsidiaries (or the ability of Surviving Corporation after
        Closing (including after the consummation of the
  Divestiture), subject to the express provisions of the Contracts set forth in
        Sections 2.11(b) – (g) of the Asset Purchase Agreement and assuming
        no action that creates such a limitation or restriction is taken by Surviving
        Corporation beyond performance under this Agreement, including consummation
        of the transactions contemplated hereunder) to use, license, sublicense,
        exploit, assert or enforce any Company IP anywhere in the world. The Company
        and its Subsidiaries have not assigned or
  otherwise transferred ownership of, or agreed to assign or otherwise transfer
        ownership of, any Intellectual Property or Intellectual Property Rights
  to any third party.

(iv)     Neither
      the execution, delivery or performance of this Agreement (nor any of the
      ancillary agreements contemplated by this Agreement) nor any of the transactions
      contemplated by this Agreement (or any of the ancillary agreements) will:
      (A) give rise to or result in a right or option
of any third party to Contracts relating to Company IP to terminate any such
      Contracts or provide any third party with a remedy or right to accelerate
      any performance under or otherwise modify any such Contract; (B) result
      in a breach or default of any Contract relating to the Intellectual Property
      or Intellectual Property Right set forth on Company Disclosure Schedule
3.1(s)(i) or the Company IP; or (C) give rise to a right of or trigger the release, disclosure, delivery or grant of licenses or other rights under any Company IP to any escrow agent or other Person.

(v)     All
      Intellectual Property or Intellectual Property Rights licensed to the Company
      or its Subsidiaries will be available to the Surviving Corporation (subject
      to the express provisions of the Contracts set forth in Sections 2.11(b) – (g)
      of the Asset Purchase Agreement and assuming no action that changes such
      availability is taken by Surviving Corporation beyond performance under
      this Agreement, including consummation of the transactions contemplated
      hereunder), immediately after the consummation of the transaction contemplated
      by this Agreement (including after consummation of the Divestiture) under
      the same terms and conditions as they are available to the Company or its
Subsidiaries as of the Effective Time.

(vi)     To the Knowledge of Company, neither the
Company nor its Subsidiaries, or any product or service developed, manufactured, marketed, sold, or otherwise provided by or on behalf of the Company or its Subsidiaries, have infringed or misappropriated any Intellectual Property Rights of third
parties or committed any acts of unfair competition.  Neither the Company nor its Subsidiaries have received any charge, complaint, claim, demand or notice alleging any such infringement, misappropriation, or act of unfair competition. Neither the
Company nor its Subsidiaries are bound by any Contract to indemnify, defend, hold harmless or reimburse any third party with respect to any infringement or misappropriation of any Intellectual Property Rights of third parties. None of the patents or
patent applications owned by the Company or its Subsidiaries are subject to any interference or opposition proceedings anywhere in the world.

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(vii)     Set
      forth in Company Disclosure Schedule 3.1(s)(vii), is a complete list of
      licenses granting exclusive Intellectual Property Rights to Company or
      its Subsidiaries, including those in which the exclusive rights are limited
to a specific field of use. 

(viii)      The Intellectual Property licensed to
Company or its Subsidiaries is being used by Company in accordance with the terms of the license governing such Intellectual Property. Each license grants, as to the grantor/licensor, sufficient rights to use the Intellectual Property that is the
subject of the license in the conduct of the business of the Company as currently conducted.

(ix)     The Company owns or has licensed sufficient
rights to conduct the business of the Company and its Subsidiaries as currently conducted. To the Knowledge of the Company, all Registered IP owned by the Company or its Subsidiaries are valid, subsisting, and enforceable. The Company and its
Subsidiaries have duly maintained all of their patents and patent applications in the ordinary course and have not abandoned, or allowed the abandonment, of any such patents or patent applications outside the ordinary course of
prosecution.

(x)     The Company has not sent to any third party
or, to the Knowledge of the Company, otherwise communicated to another person or entity any charge, complaint, claim, demand or notice asserting infringement or misappropriation of, any Intellectual Property Right of the Company by such other Person
or entity or any acts of unfair competition by such other Person or entity, nor, to the Knowledge of the Company, is any such infringement, misappropriation or act of unfair competition occurring.

(xi)     It
      is not nor to the Knowledge of the Company, will it be necessary to use
      any inventions of any of the Company’s employees (or Persons it currently
      intends to hire) made prior to or outside the scope of their employment
      by the Company, other than those which have been assigned to the Company,
in conducting the business of the Company as currently conducted.

(xii)     Company IP owned by the Company or its
Subsidiaries did not arise from and was not the product of, government (whether state, federal or municipal) funded research and no Governmental Authority has any rights with respect to the foregoing Company IP.

(xiii)     All
      of the Company’s and its
Subsidiary’s employees and consultants who have participated in the conception,
reduction to practice or development of the Company IP or other Intellectual
Property have assigned to the Company all right, title and interest in and to
such
Company IP and other Intellectual Property.

(xiv)     Each
      employee and officer of the Company and its Subsidiaries has, effective
      as of the date of employment of such individual, executed a confidentiality
      and assignment of inventions agreement (each, an “Employee Confidentiality and Inventions Agreement”)
      substantially in the form(s) of the exemplary agreement(s) set forth on Company Disclosure Schedule
      3.1(s)(xiv). To the Knowledge of the Company none of such employees

   
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or
      officers are in violation thereof. All employees, consultants and independent
      contractors of the Company and its Subsidiaries or other third parties
      (excluding routine maintenance or cleaning staff) to whom the Company has
      provided access to confidential information of the
Company or its Subsidiaries, are subject to an obligation to maintain the confidentiality
      of the confidential information of Company and its Subsidiaries. Additionally,
      employees, consultants and independent contractors who create or develop
      Intellectual Property for the Company or its Subsidiaries are parties to
      a written agreement under which they are obligated to maintain the confidentiality
      of confidential information of the Company and its Subsidiaries and to
      assign to the Company
and its Subsidiaries all right, title and interest in and to any inventions or
      other Intellectual Property conceived, reduced to practice, made or developed
      in the course of performing services for the Company or its Subsidiaries.
      To the Knowledge of the Company none of such employees, consultants or
independent contractors are in violation of these obligations. 

(t)     Bank
          Accounts; Receivables.

 (i)     Company
      Disclosure Schedule 3.1(t)(i)     provides accurate information
      with respect to each account maintained by or for the benefit of the Company
      and each of its Subsidiaries at any bank or other financial institution
      including the name of the bank or  financial institution and the account
      number.

(ii)     Company
      Disclosure Schedule
3.1(t)(ii)     provides an accurate and complete breakdown and aging of all accounts
receivable, notes receivable and other receivables of the Company and each of
its Subsidiaries as of November 30, 2005. All existing accounts receivable of
the Company and each of its Subsidiaries (including those accounts receivable
reflected on the Balance Sheet that have not yet been collected and those accounts
receivable that have arisen
since November 30, 2005 and have not yet been collected) represent valid obligations
of customers of the Company or its Subsidiaries arising from bona fide transactions
entered into in the ordinary course of business.

  (u)     Broker’s
          Commissions.     Neither
          the Company nor any Subsidiary thereof has, directly or indirectly,
          entered into any agreement with any Person that would obligate the
          Company or any Subsidiary thereof to pay any commission, brokerage
          fee or “finder’s
          fee” in
          connection with the
transactions contemplated herein.

  (v)     Related
          Party
Transactions.    (i)
No Related Party has, and no Related Party has at any time within the last two
years had, any direct or indirect interest in any material asset used in or
otherwise relating to the business of the Company or any of its Subsidiaries;
(ii) no Related Party is, or has been within the last two years, indebted to
the Company or any of its Subsidiaries; (iii) within the last two years, no Related
Party has
entered into, or has had any direct or indirect financial interest in, any Company
Contract, transaction or business dealing involving the Company or any of its
Subsidiaries; (iv) no officer or director of the Company is competing, or has
at any  time within the last two years competed, directly or indirectly, with
the Company or any of its Subsidiaries; and (v) no Related Party has any claim
or right against the Company or any of its Subsidiaries (other than rights as
a Securityholder and
rights to receive compensation for services performed and benefits as an employee
of the Company or any of its Subsidiaries). (For purposes of this

 

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  Section
3.1(v) each
of the following shall be deemed to be a “Related
Party”: (i)  each individual who is an officer or director
of the Company or any of its Subsidiaries; (ii) each Stockholder of the Company
who owns of record in excess of five percent of the outstanding Common Stock
on a fully diluted basis; (iii) each member of the immediate family of each of
the individuals referred to in clauses (i) and (ii) above; and (iv) any trust
or other entity (other than the Company) in which any one of the individuals
referred to in clauses
(i), (ii) and (iii) above holds (or in which more than one of such individuals
collectively hold), beneficially or otherwise, a material voting, proprietary,
equity or other financial interest).

  (w)     Sufficiency

of the Assets.     After
the consummation of the Divestiture, the property and other assets which will
be owned by the Company or used under enforceable Contracts or licenses  constitute
all of the property and assets necessary or useful in the conduct of the Research
Products Business as now being and heretofore conducted, and will permit the
Surviving Corporation to conduct such Research Products Business after the
Effective Time substantially as it is being conducted by the Company on the date
of this Agreement. The assets and liabilities comprising the Diagnostics Business
will be transferred pursuant to the Asset Purchase Agreement. 

  (x)     Translations.     All
        English translations of documents included in the data room are fair
        and accurate translations
        in all material respects

  (y)     UK
          Subsidiary.    Ambion
          (UK) Limited is a dormant company with no assets or business operations
          whatsoever.

3.2     Representations and Warranties of Parent and Merger Subsidiary.     Except
      as set forth on Parent
      Disclosure Schedule, as of the date of this Agreement and as of the Effective
      Time (except to the extent such representations and warranties speak expressly
      as of an earlier date), Parent and the Merger Subsidiary jointly and severally
represent and warrant to the Company as follows:

(a)     Organization
        Good Standing and
Other Matters.     Each
of Parent and Merger Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted,
and is duly qualified to do business as a foreign corporation in good standing
to conduct
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification necessary,
other than in such jurisdictions where the failure so to qualify would not materially
impair the ability of Parent and Merger Subsidiary to consummate the transactions
contemplated in this Agreement. Parent directly owns all of the issued and outstanding
capital stock of Merger Subsidiary. A true, correct and complete copy of
Parent’s Certificate of Incorporation and Bylaws and the certificate of
incorporation and bylaws of Merger Subsidiary, as in effect on the date of this
Agreement, has been made available to the Company or its representatives.

(b)     Authority.     Each
      of Parent and Merger Subsidiary has all requisite corporate power and authority
      to execute and deliver this Agreement and the other Transaction Documents
      to which it is a party, to perform its obligations hereunder and  

 

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 thereunder,
      and to consummate the transactions contemplated herein and therein. The
      execution, delivery and performance of this Agreement and the other
Transaction Documents by each of Parent and Merger Subsidiary and the consummation
      of the transactions contemplated herein and therein have been duly and
      validly authorized by all necessary corporate or stockholder action on
      the part of Parent and Merger Subsidiary. No other proceedings on the part
      of Parent or Merger Subsidiary are necessary to authorize this Agreement
      and the other Transaction Documents to which Parent or Merger Subsidiary
      is a party, to perform Parent’s or Merger
Subsidiary’s obligations hereunder and thereunder or for Parent and Merger Subsidiary to consummate the transactions contemplated herein and therein. This Agreement and the other Transaction Documents to which either of Parent or Merger
Subsidiary is or will be a party have been, or upon execution and delivery will be, duly and validly executed and delivered by each of Parent and Merger Subsidiary, as applicable, and, assuming that this Agreement and the other Transaction Documents
constitute the valid and binding agreement of the other parties thereto, constitute, or upon execution and delivery will constitute, the valid and binding obligations of Parent and Merger Subsidiary, enforceable against Parent and Merger Subsidiary
in accordance with their respective terms and conditions, except that the enforcement hereof and thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors’ rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in a
Proceeding at law or in equity). 

