Document:

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                                                                   EXHIBIT 10.46

                                                     EXECUTION COPY - 22 03 2004

                            ASSET PURCHASE AGREEMENT

                               MANTEIA TECHNOLOGY

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                                                     EXECUTION COPY - 22 03 2004

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<S>                                                                       <C>
ARTICLE.1          PURCHASE AND SALE OF ASSETS........................                               5

ARTICLE.2          CLOSING AND PURCHASE PRICE.........................                               6

ARTICLE.3          REPRESENTATIONS AND WARRANTIES OF THE SELLER.......                               8

ARTICLE.4          REPRESENTATIONS AND WARRANTIES OF SOLEXA...........                               9

ARTICLE.5          REPRESENTATIONS AND WARRANTIES OF LYNX.............                              10

ARTICLE.6          OTHER COVENANTS AND AGREEMENTS OF THE SELLER.......                              13

ARTICLE.7          OTHER COVENANTS AND AGREEMENTS OF THE BUYERS.......                              15

ARTICLE.8          OTHER COVENANTS AND AGREEMENTS OF LYNX  AND THE
                   SELLER WITH  RESPECT TO THE LYNX SHARES............                              15

ARTICLE.9          CONDITIONS PRECEDENT...............................                              23

ARTICLE.10         MISCELLANEOUS......................................                              24
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                                                     EXECUTION COPY - 22 03 2004

This Asset Purchase Agreement (the "AGREEMENT") is made and entered into as of
March 22, 2004 ( the "SIGNING DATE") by and between:

MANTEIA SA, a company established under the laws of Switzerland and having its
registered office at zone industrielle, 1267 Coinsins, Switzerland (the
"SELLER")

                                                                 on the one hand

                                       and

SOLEXA LIMITED, a company established under the laws of England and Wales and
having its registered office at Little Chesterford, Saffron Walden, Essex CB10
1XL (hereinafter referred to as "SOLEXA")

                                       and

LYNX THERAPEUTICS INC, a company established under the laws of Delaware and
having its registered office at 25861 Industrial Boulevard, Hayward, CA 94545,
United States of America (hereinafter referred to as "LYNX")

(Solexa and Lynx hereinafter collectively referred to as the "BUYERS", each of
them a "BUYER")

                                                               on the other hand

The Seller and the Buyers are hereinafter collectively referred to as the
"PARTIES", and individually as a "PARTY".

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PREAMBLE

Whereas the Seller was incorporated in November 2000 and has been working toward
the development of a proprietary technology in the field of genotyping and high
throughput sequencing of human DNA.

Whereas, due to financial difficulties, the Seller has initiated on November 4,
2003 a debt restructuring procedure by filing a request for a provisory debt
restructuring moratorium pursuant to Article 293 of the Swiss Debt Enforcement
and Bankruptcy Statute.

Whereas the Debt Restructuring Court has granted to the Seller a provisory debt
restructuring moratorium for a period of two months on November 10, 2003.

Whereas the Debt Restructuring Court has appointed a commissioner (in the person
of Mr Bruno Vocat, the "COMMISSIONER") in order to supervise the activities of
the Seller.

Whereas a debt restructuring moratorium (the "MORATORIUM") has been granted by
the Debt Restructuring Court and is in force until August 2, 2004. The duration
of the Moratorium can be further extended by Court decision.

Whereas the Seller currently employs only two employees, of which only Mr
Gerardo Turcatti is still in activity for the Seller. All other employment
relationships have been terminated by the Seller in accordance with the
provisions of the Swiss Federal Code of Obligations ("CO").

Whereas the Seller has organized a bid process for the sale of its assets under
the supervision of the Commissioner.

Whereas Lynx and Solexa were allowed to (i) conduct technical and legal due
diligence and site visit at the Seller's premises for two consecutive days each,
(ii) ask detailed follow-up questions to the Seller, all of which were promptly
answered by the Seller, and (iii) share the results of such investigations with
one another.