(c)     No
        Conflict; Required Filings and
Consents.     The
execution, delivery and performance by Parent and Merger Subsidiary of this Agreement
and the other Transaction Documents to which either is a party do not, and consummation
of the transactions contemplated herein and therein will not, (i) violate, conflict
with, or result in any breach of any provisions of the Certificate of Incorporation
or Bylaws of Parent or Merger Subsidiary; (ii) violate, conflict
with or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under, any of the terms, conditions
or provisions of any material Contract, loan or credit agreement, note, bond,
mortgage, indenture or deed of trust, or any license, lease, agreement, or other
instrument or obligation, to which Parent or Merger Subsidiary is a party or
by which Parent or Merger Subsidiary or any material portion of their respective
assets is bound; or
(iii) subject to obtaining the Consents or making the registrations, declarations
or filings set forth in the next sentence, violate any Applicable Law binding
upon Parent or Merger Subsidiary or by which they or any material portion of
their respective assets is bound, except, with respect to clauses (ii) and (iii),
such violations, conflicts, breaches or defaults as would not interfere with
the ability of either of Parent or Merger Subsidiary to perform its obligations
under this
Agreement and the other Transaction Documents to which it is a party. No Consent
of any Governmental Authority is required by or with respect to Parent or Merger
Subsidiary in connection with the execution, delivery and performance by Parent
and Merger Subsidiary of this Agreement and the other Transaction Documents to
which either of them is a party or the consummation of the transactions contemplated
herein and therein, except for (A) filings under the HSR Act, (B) the filing
of the
Certificate of Merger with the Secretary of State of the State of Delaware, (C)
such Consents as may be required under any environmental, health or safety law
or regulation pertaining to any notification, disclosure or required approval
necessitated by the Merger or the other transactions contemplated by this Agreement
and the

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other
      Transaction Documents to which Parent or Merger Subsidiary is a party and
      (D) such other Consents, the failure of which to obtain would not interfere
with the
ability of Parent and Merger Subsidiary to perform their respective obligations
under this Agreement and the other Transaction Documents to which either of them
is or will be a party.

(d)     Litigation.     As
      of the date of this Agreement, there is no action, suit or judicial or
      administrative proceeding pending
      or, to the Knowledge of Parent or Merger Subsidiary, threatened against
      Parent or Merger  Subsidiary relating to the transactions contemplated
      by this Agreement or which, if adversely determined, would reasonably be
      expected to adversely affect the ability of Parent or Merger Subsidiary
      to perform its obligations and agreements under
this Agreement and the other Transaction Documents to which it is or will be
      a party and to consummate the transactions contemplated herein and therein. 

(e)     Financing.     Parent
      has, and will have available to it at the Effective Time, sufficient funds
      to consummate the transactions
      contemplated by this Agreement.

(f)     No
        Business
Conduct.     Merger
Subsidiary was incorporated on December 19, 2005. Since inception, Merger Subsidiary
has not engaged in any activity, other than such actions in connection  with
(i) its organization and (ii) the preparation, negotiation and execution of this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby. Merger Subsidiary has no operations, has generated no revenues

and does not have any liabilities other than those incurred in connection with
the foregoing and in association with the Merger as provided in this Agreement.

 ARTICLE
        IV

    COVENANTS
    OF THE COMPANY

4.1     Stockholder
  Approval.
   

 (a)     Promptly
      following the execution of this Agreement, the Company shall use
      all reasonable efforts to obtain and deliver the Signing Stockholder Consent
      setting forth the adoption of this Agreement and the approval of the Merger
      and the other transactions  contemplated hereby by the Stockholder Written
      Consent, which approval shall also include and constitute the Company Stockholder
      Approval of (i) the escrow and indemnification obligations of the Stockholders
      and the deposit of cash equal to the
Escrow Amount into the Escrow Account and the Working Capital Escrow Amount into
      the Working Capital Escrow Account and (ii) the appointment of Matthew
      M. Winkler as the Representative.

(b)     The
      Company shall as soon as reasonably practicable deliver the Information
      Statement to the Stockholders setting forth notice of the action by the
      Signing Stockholder Consent adopting this Agreement and approving the Merger
      and the transactions contemplated hereby, including each of the
matters set forth in Section 4.1(a) hereof, pursuant to and in accordance with
Section 228(e) of the DGCL and the
Company’s Amended and Restated Certificate of Incorporation and Bylaws,
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the notice
    to stockholders required by Section 262(d)(2) of the DGCL of the approval
    of the Merger and that appraisal
rights are
available (the “Stockholder Notice”).

(c)     If any payment and/or benefits to any Person may separately or in
the aggregate
constitute “parachute payments”, the Company shall, before the Stockholder vote described below, use reasonable efforts to cause such Person to either execute and deliver to
the Company a 280G Waiver with respect to such payments and/or benefits. In addition, the Company shall as soon as reasonably practicable submit to the Stockholders for approval by such number of Stockholders as is required by the terms of Section
280G(b)(5)(B) of the Code, any payment and/or benefits that Parent determines may separately or in the aggregate constitute “parachute payments,” such that such payments and/or benefits shall not be deemed “parachute payments” under
Section 280G of the Code and prior to the Effective Time the Company shall deliver
to Parent evidence that (i) a Stockholder vote was solicited in conformance with
Section 280G of the Code and the regulations promulgated thereunder and the requisite
Stockholder approval was obtained with respect to any payment and/or benefits
that were subject to the Stockholder vote (the “280G Approval”), or (ii) that the 280G Approval was not obtained and as a consequence, that such “parachute payments” shall
not be made or provided, pursuant to the 280G Waivers executed by the Persons
affected by Section 280G of the Code.

4.2     Conduct
            of Business.     Except
            as contemplated by or otherwise permitted under this Agreement or
            in Schedule 4.2 or to the extent that Parent shall otherwise consent
            in writing (which consent shall not be unreasonably withheld), from
            the date of this Agreement until the Closing, the Company covenants
            and agrees with Parent that the Company shall not, and shall not
            permit any of its Subsidiaries to: 

(a)     fail to act in the ordinary course of business and consistent with
past practices
of the Company
to (i) preserve substantially intact the Company’s and each of its Subsidiaries’ present
business organization and (ii) preserve its present relationships with customers,
suppliers and others having business dealings with it; except, in each case,
where such failure would not be reasonably likely to have a Material Adverse
Effect;

(b)     fail
      to use commercially reasonable efforts to maintain the material tangible
      assets of the Company and each of its Subsidiaries in their current physical
      condition, except for ordinary wear and tear (any compliance with this Section 4.2(b) shall
not be deemed to be a breach of Section 4.2(f));

(c)     enter into any Contract that would be deemed
to be a Material Contract or, except for amendments, terminations or non-renewals in the ordinary course of business and consistent with past practices of the Company, materially amend, terminate or fail to use its commercially reasonable efforts to
renew any Material Contract; 

(d)     effect, become a party to or authorize any Acquisition
Transaction;

(e)     except
      in the ordinary course of business and consistent with past practices of
      the Company or as required by the terms and provisions of written Contracts
      between the Company or any of its Subsidiaries and an employee thereof
as in existence on the date of this

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Agreement,
    (i) adopt or amend any Employee Benefit Plan or (ii) increase in any manner
    the aggregate compensation or fringe benefits of any director, officer or
employee of the Company or any of its Subsidiaries;

(f)     except
      for capital expenditures that are (i)
in accordance with the Company’s 2005 and 2006 budgets, or (ii) set forth
on Schedule 4.2, acquire (including,
without limitation, by merger, consolidation or the acquisition of any equity
interest or assets), lease or dispose of any assets, except in the ordinary course
of business and consistent with past practices of the Company;

(g)     mortgage, pledge or subject to any Lien,
other than Permitted Liens, any of its material assets;

(h)     except as required by GAAP or by Applicable
Law, change any of the material accounting principles or practices used by the Company or its Subsidiaries;

(i)     pay, discharge or satisfy any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than in the ordinary course of business and consistent with past practices of the Company; 

  (j)     (i)     except
      for dividends  or distributions payable to the Company or a Subsidiary
      of the Company and except for the Divestiture, declare, set aside or pay
      any dividends on, or make any other distributions (whether in cash, securities
      or property) in respect of, any of its
capital stock or other voting securities, (ii) adjust, split, combine, or reclassify
      any of its capital stock or other voting securities or issue or authorize
      the issuance of any other securities in respect of, in lieu of or in substitution
      for  shares of its capital stock or other voting securities, or (iii) except
      as provided in the Right of First Refusal Agreement or in the case of an
      employee whose employment has terminated, purchase, redeem or otherwise
      acquire any shares of capital
stock or other voting securities of the Company or any of its Subsidiaries or
      any Options;

(k)     except for the issuance of shares of capital
stock of the Company issuable upon the exercise of any Options or upon the conversion of shares of Series A Preferred Stock or Series B Preferred Stock outstanding on the date of this Agreement or as required by the terms of any written Contracts
between the Company or any of its Subsidiaries and an employee thereof as in existence on the date of this Agreement, issue, sell, pledge, dispose of, encumber or deliver (whether through the issuance or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any capital stock or voting securities of any class or any securities convertible into or exercisable or exchangeable for shares of capital stock or voting securities of any class (except
for the issuance of certificates in replacement of lost certificates);

(l)     amend or waive any of its rights under, or
accelerate the vesting under, any provision of any of the Stock Plans, any provision of any Contract related to any outstanding stock option or any restricted stock purchase agreement, or otherwise modify any of the terms of any outstanding option
or any related Contract;

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(m)     change
or amend its charter documents or bylaws;

(n)     except
under the Loan Agreement in the ordinary course of business and consistent with past practices of the Company, and except for current liabilities within the meaning of GAAP incurred in the ordinary course of business and consistent with past practices of the
Company, incur or assume any indebtedness for borrowed money, assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other Person (other than endorsements of checks in the ordinary course) or make any loans,
advances or capital contributions to, or investments in, any Person (other than among the Company and its Subsidiaries and among such Subsidiaries, and other than advances to directors, officers and employees in the ordinary course of business and
consistent with past practices of the Company);

(o)     make any settlement of or compromise any Tax
liability, change in any material respect any Tax election or Tax method of accounting or make any new Tax election or adopt any new Tax method of accounting; 

(p)     enter
into any collective bargaining agreement;

(q)     adopt
a plan of complete or partial liquidation or dissolution or resolutions providing for or authorizing such a liquidation or a dissolution; 

(r)     form any Subsidiary or acquire any equity
interest or other interest in any other entity; 

(s)     dismiss
      any employee except for cause or hire any new employee (except for any
      employee or new employee of Ambion Diagnostics, Inc.) having an annual
      salary in excess of $100,000; provided that with respect to any hiring
      of a new employee (except for any new employee of Ambion Diagnostics, Inc.),
      the Company shall only be required to seek the consent of Parent with respect
      to the open employment position and not the candidate for employment; 

(t)     commence
or settle any Proceeding; or

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

4.3     No

Negotiation.

(a)     Until
        the earlier of (x) the Closing and (y) the termination of this Agreement
        in accordance with Article IX,
        the Company agrees that it will not, and will not permit any of its representatives
        to directly or indirectly:

(i)     solicit or encourage the initiation or
submission of any proposal or offer from any Person (other than Parent or an Affiliate thereof) relating to an Acquisition Transaction; 

(ii)     participate
      in any discussions or negotiations or enter into any agreement with, or
provide any non-public information to, any Person (other than Parent or

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any
      Affiliate thereof) relating to or in connection with a proposal or offer
      made by such person relating to an Acquisition
Transaction; or

(iii)     assist or cooperate with any Person (other
than Parent or any Affiliate thereof) to make any proposal or offer, accept any proposal or offer from any Person (other than Parent or any Affiliate thereof) relating to an Acquisition Transaction. 

(b)     The Company shall advise Parent within one
(1) Business Day of (i) the receipt by the Company or any representative of the Company of any proposal or offer from any Person relating to an Acquisition Transaction; (ii) the material terms of such Acquisition Transaction (which the Company shall
describe in writing, and which shall include any conditions to such Acquisition Transaction, and the amount and form of consideration offered therein); and (iii) the identity of the Person making any such proposal or offer for an Acquisition
Transaction except to the extent explicitly prohibited by the terms of an agreement existing prior to the date hereof, in which case, the Company will (x) provide to Parent the maximum amount of information that is allowable under the restriction at
issue and (y) cooperate with Parent in determining the nature and extent of the information so provided. The Company shall keep Parent reasonably and currently informed regarding any Acquisition Transaction. 

4.4     Access
        and
Information.      Until
the Closing, the Company shall afford to Parent and its representatives (including
accountants and counsel) reasonable access, in each case, only at such  locations
and in accordance with such procedures (including prior notice requirements,
the time and duration of access and the manner in which access and discussions
may be held) as are mutually agreed to between Parent and the Company prior to
such
access, to all properties, books, records, and Tax Returns of the Company and
each of its Subsidiaries and all other information with respect to their respective
businesses, together with the opportunity, at the sole cost and expense of Parent,
to  make copies of such books, records and other documents and to discuss the
business of the Company and each of its Subsidiaries with such directors, officers
and counsel for the Company as Parent may reasonably request for the purposes
of
familiarizing itself with the Company and each of its Subsidiaries. Notwithstanding
the foregoing provisions of this Section
4.4, the Company shall not be required to, or to cause any of
its Subsidiaries to, grant access or furnish information to Parent or any of
Parent’s representatives to the extent that such information is subject
to an  attorney/client or attorney work product privilege or that such access
or the furnishing of such information is prohibited by an existing Contract or
agreement unless Parent and Company mutually agree to enter into a common-interest
privilege
agreement to protect such privilege. Notwithstanding the foregoing, Parent shall
not have access to personnel records of the Company or any of its Subsidiaries
relating to individual performance or evaluation records, medical histories or
other  information that could subject the Company or any of its Subsidiaries
to risk of liability. In addition, Parent shall not contact any personnel of
the Company or its Subsidiaries regarding the transactions contemplated by this
Agreement without the
express prior written consent of the President of the Company. All information
provided pursuant to this Agreement shall remain subject in all respects to the
Confidentiality Agreement until the Effective Time.

4.5     Third
            Party Consents.     After
            the date of this Agreement and prior to the Closing, the Company
            shall use its commercially reasonable efforts, but excluding making
  any

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payments
      unless made
in the Company’s sole and absolute discretion, to obtain the Consent from
any party to a Material Contract that is set forth on Schedule
4.5.

4.6     Notification of Certain Matters.     The
      Company shall give prompt notice to Parent of (i) the occurrence, or failure
      to occur, of any event of which it has  Knowledge that has caused any representation
      or warranty of the Company contained in this Agreement to be untrue or
      inaccurate in any material respect and (ii) the failure of the Company
      to comply with or satisfy in any material respect any covenant
to be complied with by it hereunder. No such notification shall affect the representations
      or warranties of the parties or the conditions to their respective obligations
      hereunder.

4.7     Bank

Accounts.     The
Company shall take all actions necessary to remove existing signatories to all
bank accounts of the Company and its Subsidiaries as of the Closing Date and
to  replace such signatories effective as of the Closing Date with individuals
to be designated at least 10 days prior to the Closing Date by Parent.

4.8     Termination of Agreements.     Prior
      to the Effective Time, the Company shall take such action as may be necessary
      to cause the Investor Rights Agreement, the Right  of First Refusal Agreement,
      the Side Letter and the Voting Agreement to be terminated in full and of
      no further force or effect as of and after the Effective Time.

4.9     Company
          Transaction Costs.     No later than two Business Days prior to the Closing Date, the Company shall
provide a certificate setting forth the amount, in the aggregate, of all Company
Transaction Costs that have been incurred by the Company in connection with the
transactions contemplated hereby and by the other Transaction Documents (the “Company
Transaction Costs Certificate”).
The Company Transaction Costs Certificate shall separately set forth those Company
Transaction Costs that are to be paid by Parent at Closing and shall provide
Parent with (a) the identity of each Person that is to be paid at Closing; (b)
the amount owed or to be owed to each such Person; and (c) the bank account and
wire transfer information for each such Person.

4.10     Pay-Off
            Letter.     No
            later than two Business Days prior to the Closing Date, the Company
            shall cause the lender under the Loan Agreement to prepare and deliver
            to the Company and Parent the  Pay-Off Letter, which Pay-Off Letter
            shall be updated, as necessary, on the Closing Date to specify the
            aggregate amount of Debt outstanding as of immediately prior to the
            Closing.

4.11     Stockholder Written Consent.     Immediately
      following the execution and delivery of this Agreement by the Company,
      the Company shall obtain the adoption of  this Agreement and the approval
      of the transactions contemplated hereby and by the Asset Purchase Agreement,
      including each of the matters set forth in Section
4.1(a) hereof, pursuant to an Action by Written Consent, in the form attached
hereto as Exhibit
H (the “Stockholder
Written Consent”), signed by Matthew M. Winkler, Telegraph Hill Partners,
L.P. and its Affiliates that are Stockholders, each member of the Company’s
Board of Directors (and any Affiliate entities) in his, her or its capacity as
a Stockholder, and such other Stockholders who, together with the foregoing,
hold at least (i) a majority of the Outstanding Series B Preferred Shares voting
as a separate class or series, (ii) a majority of the Outstanding Common Shares
voting as a
separate

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class, and (iii) a majority of the Outstanding Preferred Shares
      and a majority of the Outstanding Common Shares voting together and not
      as separate
classes on an as-converted to Common Stock basis (the “Signing Stockholder Consent”),
pursuant to and in strict accordance with the applicable provisions of the DGCL
and
the Company’s Amended and Restated Certificate of Incorporation and Bylaws.

4.12     Calculation of Merger Consideration.     Prior
      to the Effective Time, the Company shall provide to Parent a certificate
        (the “Closing Capitalization
        Certificate”)
        which includes: (a) an update to Section 3.1(c) reflecting
        the capitalization of the Company as of immediately prior to the Effective
        Time and (b) a detailed list setting forth the name of each  Securityholder
        as well as the number of Outstanding Shares and/or Outstanding Option
        Shares held of record by such Securityholder as of immediately prior
        to the Effective Time.

ARTICLE V

COVENANTS OF PARENT AND MERGER SUBSIDIARY

5.1     Notification of Certain Matters.     Parent
      and Merger Subsidiary shall give prompt written notice to the Company of
      (a) the occurrence, or failure to occur, of  any event of which either
      of them has Knowledge that has caused any representation or warranty of
      Parent or Merger Subsidiary contained in this Agreement to be untrue or
      inaccurate in any material respect and (b) the failure of Parent or Merger

Subsidiary to comply with or satisfy in any material respect any covenant to
      be complied with by it hereunder. No such notification shall affect the
      representations or warranties of the parties or the conditions to their
      respective obligations  hereunder. If Parent, Merger Subsidiary or any
      of their Affiliates obtains Knowledge of a breach by the Company of a representation,
      warranty, covenant or agreement made by the Company contained in this Agreement,
      Parent shall promptly notify the
Company of such breach; provided that such notification shall not result in the
      waiver by Parent or Merger Subsidiary of any of their respective rights
      or remedies under this Agreement.

5.2     Employee
            Matters.

  (a)     Parent
        acknowledges and agrees that it is a material inducement to the Company
        to enter into and perform this Agreement with Parent and Merger Subsidiary
        that the  operations of the Surviving Corporation remain located in Austin,
        Texas at the current facilities of the Company for a period of not less
        than three years after the Effective Time. Parent and Merger Subsidiary
        agree to use all commercially
  reasonable efforts to maintain the principal office of the Surviving Corporation
        and the operations conducted by the Company prior to the Closing at the
        current location and facilities of the Company in Austin, Texas for a
        period of not less than  three years after the Effective Time.

(b)      Parent
      shall take such action as may be necessary so that on and after the Effective
      Time, and for one year thereafter, officers and employees of the Company
      and its Subsidiaries who remain after the Closing in the employ of the
      Surviving Corporation or its Subsidiaries are provided
employee benefits, plans and programs (including but not limited to incentive
      compensation, deferred compensation, pension, life insurance, welfare,
      profit sharing, 401(k), severance, salary continuation and fringe benefits
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retirement
      equity-based compensation arrangements) on substantially the same basis
      as officers and employees of Parent and its
      Subsidiaries having similar responsibilities and positions; provided that
      such benefits, plans and programs, in the
aggregate, are not materially less favorable than those made available by the
      Company and its Subsidiaries to such officers and employees immediately
      prior to the Effective Time. For purposes of eligibility to participate
      and vesting (but not benefit accruals) in all benefits provided by Parent
      to such officers and employees, the officers and employees of the Company
      and its Subsidiaries will be credited with their years of service with
      the Company and its Subsidiaries and any
predecessors thereof to the extent service with Parent and its Subsidiaries and
      any predecessors thereof is taken into account under the plans of Parent
      and its Subsidiaries. The eligibility of any officer or employee of the
      Company and its Subsidiaries to participate in any welfare benefit plan
      or program of Parent shall not be subject to any exclusions for any pre-existing
      conditions if such individual has met the participation requirements of
      similar benefit plans and programs of
the Company and its Subsidiaries.  All individuals eligible to participate in
      any plan or arrangement contemplated above shall be immediately eligible
      to participate in the similar plan or arrangement maintained by Parent
      or its Subsidiaries (or the same plan or arrangement if still maintained).
      Except with respect to any employee who is terminated without cause by
      the Company at or prior to the Effective Time in connection with the Divestiture,
      in the event Parent or Surviving Corporation
terminate any employee of the Company without cause, or desire to relocate any
      employee employed at the Company’s Austin, Texas facility, in each case prior to the first anniversary of the Effective Time, Parent and Surviving Corporation shall
provide severance packages to such terminated or relocated employees in accordance with Parent’s
then-current severance policy. Nothing contained in this Section
5.2(b) shall create any rights of any nature or kind whatsoever in any officer
or employee or former officer or employee (including any beneficiary or dependent
thereof) of the Company, any of its Subsidiaries or the Surviving Corporation
in respect of continued employment for any specified period.

(c)      Subject
      to the other provisions set forth in
this Section 5.2, after the Effective Time and subject to Applicable Law and
the terms of any Employee Benefit Plan, Parent may amend, modify or terminate
any Employee Benefit Plan of the Surviving Corporation that was in existence
prior to the Closing.

5.3      Indemnification
            of Officers, Directors,
Employees and Agents.

(a)     All rights to indemnification
      and advancement of expenses existing in favor of those Persons who are
      or were directors or officers
of the Company (the “D&O Indemnified Persons”) for acts and omissions occurring prior to the Effective Time, as provided in the
Company’s Constituent Documents (as in effect as of the date of this Agreement) and as provided in the indemnification agreements between the Company and said D&O
Indemnified Persons (as in effect as of the Effective Time) (the “D&O
Indemnified Liabilities”),
shall survive the Merger and shall be fully complied with by the Surviving Corporation,
and Parent shall take all action necessary to cause the Surviving Corporation
to fully comply with such rights, to the fullest extent permitted by Delaware
law.

(b)      Parent
      and the Surviving Corporation shall not amend, repeal or otherwise modify
      the certificate of incorporation and bylaws of the Surviving Corporation
      or manage

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 the
      Surviving Corporation or any of its Subsidiaries in any manner that would
      affect adversely the rights thereunder of individuals who at and at any
      time prior to the Effective Time were directors, officers, employees or
      agents of the Company or any of its Subsidiaries. Parent shall, and shall
      cause the Surviving Corporation to, honor any indemnification agreements
  between the Company and any of its directors, officers or employees.

(c)      For
a period of six years after the Effective Time, Parent shall, or shall cause
the Surviving Corporation to, maintain directors’ and officers’ liability insurance and fiduciary liability insurance covering the D&O Indemnified Persons who are currently covered by the
Company’s existing directors’ and officers’ liability insurance or fiduciary liability insurance policies on terms no less advantageous to such D&O
Indemnified Persons than such existing insurance; provided, however, that (i)
neither Parent nor the Surviving Corporation will be required in order to maintain
such policies to pay an annual premium in excess of 300% of the greater of (A)
the last annual premium paid by the Company prior to the date of this Agreement
and (B)
the annual premium for the year in which the Closing occurs (the amount which
is 300% of the greater of the amounts set forth in clauses (A) and (B) being
referred to as the “Premium Cap”); (ii) if equivalent coverage cannot be obtained, or can be obtained only by paying an annual premium in excess of the Premium Cap, then Parent
shall, or shall cause the Surviving Corporation to, maintain policies that, in Parent’s good faith judgment, provide the maximum coverage available at an annual premium equal to the Premium Cap; and (iii) on or prior to the Closing Date, Parent
shall cause the Surviving Corporation to purchase a six year extended reporting period endorsement under its existing directors and officers liability coverage. The Company represents to Parent that the Premium Cap is $123,750.