Whereas the Buyers have shown their interest in purchasing certain assets of the
Seller and have sent to the Seller an Offer Letter dated February 17, 2004.

Whereas the Buyers now desire to purchase from the Seller and the Seller desires
to sell to the Buyers certain assets of the Seller specifically designated in
this Agreement and the related schedules.

Whereas the Parties do not intend to structure the present transaction as a
transfer of a business with assets and liabilities in accordance with article
181 CO.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

                     ARTICLE.1 PURCHASE AND SALE OF ASSETS

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1.1      On and subject to the terms and conditions set forth in this Agreement,
         the Seller hereby agrees to sell, assign, transfer and deliver to the
         Buyers and the Buyers agree to purchase from the Seller all of the
         Seller's right, title and interest in and to the following assets
         (collectively, the "PURCHASED ASSETS"):

         (i)      Tangible assets: the tangible assets set forth in SCHEDULE 1.1
                  hereto (the "TANGIBLE ASSETS").

         (ii)     Patents: the patents set forth in SCHEDULE 1.2 hereto (the
                  "PATENTS").

         (iii)    Know how: the know how of the Seller derived from or
                  associated with the Tangible Assets and the Patents (the "KNOW
                  HOW"), including but not limited to the Know How set forth in
                  SCHEDULE 1.3.

         (iv)     License: The license to the Patents of Mosaic Technologies as
                  set forth in SCHEDULE 1.4 hereto (the "MOSAIC LICENSE").

1.2      The Parties agree not to structure this purchase as a transfer of a
         business with assets and liabilities in accordance with art. 181 CO.

                      ARTICLE.2 CLOSING AND PURCHASE PRICE

2.1      The closing of the transactions contemplated by this Agreement (the
         "CLOSING") shall take place at the latest ten (10) business days
         following the satisfaction of the Conditions Precedent set forth in
         clauses (i) and (ii) of Article 9.1 below, or such other date as the
         Parties may mutually agree in writing.

2.2      The aggregate purchase price for the Purchased Assets is USD
         4'000'000.- (four million US dollars) (hereinafter referred to as the
         "PURCHASE PRICE"). The payment of the Purchase Price shall be made as
         follows:

         (i)      Cash Consideration:

         At the Closing, Solexa shall arrange for payment to the Seller of USD
         2'000'000 (two million US Dollars), being fifty (50) percent of the
         Purchase Price in cash (the "CASH CONSIDERATION") by a wire transfer of
         freely available USD denominated funds to Seller's bank account to be
         indicated by the Seller.

         (ii)     Share Consideration:

         At the Closing, Lynx shall issue and deliver to the Seller shares of
         common stock of Lynx (the "LYNX SHARES") for a value representing the
         remaining fifty (50) percent of the Purchase Price (the "SHARE
         CONSIDERATION"). The number of Lynx Shares to be issued and delivered
         to the Seller for the Share Consideration shall be determined by
         reference to the average of the volume weighted average price of Lynx
         Shares for the ten (10) trading days prior to the day prior to the
         filing date of the Registration Statement with the U.S. Securities and
         Exchange Commission (the "COMMISSION"), as per Article 8.3 below, less
         a 20% discount. An example of the computation of the Share
         Consideration is attached as SCHEDULE 2.2. Price and volume information
         used to determine the number of Lynx Shares to be issued to the Seller
         shall be extracted from a reliable external source of information such
         as Reuters or Bloomberg.