5.4      WARN
            Act.     For a period of 91 days (inclusive) following the Closing Date, Parent and the Surviving Corporation shall not, and shall cause the Subsidiaries of the Surviving Corporation
to not, implement any plant closing, mass layoff or other termination of employees which, either alone or in the aggregate (with each other and/or with any plant closing, mass layoff or other termination of employees by the Company on or prior to
the Closing Date), would create any obligations upon or liabilities for the Company or any Securityholder under the Worker Adjustment and Retraining Notification Act or similar Applicable Laws.

   ARTICLE
          VI

      MUTUAL COVENANTS

6.1      Governmental
          Consents.

(a)      Except
    for the filings and notifications made pursuant to applicable Antitrust Laws,
    to which Section 6.1(b),
  and not this Section 6.1(a), shall apply, as soon as reasonably practicable
    following the execution of this Agreement, the parties shall proceed to prepare
    and file
  with the appropriate Governmental Authorities such Consents that are necessary
  in order to consummate the transactions contemplated by this Agreement and
    shall diligently and
  expeditiously prosecute, and shall cooperate fully with each other in the prosecution
of, such matters.

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(b)      As
    soon as reasonably practicable following the execution of this Agreement, the
    parties shall file, or cause to be filed by their respective “ultimate
    parent entities,” with the FTC and the DOJ the notifications and other
    information (if any) required to
    be filed under the HSR Act with respect to the transactions contemplated in
    the Transaction Documents. As soon as reasonably practicable following the
    execution of this Agreement, the Company  and Parent shall proceed to prepare
    and file with the appropriate Governmental Authorities such additional requests,
    reports or notifications as may be required in connection with this Agreement
    and shall diligently and expeditiously prosecute, and
  shall cooperate fully with each other in the prosecution of, such matters. Each
    of Parent and the Company shall furnish to the other such necessary information
    and reasonable assistance as the other may reasonably request in connection
    with its  preparation of any filing or submission which is necessary under
    the HSR Act. Parent and the Company shall keep each other apprised of the status
    of any communications with, and any inquiries or requests for additional information
    from, the FTC or
  the DOJ.

6.2      No
          Other
Representations or Warranties.

(a)     Each
of Parent and Merger Subsidiary agrees that, except for the representations and
warranties made by the Company that are expressly set forth in Section 3.1 of
this Agreement, none of the Company, any Subsidiary of the Company, any Securityholder,
or any of their respective Affiliates or representatives has made and shall not
be deemed to have made to any of Parent, Merger Subsidiary or their respective
Affiliates or representatives any representation or warranty of any kind. Without
limiting the generality
of the foregoing, and notwithstanding any otherwise express representations and
warranties made by the Company and set forth in Section 3.1, each of Parent and Merger Subsidiary agrees that none
of the Company, any Subsidiary of the Company, any Securityholder, or any of
their respective Affiliates or representatives makes or has made any representation
or  warranty to Parent, Merger Subsidiary or to any of their respective representatives
or Affiliates with respect to:

(i)      any projections, forecasts, estimates, plans
or budgets of future revenue, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of the Company or any of its
Subsidiaries or the future business, operations or affairs of the Company or any of its Subsidiaries heretofore or hereafter delivered to or made available to Parent, Merger Subsidiary or their respective representatives or Affiliates; or

(ii)      any
      other information, statements or documents heretofore or hereafter delivered
      to or made available to Parent, Merger Subsidiary or their respective representatives
      or Affiliates, including the information contained in the on-line data
      room, with respect to the Company or any of its
Subsidiaries or the business, operations or affairs of the Company or any of
      its Subsidiaries, except as and to the extent expressly covered by representations
      and warranties made by the Company and set forth in Section 3.1 or in any
      other agreement or document executed in connection with the transactions
      contemplated by this Agreement and the Asset Purchase Agreement, which
shall be governed by their respective terms and conditions.

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(b)      The
      Company acknowledges and agrees that, except for the representations and
      warranties made by Parent or Merger Subsidiary as expressly set forth in Section
      3.2, none of Parent, Merger Subsidiary or any of their respective Affiliates or representatives makes or has made to any of the Company, any Subsidiary of the Company, any Securityholder or any of their respective Affiliates or
representatives any representation or warranty of any kind.  Notwithstanding anything to the contrary contained in this Agreement, neither Parent nor any of its Subsidiaries shall have any obligation under this Agreement to do
any of the following (or cause the other to do any of the following): (i) to dispose or cause any of its Subsidiaries to dispose of any assets; (ii) to discontinue or cause any of its Subsidiaries to discontinue offering any product; (iii) to
license or otherwise make available, or cause any of its Subsidiaries to license or otherwise make available, to any Person, any technology, software or other Intellectual Property; (iv) to hold separate or cause any of its Subsidiaries to hold
separate any assets or operations (either before or after the Closing Date); or (v) to make or cause any of its Subsidiaries to make any commitment (to any Governmental Authority or otherwise) regarding future operations.

(c)      The
parties expressly agree and acknowledge
that nothing in this Section 6.2 shall be deemed, interpreted or construed to
eliminate or limit the ability of Parent to recover for any claim arising out
of fraud or intentional misrepresentation.

6.3      Sale
            of
Assets to Asuragen and Related Transactions.     Effective
at 12:01 a.m. Eastern Time on the first Business Day following the Closing, the
Surviving Corporation will sell, transfer
and assign to Asuragen, and Asuragen will purchase and assume from the Surviving
Corporation the assets and liabilities
of the Diagnostics Business (pursuant to the terms and conditions of the Asset
Purchase Agreement).

6.4      Waiver.     Parent
      hereby waives, and agrees to cause the Surviving Corporation to waive,
      any conflicts that may arise in connection with (a) counsel for the  Company
      in connection with the transactions contemplated by this Agreement and
      the other Transaction Documents representing (i) Asuragen prior to and
      following the Closing and (ii) the Representative and the Securityholders
      following the Closing and
(b) the communication by such counsel to Asuragen, the Representative or the
      Securityholders, in connection with any such representation of any information
      known to such counsel, including in connection with a dispute with Parent
      or the Surviving
Corporation on or following the Closing.

ARTICLE
        VII

    CONDITIONS
    PRECEDENT

7.1      Conditions
  to Each Party’s Obligation.     The
  respective obligations of the Company, Parent and Merger Subsidiary to effect
  the transactions contemplated by this Agreement are subject to  the satisfaction
  on or prior to the Effective Time of the following conditions:

(a)      Stockholder
          Approval.     Company
Stockholder Approval of the Merger, this Agreement and the transactions contemplated
hereby, including each of the matters set forth in Section 4.1(a) hereof, shall
have been obtained in accordance with Section 4.1 hereof,

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the
    DGCL and the Company’s Amended and Restated Certificate of Incorporation
and Bylaws.

(b)      Consents
        and Approvals.     All Consents of or imposed
        by any Governmental
        Authority necessary for the consummation of the transactions contemplated
        by this
        Agreement and the other Transaction Documents shall have been obtained,
        occurred or have been made, including those arising under all applicable
        Antitrust Laws and the applicable waiting period under the HSR Act shall
        have expired or terminated.

(c)      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 transactions contemplated by this Agreement or any other Transaction Document shall be in effect.

  (d)      No
      Action. No action shall have been
      taken nor any statute, rule or regulation shall have been enacted by any
      Governmental Authority that makes the consummation of the transactions
      contemplated by this
Agreement or any other Transaction Document illegal.

7.2      Conditions
            to Obligation of Parent and Merger Subsidiary.     The
            obligation of Parent and Merger Subsidiary to effect the transactions
            contemplated by this Agreement is subject to the  satisfaction on
            or prior to the Effective Time of the following conditions unless
            waived in writing, in whole or in part, by Parent:

(a)      Representations
        and
Warranties.     Each of the representations and
warranties of the Company set forth in Section 3.1 shall be true and correct
as of the date of this Agreement and (except to
the extent such representations and warranties speak expressly as of an earlier
date) as of the Effective Time as though made on and as of the Effective Time;
provided, however, that this condition shall be deemed to have been satisfied
unless the individual or aggregate impact of all inaccuracies of such representations
and warranties has had or would be reasonably likely
to have a Material Adverse Effect (it being understood that, for purposes of
determining the accuracy of such representations and warranties, all “Material Adverse Effect” qualifications
and other materiality qualifications contained in such representations and warranties
shall be disregarded). Parent shall have received a certificate signed on behalf
of the Company by the Chief Executive Officer or the Chief Financial Officer
of the Company to such effect.

(b)      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 Effective Time, and
Parent shall have received a certificate signed on behalf of the Company by the Chief Executive Officer or the Chief Financial Officer of the Company to such effect.

(c)      Evidence
  of Debt Pay-Off.      Parent
  shall have received the Pay-Off Letter pursuant
  to Section 4.10.

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(d)      Evidence
        of Company Transaction Costs.     Parent
        shall have received the Company Transaction Costs Certificate pursuant
        to Section 4.9.

(e)      Third
        Party Consents.     The Company shall have received
        all third party Consents listed in Schedule
  7.2(e), in form and substance as
Parent shall reasonably request.

  (f)      Employment

Agreement.     No
breach of the Employment and Noncompetition Agreement executed by the Key Employee
set forth on Schedule 7.2(f) shall
have occurred and be continuing.

(g)     Amendment of Certain
Agreements.     The Company shall have entered into amendments to the agreements listed in Schedule
7.2(g).

(h)     Environmental
Assessment.     The
Parent shall have received two Environmental Site Assessment reports (“ESA
Reports”)
from Beyond Compliance, LLC and Geomatrix Consultants, Inc. (or other environmental
consultants reasonably satisfactory to Parent) and such ESA reports shall not
have identified Environmental Costs and Liabilities applicable to, or reasonably
likely to be incurred by, the Company that in the aggregate would have a net
present value (“NPV”) cost to the Company in excess of $7
million. For purposes of this Section
7.2(h) only, the NPV cost to the Company shall be calculated using a 3% inflation
rate and a 7% discount rate, and shall be based on the lowest, commercially reasonable
costs required to address all non-compliance with Environmental Laws identified
by the ESA Reports as to contributing to Environmental Costs and Liabilities.
For purposes of this Section
7.2(h) only in the event that the two ESA Reports identify the same issue or
issues as contributing to Environmental Costs and Liabilities, the lower of the
cost estimates for such issue or issues shall be used to calculate the NPV cost
to the Company. Any physical environmental sampling to be performed in preparation
of the ESA Reports must be approved in advance by the Company, which approval
shall not be unreasonably
withheld, and such request for approval shall be accompanied by an explanation
why such sampling is appropriate.

(i)      Closing
        Capitalization
Certificate.     Parent
shall have received a certificate signed on behalf of the Company by the Chief
Financial Officer of the Company that the Closing Capitalization Certificate
delivered pursuant to Section
4.12 is true and accurate as of the Effective Time.

(j)      Diagnostics
        Business Tax
Basis.     Parent
shall have received a certificate signed on behalf of the Company by the Chief
Financial Officer of the Company reflecting the cumulative tax basis of the assets
to
be transferred by the Company to Asuragen under the Asset Purchase Agreement. 

(k)     Appraisal.     Parent shall have received the Uhy Valuation.

(l)     Termination
        of Stock Plans and
Options.     All
of the Stock Plans and all unexercised Options whether or not issued under any
of the Stock Plans shall have been terminated without liability to Parent, the
 Surviving Corporation, the Company or any of their Affiliates, and Parent shall
have received reasonably satisfactory evidence of such

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terminations
      and that rights of the Optionholders cease to represent any claim on the
      equity of the

Company.

(m)     Asset
        Purchase
Agreement.     The
Asset Purchase Agreement shall be in full force and effect; no breach of such
agreement shall have occurred and be continuing.

(n)     Closing
Deliveries.     All documents, instruments, certificates or other items required to be delivered at the Closing by the Company pursuant to Section 8.2(b) of this Agreement shall have been delivered.

7.3     Conditions
            to Obligations of the Company.     The
            obligation of the Company to effect the transactions contemplated
            by this Agreement is subject to the satisfaction of the following
            conditions  unless waived in writing, in whole or in part, by the
            Company:

(a)     Representations
        and
Warranties.     Each
of the representations and warranties of Parent and Merger Subsidiary set forth
in this Agreement shall be true and correct in all material respects as of the
 date of this Agreement and (except to the extent such representations and warranties
expressly speak as of an earlier date) as of the Effective Time as though made
on and as of the Effective Time. The Company shall have received a certificate

signed on behalf of Parent by the Chief Executive Officer or the Chief Financial
Officer of Parent to such effect.

(b)     Performance of Obligations of
Parent and Merger Subsidiary.     Each of Parent and Merger Subsidiary shall have performed in all material respects all obligations required to be performed respectively by them
under this Agreement at or prior to the Effective Time, and the Company shall have received a certificate signed on behalf of Parent by the Chief Executive Office or the Chief Financial Office of Parent to such effect. 

(c)     Closing
Deliveries.     All documents, instruments, certificates or other items required to be delivered at Closing by Parent and Merger Subsidiary pursuant to Section 8.2(a) this
Agreement shall have been delivered.

 ARTICLE
    VIII

  CLOSING 

  

  8.1      Closing.     Unless
        this Agreement shall have been terminated and the transactions herein
        contemplated shall have been abandoned pursuant to Article IX, and subject
      to the satisfaction or waiver of the conditions set forth in Article VII,
      the closing of the Merger (the “Closing”) shall take place at
      9:00 a.m., on the date that is no later than the second Business Day after
      the satisfaction or waiver of the last condition to be satisfied or waived
      under Article VII provided
      such date is prior to the Termination Date, and provided further that the
      next succeeding calendar day is a
Business Day, at the offices of Vinson & Elkins L.L.P., Terrace 7, 2801 Via
Fortuna, Suite 100, Austin, Texas, unless another date, time or place is mutually
agreed to in writing by Parent and the Company. (The date and time on which the
Closing
occurs is the “Closing
Date.”) 

  
  8.2     Actions
    to Occur at Closing. 

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  (a)     At
the Closing, Parent and Merger Subsidiary shall deliver or pay, as the case may be, the following in accordance with the applicable provisions of this Agreement:

(i)     Closing
      Payments. To the Exchange Agent, the Escrow Agent and the other payees
      identified in Section 2.10, by wire transfers of immediately available funds, the payments required to be made by Parent under Sections 2.10, 2.11      and 2.15; 

  (ii)     Certificates.
The certificates described in Section 7.3(a) and (b); and 

  (iii)     Escrow
      Agreement.
      To the Representative, a counterpart of the  Escrow Agreement executed by Parent and Escrow Agent.

 (b)     At the Closing, the Company shall deliver to Parent the following: 

 (i)     Certificate.
  The certificates described in Section 7.2(a) and (b);  

   (ii)     Resignations.
  The Company shall deliver resignations of the directors
  of the Company and each of its Subsidiaries and such officers as requested
  by the Parent; 

(iii)     Escrow
      Agreement. To Parent, a counterpart of the Escrow Agreement executed by
      the Representative;

(iv)     Bank
      Accounts. Evidence of the replacement of the Company’s and its Subsidiaries’ bank account signatories with Parent’s
      designees; and 

(v)     Termination
      of Agreements.  Evidence of the termination of the Investor Rights Agreement,
      Right of First Refusal Agreement, Side Letter and Voting Agreement.

(c)     Pursuant
      to Section 2.2, the Company and Parent shall cause the Certificate of Merger
      to be properly executed and filed with the Secretary of State of the State
      of Delaware.

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

9.1     Termination.     This
      Agreement may be terminated and the Merger may be abandoned at any time
      prior to the Effective Time: 

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

 (b)     by either Parent or
the Company: 

 (i)     if there shall have been any breach by the other party (which, in the case
      of the right of termination by the Company, shall also include any breach
      by Merger

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 Subsidiary)
        of any representation, warranty, covenant or agreement set forth in this
        Agreement, which breach (A)
would give rise to the failure of a condition to the Closing hereunder and (B)
either (1) cannot be cured or (2) if it can be cured, has not been cured prior
to the first to occur of (x) 5:00 p.m., Central Time, on the date that is 20
days following receipt by the breaching party of written notice of such breach
or (y) 5:00 p.m., Central Time, on the date immediately preceding the Termination
Date (the “Cure Period”); and, without limiting the generality of the foregoing, there shall be no Cure Period for Parent’s
failure to obtain all funds on or prior to the Closing Date necessary to consummate
the Merger and the other transactions contemplated by this Agreement and the
other Transaction Documents in accordance with the terms and conditions hereof
and thereof (which failure shall constitute a
material breach of this Agreement);

(ii)     if a court of competent jurisdiction or
other Governmental Authority shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling Parent and the Company shall use their reasonable best efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this Agreement and the other Transaction Documents and such order, decree, ruling or other action shall have become final and nonappealable; or

(iii)     if
      the Closing shall not have occurred on or before 5:00 p.m., Central Time,
      on March 15, 2006 (the “Termination Date”);
      provided, however, that the right to terminate this Agreement under this
      clause (iii) shall not be available to any party whose breach of this Agreement
      has been the cause of, or resulted in, the failure of the Closing to occur
      on or before such date; or

(c)     by Parent if the Signed Written Consent has
not been received by the Company and delivered to Parent on or before 5:00 p.m., Central Time, on December 26, 2005. 

  
9.2     Effect
of
Termination.      In
the event of the termination of this Agreement by either
the Company or Parent as provided in Section
9.1, this
Agreement shall forthwith become void
and there shall be no liability or obligation hereunder on the part of Parent,
Merger Subsidiary or the Company or their respective Affiliates, directors, officers,
employees or
stockholders, except that (i) Article
I, this Article IX and Article XI shall survive such termination and (ii) no
such termination shall relieve any party from liability for breach of any term
or provision hereof. 

  9.3      Return
          of
Information. Within
ten Business Days following termination of this Agreement in accordance with Section
9.1, Parent shall, and shall cause Merger Subsidiary and their respective
Affiliates and representatives to, return to the Company, or destroy, all Information
(as
defined in the Confidentiality Agreement) furnished or made available to Parent
and Merger Subsidiary and their respective Affiliates and representatives by
or on behalf of the Company, and all analyses, compilations, data, studies, notes,
interpretations,
memoranda or other documents prepared by Parent or Merger Subsidiary or any of
their respective Affiliates or representatives (including electronic copies thereof)
that refer to, relate to, discuss or contain, or are based on, in whole or in
part, any such Information. Parent shall deliver a certificate signed 

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  by its
Chief Executive Officer, which certificate shall provide evidence reasonably
substantiating the return or destruction of the Information as required under
this Section 9.3.

 ARTICLE
      X

      INDEMNIFICATION

  
    
    10.1     

    Survival of
    Representations, Warranties and Agreements. 
    

 (a)     The
representations and warranties of the Company set forth in this Agreement and
in any certificate delivered by the Company pursuant to this Agreement and the
right of a Parent Indemnified Person to assert any claim for indemnification
pursuant to this Article X shall survive
the Closing until 5:00 p.m. on the date that is 12 months following the Closing
Date (the “Expiration Date”); provided, however, that if, at any time prior to the Expiration
Date, any Parent Indemnified Person delivers to the Representative a written notice alleging the existence of an inaccuracy in or breach of any of the representations and warranties made by the Company (and setting forth in reasonable detail the
basis for such Parent Indemnified Person’s belief that such an inaccuracy
or breach may exist), then the representation or warranty underlying the claim
asserted in such notice shall survive the Expiration Date solely with respect
to the underlying facts or circumstances of such claim until such time as such
claim is fully and finally resolved. All representations and warranties made
by Parent and Merger Subsidiary shall terminate and expire as of the Effective
Time, and any
liability of Parent or Merger Subsidiary with respect to such representations
and warranties shall thereupon cease. The covenants and other agreements of the
Company, Parent and Merger Subsidiary set forth in this Agreement shall survive
the Closing Date (i) until fully performed or fulfilled, unless non-compliance
with such covenants or agreements is waived in writing by the party or parties
entitled to such performance or (ii) if not fully performed or fulfilled, until
the expiration
of the relevant statute of limitations. 

(b)     The representations and warranties of the
Company shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or knowledge of, any Parent Indemnified Person or any of their representatives.

(c)     The
      representations and warranties of the Company set forth in this Agreement
      and in any certificate delivered by the Company pursuant to this Agreement
      shall, for purposes of the Securityholder Indemnifying Persons’ obligations
      pursuant to this Article X, be deemed to be made as of the date of this
      Agreement and as of the Closing Date (except to the extent such representations
      and warranties speak expressly as of another date).

10.2     Indemnification
  of the Parent Indemnified Persons.     Subject to the limitations on recourse and recovery set forth in this Article
  X, from and after the Closing, the Securityholders, acting through the Representative,shall indemnify, defend and hold harmless the Parent Indemnified Persons from and against any and all Losses suffered or incurred by any Parent Indemnified Person after the Closing (regardless of whether or not such Losses relate to any third-party claim), in connection with,arising out of or resulting from (any of such Losses, a “Parent Indemnification Claim”):

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(a)     the
    inaccuracy or breach of any representation or warranty made as of the date
    hereof and as of the Closing Date by the Company in Section 3.1 or in
each of the certificates delivered pursuant to Sections 7.2(a), 7.2(b),
7.2(i) and 7.2(j) of
this Agreement;

(b)     any
    nonfulfillment or breach by the Company of any covenant or agreement made
    by the Company under this Agreement and which is required to be performed
by the Company prior to the Closing;

(c)     the
    amount of any Company Transaction Costs incurred and unpaid as of the Closing
Date and not deducted from the Closing Merger Consideration;

(d)     the
    amount of any Debt outstanding at Closing not deducted from the Closing Merger
Consideration;

(e)     any
    claim, suit, action, litigation or Proceeding by any Securityholder or purported
    Securityholder of the Company against the Company and relating to or arising
    out of such Person’s status, or purported status, as a Securityholder
of the Company; and 

 
(f)     any
    amounts paid to (A) holders of Dissenting Shares in excess of the Closing
    Per Share Merger Consideration that such holders would otherwise have been
    entitled to receive pursuant to Article II or (B) any Securityholder as to
    which the information set forth on the Closing Capitalization Certificate
    is inaccurate that is in excess of the amount such Securityholder would have
    been entitled to
receive pursuant to Article II if such information had been accurate.

 

  10.3     Limitations.

(a)     Minimum
      Loss.     The Parent Indemnified Persons shall not be entitled to be indemnified for Losses pursuant to Section
      10.2(a) unless and until the aggregate amount of all such Losses exceeds $750,000
      (the “Minimum Loss”) and otherwise satisfy
      all other requirements under Section 10.3. After the Minimum Loss is exceeded,
      Parent Indemnified Persons shall be entitled to be paid the entire amount
      of any Losses pursuant to Section
      10.2(a) in excess of (but not including) the amount of the Minimum Loss,
      subject to the limitations on recovery and recourse set forth in this Agreement.
      Notwithstanding the
foregoing, any claim for Losses under Sections 10.2(a) arising from the inaccuracy
or breach of Section 3.1(p), 10.2(b), 10.2(c),
10.2(d), 10.2(e) and 10.2(f),
shall not be subject to the limitations contained in this Section 10.3(a). 

(b)     Sole
  and Exclusive Remedy; Recourse Against Escrowed Funds.   

(i)     Each
    of Parent and Merger Subsidiary acknowledges and agrees that,
    after the Closing, notwithstanding any other provision of this Agreement
    to the contrary but
    subject to clause (iv) below, the sole and exclusive remedy of the Parent
    Indemnified Persons with respect to claims for Losses or otherwise, including
    those set forth in Section
10.2, in connection with, arising
out of or resulting from the subject matter of this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby shall be in accordance
with, and limited solely to indemnification under, the provisions of this Article
X and the Escrow Agreement.

  
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(ii)     Each
      of Parent and Merger Subsidiary further acknowledges and agrees that, notwithstanding
      any other provision of this Agreement to the contrary but subject to clause
      (iv) below, the Escrow Amount shall be the sole and exclusive source of
      funds for satisfaction of all claims by Parent
Indemnified Persons for Losses or otherwise, including those set forth in Section
10.2, in connection with, arising
out of or resulting from the subject matter of this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby. 

	

(iii)     Each
      of Parent and Merger Subsidiary further acknowledges and agrees that, notwithstanding
      any other provision of this Agreement to the contrary, the indemnification
      provisions set forth in this Article X are not a remedy for any breach
or claim under the Asset Purchase Agreement.

(iv)     Notwithstanding
      any other provision of this Agreement to the contrary but subject to clause
      (v) below, no Securityholder or other Securityholder Affiliate shall have
      any liability to the Parent Indemnified Persons in connection with this
      Agreement or any other Transaction Documents or the
transactions contemplated hereby or thereby, other than such Securityholder’s
pro rata share of the Escrow Amount, which shall be available to satisfy Losses
of Parent Indemnified Persons, subject to and in accordance with the terms of
this
Agreement.

(v)     Notwithstanding
      anything to the contrary contained in this Agreement or any Transaction
      Document or otherwise but subject to clause (iii) above, nothing in this
      Agreement or any Transaction Document or otherwise shall (A) limit any
      liability (1) of a Securityholder or other Securityholder
Affiliate or of Parent or the Surviving Corporation in connection with any action
      or omission in connection with the Asset Purchase Agreement or any agreement
      listed in Sections 2.11(b) – (g) of the Asset Purchase Agreement,
      (2) of a Securityholder or Securityholder Affiliate in connection with
      any actions taken by such Securityholder or Securityholder Affiliate after
      the Closing, or (3) of a Securityholder or Securityholder Affiliate in
      respect of any employment agreement,
confidentiality agreement, non-competition agreement or other Contract, agreement
      or document to which the Securityholder or Securityholder Affiliate and
      the Company or the Surviving Corporation or any of their respective Subsidiaries
      are parties and which continue in force and effect after the Closing, or
(B) limit any right to equitable remedies. 

(c)     Characterization
      of
Payments.     For all Tax purposes, the parties agree to treat (and shall cause
each of their respective Affiliates to treat) any indemnity payment under this
Agreement as an  adjustment to the merger consideration payable to the Securityholders
pursuant to Article
II unless a final and nonappealable determination by an appropriate Governmental
Authority
(which shall include the execution of an IRS Form 870-AD or successor form) provides
otherwise; provided that the Securityholder Indemnifying Person’s prior
written consent (which will not be unreasonably withheld, conditioned or delayed)
will be obtained by the Parent Indemnified Person who seeks to accept, via a
settlement or compromise with any such Governmental Authority, a position that
is contrary to treatment of
an indemnity payment as an adjustment to the merger consideration payable to
the Securityholders pursuant to Article II.

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(d)     Limitation
      as to
Time.     No Securityholder Indemnifying Person shall be liable for any Losses
that are indemnifiable under Section
10.2 unless a written claim for indemnification under this Agreement is delivered
by the Parent Indemnified Person to the Securityholder Indemnifying Person with
respect thereto prior
to the Expiration Date.

 10.4     Third
Party Claims. 

 (a)     As
    soon as reasonably practicable after receipt by any Parent Indemnified Person
    of notice of the commencement or assertion of any action, Proceeding, demand,
    claim or investigation
by a third party or circumstances which, with the lapse of time, such Parent
Indemnified Person believes is likely to give rise to an action, Proceeding,
demand, claim or investigation by a third party (an “Asserted Liability”)
that may result in a Loss, such Parent Indemnified Person shall give written
notice thereof (the “Claims
Notice”) to the Representative; provided, however, that any failure on the part of Parent to so notify the Representative shall not limit any of the Parent Indemnified
Persons’ rights to indemnification under this Article
X (except to the extent such failure prejudices the defense
of such Proceeding, materially increases the amount of Losses arising as a result
of such Proceeding, or precludes mitigation of such Losses). The Claims Notice
shall describe the Asserted Liability in reasonable detail, and shall indicate
the
amount (estimated, if necessary) of the Loss that has been or may be suffered.

(b)     Each
      Securityholder shall be, subject to the
limitations set forth in this Section 10.4, entitled to assume control of and
appoint lead counsel for such defense; provided, however, that the Securityholders
shall not have the right to assume control of the defense of any Asserted Liability
(i) to the extent that the object of such Asserted Liability is to obtain an
injunction, restraining order, declaratory
relief or other non-monetary relief against the Parent Indemnified Person which,
if successful, would materially adversely affect the business, operations, assets,
or financial condition of the Parent Indemnified Person, (ii) if the named parties
to any such action or Proceeding (including any impleaded parties) include both
the Parent Indemnified Persons and any Securityholder and the former shall have
been advised in writing by counsel (with a copy to the Securityholders) that
there are one
or more legal or equitable defenses available to them that are different from
or additional to those available to such Securityholders, (iii) if the Loss exceeds
the Escrow Amount on the date of the Asserted Liability, or (iv) if the Asserted
Liability relates to any Intellectual Property Rights or other intellectual property
issues; provided, further, that to exercise such rights a Securityholder must
give notice to the Parent Indemnified Person within 30 days after receipt of
any such
Claims Notice whether it is assuming control of and appointing lead counsel for
such defense. If no Securityholder gives such notice within such 30-day period,
or fails to diligently contest the Asserted Liability after such election, then
the Parent Indemnified Person shall have the right to assume control of the defense
thereof at the cost and expense of the Securityholders, subject to the limitations
of liability and other limits set forth in Section 10.3.

(c)     If
      a Securityholder shall assume the control of the defense of the Asserted
      Liability in accordance with the provisions of this Section 10.4,
      (i) the Securityholder shall obtain the prior written consent of the Parent
      Indemnified
      Person (which shall not be unreasonably withheld, conditioned or delayed)
  before entering into any settlement,

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compromise, admission
    or acknowledgement of the validity
of such Asserted Liability (it being expressly acknowledged and agreed that a
      Parent Indemnified Person may withhold its consent to any settlement that
      does not unconditionally release the Parent Indemnified Person from all
      liabilities and obligations with respect to such Asserted Liability or
      the settlement imposes injunctive or other equitable relief against the
      Parent Indemnified Person) and (ii) the Parent Indemnified Person shall
      be entitled to participate, at its own cost and
expense, in the defense of such Asserted Liability and to employ separate counsel
      of its choice for such purpose. The fees, costs and expenses of any such
      separate counsel to the Parent Indemnified Person pursuant to this Section
      10.4 shall be paid by the Parent Indemnified Person; provided, however,
      that the Securityholder shall pay the fees, costs and expenses of such
      counsel if (A) the employment of separate counsel shall have been authorized
      in writing by the Securityholder in connection with the defense of such
      Asserted Liability or (B) the Parent Indemnified Person’s legal counsel
      shall have advised the Securityholder in writing, with a copy delivered
      to the Securityholder, that a material conflict of interest exists that
      would make it inappropriate under applicable standards of professional
      conduct to have common counsel, subject
to the limitations of liability and other limits set forth in Section 10.3. 

(d)     If
      the Parent Indemnified Person shall assume the control of the defense of
      any Asserted Liability in accordance with the provisions of this Section
      10.4, (i) the Parent Indemnified Person shall obtain the prior written
      consent of the Securityholders before entering into any settlement, compromise,
      admission or acknowledgement of the validity of such Asserted Liability,
      and (ii) the Securityholders shall be entitled to participate, at their
      cost and expense, in the defense of such Asserted Liability and to employ
separate counsel of its choice for such purpose. 

(e)      Each
    party shall cooperate, and cause their respective Affiliates to cooperate,
    in the defense or prosecution of any Asserted Liability and shall furnish
    or cause to be furnished such records, information and testimony (subject
    to any applicable confidentiality agreement), and attend such
conferences, discovery Proceedings, hearings, trials or appeals as may be reasonably
requested in connection therewith.

(f)     The
    fees, costs and expenses of the Representative’s legal counsel any and experts (including expert witnesses), consultants and other representatives engaged by it in connection with (i) the Representative’s
assumption of the defense of an Asserted Liability pursuant to
this Section 10.4, on behalf of the Securityholders or (ii) the Representative’s
participation in the defense of
an Asserted Liability pursuant to this Section 10.4, on behalf of the Securityholders
shall be paid out of the Escrow Amount; provided, however, that all payments
to the Representative out of the Escrow Amount pursuant to clause (i) and (ii)
of this Section 10.4(f) shall not exceed $1,000,000. The cost and expense
of the Parent Indemnified Person, if any, that the Representative on behalf of
the Securityholders becomes obligated to pay pursuant to the last
sentence of Section 10.4(b) shall be paid solely out of the Escrow Amount. The
fees, costs and expenses of separate counsel to any Parent Indemnified Person,
if any, that the Representative on behalf of the Securityholders becomes obligated
to pay pursuant to the last sentence of Section
10.4(c) shall be paid solely out of the Escrow Amount. 

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10.5     Direct
Claims.     In any case in which a Parent Indemnified Person seeks
indemnification
hereunder which is not subject to Section 10.4 because
no Asserted Liability is involved, the Parent Indemnified Person shall notify
the Securityholder Indemnifying Person in writing of any Losses that such Parent
Indemnified Person claims are subject to indemnification under the terms hereof.
Subject to the limitations set forth in Sections 10.1 and 10.3, the failure of
the Parent Indemnified Person to exercise promptness in such notification shall
not amount to a waiver of such claim unless and only to the extent that the resulting
delay materially and adversely prejudices the position of the Securityholder
Indemnifying Person with respect to such claim. 

10.6     No
Circular Recovery, Etc.     The Representative hereby agrees that it will not, and no Securityholder shall,
make any claim for indemnification of D&O Indemnified Liabilities
against Parent, the Surviving Corporation or any of their respective Subsidiaries
by reason of the fact that such Securityholder was a controlling person, director,
officer, stockholder, employee, agent or representative of the Company or any
of its Subsidiaries or was serving as such for another Person at the request
of the Company or any of its Subsidiaries (whether such claim is pursuant to
any statute, organizational document, contractual obligation or otherwise) with
respect to any claim
brought by a Parent Indemnified Person in accordance with this Agreement. The
Representative, on behalf of itself and each such Securityholder, expressly waives
any right of subrogation, contribution, advancement, indemnification or other
claim against Parent, the Surviving Corporation or any Subsidiary with respect
to any amounts owed by such Person pursuant to this Article X.

10.7     No
Limitation.     Notwithstanding anything in this Agreement (including
in this Article X) to the contrary, none of the limitations set forth in Sections
10.1, 10.3(a), 10.3(b)(i),
(ii), (iv) and (v) and 10.3(c)shall
apply in the event of fraud or intentional misrepresentation.

 ARTICLE XI

  GENERAL PROVISIONS

11.1     Reasonable
        Efforts; Further Assurances.

  
  (a)     Prior to the Closing,
      upon the terms and subject to the conditions set forth in this Agreement,
      the Company, Parent and  Merger Subsidiary agree to use commercially reasonable
      efforts to take, or cause to be taken, all actions, and to do, or cause
      to be done, all things necessary, proper or advisable (subject to any Applicable
      Laws) to consummate the Merger and make
  effective the Merger and the other transactions contemplated by this Agreement
      and the other Transaction Documents as soon as reasonably practicable,
      including (i) the obtaining of all Consents of, and the making of all registrations,
      declarations  and filings with, Governmental Authorities and (ii) the execution
      and delivery of any additional instruments necessary to consummate the
      transactions contemplated by, and to fully carry out the purposes of this
      Agreement and the other Transaction
  Documents. 

(b)     At
      and after the Effective Time, the officers and directors of the Surviving
      Corporation shall be authorized to execute and deliver, in the name and
      on behalf of the Company or Merger Subsidiary, any deeds, bills of sale,
      assignment or assurances and to take

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and do, in the name and
    on behalf of
the Company or Merger Subsidiary, any other actions and things to vest, perfect
      or confirm of record or otherwise in the Surviving Corporation any and
      all right, title and interest in, to and under any of the rights, properties
      or assets of the Company acquired or to be acquired by the Surviving Corporation
      as a result of, or in connection with, the Merger.

11.2     Amendment
        and Modification.     This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, provided
that no amendment shall be  made which by Applicable Law requires further approval
by a parties’ stockholders without such further approval.

11.3     Waiver
      of
Compliance.     Any failure of Parent or Merger Subsidiary on the one hand, or
the Company, on the other hand, to comply with any obligation, covenant, agreement
or condition  contained herein may be waived only if set forth in an instrument
in writing signed by the party or parties to be bound by such waiver (including
if such waiver is after the Closing the third-party beneficiaries set forth in Section
11.6), but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition  shall not operate as a waiver of,
or estoppel with respect to, any other failure.

11.4     Severability.     If
    any term or other provision of this Agreement is invalid, illegal or incapable
    of being enforced by any Applicable Law or public policy, all  other terms
    and provisions of this Agreement shall nevertheless remain in full force
    and effect so long as the economic or legal substance of the transactions
    contemplated herein is not affected in any manner materially adverse to any
    party. Upon
such determination that any term or other provision is invalid, illegal or incapable
    of being enforced, the Governmental Authority making such determination is
    authorized and instructed to modify this Agreement so as to effect the
    original intent of
    the parties as closely as possible in order that the transactions contemplated
    herein are consummated as originally contemplated to the fullest extent possible.

11.5     Expenses
        and Obligations.     Except as otherwise expressly provided in this Agreement,
        all costs and expenses incurred by the parties hereto in connection with
        the transactions contemplated  by this Agreement shall be borne solely
        and entirely by the party that has incurred such expenses.

11.6     Parties

in Interest.     This Agreement shall be binding upon and inure solely to the
benefit of each party hereto and its successors and permitted assigns. Nothing
in this Agreement is  intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement except
as expressly set forth herein.

11.7     Notices.     All
    notices and other communications hereunder shall be in writing and shall
    be deemed given if delivered by hand, mailed by registered or certified
    mail (return receipt requested), sent by facsimile or sent by Federal Express
    or other recognized overnight courier 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 Subsidiary, to:	
	 	 

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Applera Corporation
	 	301 Merritt 7
	 	Norwalk, CT 06851
	 	
Attention: Corporate Secretary
	 	Facsimile: (203) 840-2922 
	 	 
	 	
with copies to:	
	 	 
	 	Paul, Hastings, Janofsky & Walker
    LLP
	 	3579 Valley Centre
    Drive
	 	San Diego, CA 92130
	 	Attention: Carl Sanchez,
    Esq. 
	 	Deyan P. Spiridonov, Esq.
	 	Facsimile: (858) 720-2555 
	 	 
	(b)	 If to the Company,
    to: 
	 	 
	 	Ambion, Inc. 
	 	 2130 Woodward Street
	 	Austin, TX 78744
	 	Attention: President
	 	Facsimile: (512) 651-0201 
	 	 
	 	with a copy to: 
	 	 
	 	 Vinson & Elkins
    L.L.P.
	 	Terrace 7
	 	2801 Via Fortuna
	 	Suite 100
	 	 Austin, Texas 78746
	 	Attention: William
    R. Volk
	 	Facsimile: (512) 236-3450 
	 	 
	(c)	If to the Representative,
    to: 
	 	 
	 	 Matthew M. Winkler
	 	960 Live Oak Circle
	 	Austin, TX 78746
	 	Facsimile: (512) 327-5089 

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	 	 with
    a copy to:
	 	 
	 	 Vinson & Elkins
    L.L.P.
	 	Terrace 7
	 	2801 Via Fortuna
	 	Suite 100
	 	Austin, Texas
    78746 
	 	Attention:
    William R. Volk
	 	Facsimile: (512)
    236-3450 

Any of the above addresses may be changed at any time by notice given as provided above; provided, however, that any such notice of change of address shall
be effective only upon receipt.  All notices, requests or instructions given in accordance herewith shall be deemed received on the date of delivery, if hand delivered, on the date of receipt, if transmitted by facsimile, three Business Days after
the date of mailing, if mailed by registered or certified mail, return receipt requested and one Business Day after the date of sending, if sent by Federal Express or other recognized overnight courier. 

11.8     Counterparts.     This
    Agreement may be executed and delivered (including by facsimile transmission)
    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, it
    being understood that all parties need not sign the same counterpart.

  11.9     Time.     Time
    is of the essence in each and every provision of this Agreement. 

11.10     Entire
Agreement.     This Agreement, the other Transaction Documents, the Asset Purchase Agreement and the Confidentiality Agreement (each such term shall be deemed to include the exhibits and schedules hereto and the other certificates, documents and instruments
delivered hereunder and thereunder), constitute the entire agreement of the parties hereto and supersede all prior agreements, letters of intent and understandings, both written and oral, among the parties with respect to the subject matter of this
Agreement, the other Transaction Documents, the Asset Purchase Agreement and the Confidentiality Agreement. There are no
representations or warranties,
agreements or covenants other than those expressly set forth in this Agreement,
the other Transaction Documents, the Asset Purchase Agreement and the Confidentiality
Agreement.

11.11     Public
        Announcements.     On or prior to the Closing, (a) the Company shall
        not issue any press release or make any public statement with respect
        to this Agreement or the transactions  contemplated hereby without the
        prior written consent of Parent, and (b) Parent will use reasonable efforts
        to consult with the Company prior to issuing any press release or making
        any public statement regarding this Agreement or the transactions
contemplated hereby; provided, however, that any party may make any disclosure
        required by Applicable Law (including federal securities laws) if it
        determines in good faith that it is required to do so and, with respect
        to each such disclosure,  provides the other with prior notice and a
        reasonable opportunity to review the disclosure.

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11.12     Attorneys’ Fees.     In
    any action or Proceeding instituted by a party arising in whole or in part
    under, related to, based on, or in connection with, this  Agreement or the
    subject matter hereof, the prevailing party shall be entitled to receive
    from the losing party reasonable attorneys’ fees, costs and expenses
    incurred in connection therewith, including any appeals therefrom.

11.13     Assignment.     Neither
    this Agreement nor any of the rights, interests or obligations hereunder
    shall be assigned by any of the parties hereto, whether by  operation of
    law or otherwise. Any assignment in violation of the foregoing shall be null
    and void.

11.14     Rules
      of
Construction.

(a)     Each of the parties
    acknowledges that it has been represented by independent counsel of its choice
    throughout
  all negotiations that have preceded
  the execution of this  Agreement and that it has executed the same with consent
  and upon the advice of said independent counsel. Each party and its counsel
    cooperated in the drafting and preparation of this Agreement and the documents
    referred
  to herein, and any and all
  drafts relating thereto shall be deemed the work product of the parties and
    may not be construed against any party by reason of its preparation. Accordingly,
  any rule of law or any legal decision that would require interpretation of
    any
  ambiguities  in this Agreement against any party that draft it is of no application
  and is hereby expressly waived.

(b)     The inclusion of any
    information in the  Disclosure Schedules shall not be deemed an admission
    or acknowledgment, in and of itself and solely by virtue of the inclusion
    of such information in the Disclosure Schedules, that such information is
    required to be listed in the Disclosure
Schedules or that such items are material to the Company, Parent or Merger Subsidiary,
    as the case may be. The headings, if any, of the individual sections of each
    of the Disclosure Schedules are inserted for convenience only and shall not
    be deemed  to constitute a part thereof or a part of this Agreement. The
    Disclosure Schedules are arranged in sections corresponding to those contained
    in Section 3.1 and Section 3.2 merely for convenience, and the disclosure
    of an
item in one section of the Disclosure Schedules as an exception to a particular
    representation or warranty shall be deemed adequately disclosed as an exception
    with respect to all other representations or warranties to the extent that
    the relevance  of such item to such representations or warranties is obvious
    on the face of such item to Parent, notwithstanding the presence or absence
    of an appropriate section of the Disclosure Schedules
    with respect to such
    other representations or warranties or an appropriate cross reference thereto. 

(c)     The specification of any dollar amount in the
representations and warranties or otherwise in this Agreement or in the Disclosure Schedules is not intended and shall not be deemed to be an admission or acknowledgment of the materiality of such amounts or items, nor shall the same be used in any
dispute or controversy between the parties to determine whether any obligation, item or matter (whether or not described herein or included in any schedule) is or is not material for purposes of this Agreement.

(d)     All
    references in this Agreement to Exhibits, Schedules, Articles, Sections,
    subsections and other
  subdivisions refer to the corresponding Exhibits, Schedules,

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Articles, Sections,
    subsections and other subdivisions of this Agreement unless expressly provided
    otherwise.
Titles appearing at the beginning of any Articles, Sections, subsections or other
    subdivisions of this Agreement are for convenience only, do not constitute
    any part of such Articles, Sections, subsections or other subdivisions, and
    shall be
disregarded in construing the language contained therein. The words “this
Agreement,”
“herein,” “hereby,” “hereunder” and “hereof” and
words of similar import, refer to this  Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words “this Section,” “this
subsection” and words of similar import, refer only to
the Sections or subsections hereof in which such words occur. The word “including” (in

its various forms) means “including, without limitation.” Pronouns
in masculine,  feminine or neuter genders shall be construed to state and include
any other gender and words, terms and titles (including terms defined herein)
in the singular form shall be construed to include the plural and vice versa,
unless the context
otherwise expressly requires. Unless the context otherwise requires, all defined
terms contained herein shall include the singular and plural and the conjunctive
and disjunctive forms of such defined terms. Unless the context otherwise requires,
all
references to a specific time shall refer to Austin, Texas time. 

(e)     Notwithstanding anything
    contained in this  Agreement to the contrary, except as otherwise expressly
    provided in this Agreement, the parties hereto covenant and agree that no
    amount shall be (or is intended to be) included, in whole or in part (either
    as an increase or a reduction), more than
once in the calculation of (including any component of) Closing Merger Consideration,
    Closing Per Share Merger Consideration, Estimated Working Capital, Closing
    Working Capital, Final Working Capital, Option Consideration, Per Share Working
    Capital  Distribution Amount, Per Share Escrow Distribution Amount, or any
    other calculated amount pursuant to this Agreement if the effect of such
    additional inclusion (either as an increase or a reduction) would be to cause
    such amount to be over- or
under-counted for purposes of the transactions contemplated by this Agreement.
    The parties hereto further covenant and agree that if any provision of this
    Agreement requires an amount or calculation to be “determined in
    accordance with this Agreement and GAAP” (or words of similar import),
    then to the extent that the terms of  this Agreement conflict with, or are
    inconsistent with, GAAP in connection with such determination, the terms
    of this Agreement shall control.

11.15     Joint
        Liability.     Each representation, warranty, covenant
and agreement made by Parent or Merger Subsidiary in this Agreement shall be
deemed a joint representation,
warranty, covenant  and agreement made by Parent and Merger Subsidiary jointly
and all liability and obligations relating thereto shall be deemed a joint liability
and obligation of Parent and Merger Subsidiary.

11.16     Governing
      Law.     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
      WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CONFLICTS
      OF

LAW PROVISIONS.

11.17      Waiver
        of Jury Trial.     TO
THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY
HEREBY IRREVOCABLY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
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ACTION
      ARISING IN WHOLE OR IN PART UNDER, RELATED TO, BASED ON, OR IN CONNECTION
      WITH, THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER
SOUNDING IN TORT OR CONTRACT OR OTHERWISE. ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 11.17 WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

  11.18     Consent
        to Jurisdiction; Venue.

(a)     The parties hereto submit to the personal
        jurisdiction of the courts of the State of Delaware and the Federal courts
        of the United States sitting in  Delaware, and any appellate court from
        any such state or Federal court, and hereby irrevocably and unconditionally
        agree that the exclusive venue for all claims arising in whole or in
        part under or in connection with this Agreement and the
    transactions contemplated hereby and for all claims with respect to any such
        claim to be heard and determined shall be courts of the State of Delaware
        sitting in Delaware or, to the extent permitted by law, in the United
        States District Court for  the District of Delaware. The parties hereto
        agree that a final judgment in any such claim shall be conclusive and
        may be enforced in any other jurisdiction by suit on the judgment or
        in any other manner provided by law. Nothing in this Agreement
    shall affect any right that any party may otherwise have to bring any claim
        relating to this Agreement or any related matter against any other party
        or its assets or properties in the courts of any jurisdiction.

(b)     Each of the parties hereto irrevocably and unconditionally waives, to the
      fullest extent it may legally and effectively
    do so, any objection which it may now or hereafter have to the laying of
    venue of any suit, action or Proceeding arising out of or relating to this
    Agreement or any related
  matter in any Delaware state or Federal court located in Delaware and the defense
    of an inconvenient forum to the maintenance of such claim in any such court.

 ARTICLE XII

    THE REPRESENTATIVE

By their execution and delivery of this Agreement, the Company, Parent, Merger Subsidiary and the Representative hereby agree as follows:

12.1     Authorization
  of the Representative.

  (a)     As
    a condition to receiving the Closing Per Share Merger Consideration, each
    of the Securityholders (other than holders of Dissenting Shares) shall agree
    in a Letter of Transmittal or other documentation acceptable to Parent to
    be bound by (i) the provisions of this Agreement, (ii) the Escrow Agreement,
    (iii) the appointment of the Representative as the agent and
  attorney-in-fact of such holder for the purposes of Article II and Article
  X and the Escrow Agreement, and (iv) the taking by the Representative of
  any and all actions and the making of any decisions required or permitted to
  be
  taken by him under the Escrow Agreement, including the exercise of the power
  to authorize delivery to any Parent
  

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  Indemnified Person of
      cash out of the Escrow Account in satisfaction of claims by any Parent
      Indemnified Person pursuant
  to this
  Agreement.  The Representative hereby is appointed, authorized and empowered
  to act as the agent of the Securityholders in connection with, and to facilitate
  the consummation of the transactions contemplated by, this Agreement and the
  other Transaction Documents, and in connection with the activities to be performed
  on behalf of the Securityholders under this Agreement and the Escrow Agreement,
  for the purposes and with the powers and authority hereinafter set forth in
  this Article XII and in the Escrow Agreement, which shall include the full
  power and authority:
  

 (i)     to
    execute and deliver the Escrow Agreement (with such modifications or changes
    thereto as to which
    the Representative, in its reasonable discretion, shall have consented to)
    and to
    agree to such amendments or modifications thereto as the Representative,
    in its reasonable discretion, may deem necessary
    or desirable to give effect to the matters set forth in Article X and this
    Article XII;

(ii)     to take such actions and to execute and deliver such waivers and consents
      in connection with this Agreement and the
      other Transaction Documents and the consummation of the transactions contemplated
      hereby and thereby as the Representative, in its reasonable discretion,
      may deem necessary or desirable to give effect to the intentions of this
      Agreement
      and the other Transaction Documents;

(iii)     as the Representative of the Securityholders, to enforce and protect the
      rights and interests of the Securityholders
      and to enforce and protect the rights and interests of the Representative
      arising out of or under or in any manner relating to this Agreement, the
      Escrow Agreement and each other Transaction Document and, in connection
      therewith, to (A) resolve all questions, disputes, conflicts and controversies
      concerning
      (1) the determination of any amounts (including Closing Merger Consideration,
      Closing Per
    Share Merger Consideration, Closing Working Capital, Final Working Capital,
      Option Consideration, Per Share Escrow Distribution Amount and Per Share
      Working Capital Distribution Amount) pursuant to Article II and (2) Parent
      Indemnification Claims pursuant to Article X, (B) employ such agents, consultants
      and professionals, to delegate authority to its agents, to take such actions
      and to execute such documents on behalf of the Securityholders in connection
      with Article II and Article X and the Escrow Agreement as the Representative,
      in its reasonable discretion, deems to be in the best interest of the Securityholders,
      (C) assert or institute any claim, action, Proceeding or investigation,
      (D) investigate, defend, contest or litigate any claim, action, Proceeding
      or
      investigation initiated by Parent or the Merger Subsidiary, or any other
      Person, against the Representative and/or the Escrow Amount, and receive
      process on
    behalf of any or all Securityholders in any such claim, action, Proceeding
      or investigation and compromise or settle on such terms as the Representative
      shall determine to be appropriate, give receipts, releases and discharges
      on behalf of all of the Securityholders with respect to any such claim,
      action, Proceeding or investigation, (E) file any proofs, debts, claims
      and petitions
      as the Representative may deem advisable or necessary, (F) settle or compromise
      any claims asserted under Article II or Article X or under the Escrow Agreement,
      (G) assume, on behalf of all of the Securityholders, the defense of any
      claim that is the basis of any claim asserted under Article II or Article
      X or
      under the Escrow Agreement, and (H) file and prosecute appeals from any
      decision, judgment or award rendered in any of the foregoing claims, actions,
      Proceedings
      or investigations, it being understood that the

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Representative
      shall not have any obligation
    to take any such actions, and shall not have liability for any failure to
      take such any action;

(iv)     to enforce payment from the Escrow Amount and of any other amounts payable
      to the Securityholders, in each case on
    behalf of the Securityholders, in the name of the Representative;

(v)     to authorize and cause to be paid out of the Escrow Amount the full amount
      of any Parent Indemnification Claims in favor of any Parent Indemnified
      Person pursuant to Article X and also any other amounts to be paid out
      of the Escrow Amount pursuant to this Agreement and the Escrow Agreement; 

(vi)     to receive and cause to be paid to Securityholders in accordance with Article
      II any escrow distributions received
    by the Representative, provided that the Representative may discharge such
    duty by requesting that such funds be paid directly to the Exchange Agent
      and requesting that the Exchange Agent make such distributions to the Securityholders; 

(vii)     to waive or refrain from enforcing any right of the Securityholders or
      any of them and/or of the Representative arising
      out of or under or in any manner relating to this Agreement, the Escrow
      Agreement or any other Transaction Document; and

(viii)     to make, execute, acknowledge and deliver all such other agreements, guarantees,
      orders, receipts, endorsements, notices,
    requests, instructions, certificates, stock powers, letters and other writings,
    and, in general, to do any and all things and to take any and all action
    that the
  Representative, in its sole and absolute discretion, may consider necessary
    or proper or convenient in connection with or to carry out the activities
    described in subparagraphs (i) through (vii) above and the transactions contemplated
    by this Agreement, the Escrow Agreement and the other Transaction Documents.

(b)     Parent,
      Merger Subsidiary, the Surviving Corporation and its Subsidiaries shall
      be entitled to rely exclusively upon
      the communications of the Representative relating to the foregoing as the
      communications of the Securityholders, and such communications of the Representative
      shall be fully binding upon the Securityholders. None of Parent, Merger
      Subsidiary or the Surviving Corporation (i) need be concerned with the
      authority of
      the Representative to act on behalf of all Securityholders hereunder, or
      (ii) shall be held liable or
    accountable in any manner for any act or omission of the Representative in
      such capacity. 

(c)     Notwithstanding
      anything to the contrary contained herein, the parties acknowledge and
      agree that (i) the Representative
      may not enter into or grant any amendments or modifications described in
      Section 12.1(a)(i) or waivers or consents described in Section 12.1(a)(ii)    unless
      such amendments, modifications, waivers or consents shall affect each Securityholder
      similarly and to the same relative extent, and (ii) any such amendment,
      modification, waiver or consent that does not affect any Securityholder
      similarly and to
      the same relative extent as it affects other Securityholders must be executed
      by such Securityholder to be binding on such Securityholder.

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(d)     The
      grant of authority provided for in this Section 12.1 (i) is coupled with
      an interest and is being granted, in part, as an
    inducement to the Company, Parent and Merger Subsidiary to enter into this
    Agreement and shall be irrevocable and survive the death, incompetency, bankruptcy
    or liquidation of any Securityholder and shall be binding on any successor
    thereto, and (ii) shall survive any distribution
  from the Escrow Agent.

(e)     If
      the Representative shall die, become disabled or otherwise be unable to
      fulfill his responsibilities as agent of
      the Securityholders, then John F. Dahler shall be appointed as a successor
      representative and shall become the “Representative” for purposes
      of Article X, the Escrow Agreement and this Article XII. 

12.2     Compensation;
          Exculpation; Indemnity.

(a)     The Representative shall not be entitled to any fee, commission or other compensation for the performance of its service
    hereunder.

(b)     In dealing with this Agreement, the Escrow Agreement and any instruments,
      agreements or documents relating thereto,
    and in exercising or failing to exercise all or any of the powers conferred
    upon the Representative hereunder or thereunder, (i) the Representative shall
    not assume any, and
  shall incur no, responsibility whatsoever to any Securityholder by reason of
    any error in judgment or other act or omission performed or omitted hereunder
    or in connection with this Agreement, the Escrow Agreement or any other Transaction
    Document, unless by the Representative’s gross negligence or willful misconduct, and (ii) the Representative shall be entitled to rely on the advice of counsel, public accountants or other independent experts experienced in the matter at issue, and any
  error in judgment or other act or omission of the Representative pursuant to such advice shall in no event subject the Representative to liability to any Securityholder unless by the Representative’s
  gross negligence or willful misconduct. Except as set forth in the previous
  sentence, notwithstanding anything to the contrary contained herein, the Representative,
  in its role as Representative, shall have no liability whatsoever to the Company,
  Parent, Merger Subsidiary or the Surviving
  Corporation or any other Person.

(c)     Each
      Securityholder, severally, shall indemnify the Representative up to, but
      not exceeding, an amount equal to the
      aggregate portion of the amounts received by such Person under Article
      II of this Agreement, which indemnification shall be paid by such Securityholder pro rata in
      accordance with the portion of the aggregate amounts received by such Person
      under Article II of this Agreement, against all damages, liabilities, claims,
      obligations, costs and expenses, including reasonable attorneys’, accountants’ and other experts’ fees and the amount of
    any judgment against it, of any nature whatsoever, arising out of or in connection with any claim or in connection with any appeal thereof, relating to the acts or omissions of the Representative hereunder, under the Escrow Agreement or otherwise,
    except for such damages, liabilities, claims, obligations, costs and expenses, including reasonable attorneys’, accountants’ and other experts’ fees and the amount of any judgment against the Representative that arise from the
    Representative’s gross negligence or willful misconduct, including the
    willful breach of this Agreement or the Escrow Agreement. The foregoing indemnification
    shall not be deemed exclusive of any other right to which the Representative
    may be entitled apart from the provisions hereof. In the event of any

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 indemnification
    under this Section 12.2(c), each
    Securityholder shall as soon as reasonably practicable deliver to the Representative
    full payment of his, her or its ratable share of such Parent Indemnification
    Claim. 

(d)     All of the indemnities, immunities and powers granted to the Representative
      under this Agreement shall survive the Closing
    and/or any termination of this Agreement and the Escrow Agreement.

(e)
     Subject to the
limitations set forth in Section 10.4(f), the Representative shall, from time
to time, be entitled to request and receive out of the Escrow Amount such amounts
as may be necessary to reimburse the Representative for all reasonable out of
pocket fees and expenses incurred by the Representative in the exercise of its
rights or the performance of its
duties hereunder.

[Remainder Of This Page Is Intentionally Blank]

74

 AMBION, INC. 

    AGREEMENT AND PLAN OF MERGER

 

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IN WITNESS WHEREOF, the Company, Parent, Merger Subsidiary and the Representative have
  caused this Agreement to be signed, all as of the date first written above.

	 	THE
    COMPANY:
	 	 	 	 
	 	AMBION,
    INC.
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	By:		/s/Matthew
    M. Winkler 
	 	 	 	

	 	Name	:	Matthew
    M. Winkler
	 	 	 	

	 	Title	:	CEO
	 	 	 	

	 	 	 	 
	 	 	 	 
	 	 PARENT:
	 	 
	 	 APPLERA
    CORPORATION
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	By:	 	/s/
    Catherine M. Burzik
	 	 	 	

	 	Name	:	Catherine
    M. Burzik
	 	 	 	

	 	Title	:	President,
    Applied Biosystems Group
	 	 	 	

	 	 	 	 
	 	 	 	 
	 	MERGER
    SUBSIDIARY: 
	 	 	 	 
	 	AMBION
    ACQUISITION CORP.
	 	 	 	 
	 	 	 	 
	 	By:		/s/
    Catherine M. Burzik
	 	 	 	

	 	Name	:	Catherine
    M. Burzik
	 	 	 	

	 	Title	:	Vice
    President
	 	 	 	

	 	 	 	 
	 	 	 	 
	 	MATTHEW
    M. WINKLER,
	 	 	 	 
	 	
        solely
        in his capacity as the Representative
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	/s/    Matthew M. Winkler    
	 	

    
	 	 	 	 
	 	 	 	 

 SIGNATURE PAGE
TO 

AMBION, INC. 

AGREEMENT AND PLAN
OF MERGER

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