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2.3      At the Closing, the Seller shall deliver to the Buyers:

         a)  A duly executed assignment of the Patents (notarized and apostilled
             for Manteia SA), essentially on the form attached hereto as
             SCHEDULE 2.3a);

         b)  The Patents prosecution files, any general and background files and
             any summaries, searches and opinions relating to the Patents, any
             and all searches, opinions, summaries etc. relating to the Freedom
             to Operate (FTO) of the Patents and any documentation relating to
             draft applications or subject-matter considered for filing in the
             last eighteen (18) months but have never been filed, if any;

         c)  Duly executed waivers of the two current employees, essentially in
             the form attached hereto as SCHEDULE 2.3c);

         d)  Letter of Serono, essentially in the form attached hereto, as
             SCHEDULE 2.3d)

         e)  The Tangible Assets;

         f)  A duly passed resolution of the board of directors of the Seller
             approving the execution and consummation of this Agreement;

         g)  The approval of the Commissioner to execute and consummate this
             Agreement;

         h)  An approval rendered by the Tribunal d'arrondissement de la Cote,
             1260 Nyon (the "DEBT RESTRUCTURING COURT") approving the execution
             and consummation of this Agreement;

         i)  The letter sent to and countersigned by GlaxoSmithKline, a copy of
             which is attached hereto as SCHEDULE 2.3i);

         j)  A written document assigning the Mosaic License to the Buyers (the
             "MOSAIC LICENSE ASSIGNMENT Agreement") essentially in the form
             attached hereto as SCHEDULE 2.3j);

         k)  A complete set of all agreements still in force or already
             terminated which relate to the Patents, the Know-How and the
             Mosaic-License;

         l)  A complete set of any and all publications relating to the Patents,
             the Know-How and the Mosaic-License.

2.4      At Closing the Buyers shall deliver to the Seller duly passed
         resolutions of the Board of Directors of each of the Buyers approving
         the execution and consummation of this Agreement.

2.5

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     a)  The Buyers undertake to remove from the seller's premises of the
         Tangible Assets and all files and documents relating to the Patents,
         the Know How and the Mosaic License within 30 days after the Closing.

     b)  From the Signing Date on and for 30 days after the Closing, the Seller
         undertakes to maintain existing security to its premises in order to
         safeguard the Purchased Assets and all documents related thereto and to
         keep the premises and its installation in the current working
         conditions (e.g. electricity, light, air condition etc) so that the
         Purchased Assets do not lose their functionality;

     c)  From the Closing on and for 30 days after the Closing, the Seller
         undertakes to grant to the Buyers access to its premises from 8 am
         until 6 pm on each business day in the Canton of Vaud.

             ARTICLE.3 REPRESENTATIONS AND WARRANTIES OF THE SELLER

3.1      The Seller represents and warrants, as of the Signing Date and the
         Closing, to the Buyers as follows:

     a)  ORGANIZATION: The Seller is a corporation duly organized and validly
         existing under the laws of Switzerland. The Seller is under the
         protection of the Moratorium in accordance with the laws of
         Switzerland.

     b)  AUTHORIZATION: Subject to the Conditions Precedent set forth in Article
         9.1 (i) and (ii) below, the Seller has the requisite corporate power
         and authority to enter into and consummate the transaction contemplated
         by this Agreement and otherwise to carry out its obligations hereunder
         and thereunder. The execution and delivery of each of this Agreement by
         the Seller and the consummation by it of the transactions contemplated
         hereby and thereby have been duly authorized by all necessary action on
         the part of its part and no further consent or action is required by
         its board of directors or its stockholders. This Agreement has been (or
         upon delivery will be) duly executed by the Seller and is, or when
         delivered in accordance with the terms hereof, will constitute, the
         valid and binding obligation of the Seller enforceable against it in
         accordance with its terms.

     c)  TANGIBLE ASSETS: The Seller is the legal and beneficial owner of and
         has good and valid record title, to the extent that valid record to
         title is capable of existing, to all of the Tangible Assets. All
         Tangible Assets are owned by the Seller free and clear of all
         encumbrances.

     d)  LITIGATION: To the best of the knowledge of the Seller, no action,
         claim, suit, judgment, injunction, order, decree, proceeding or
         investigation is threatened or has ever been notified in writing to the
         Seller relating to or affecting any of the Purchased Assets and the
         Seller has never instigated any litigation relating to or affecting any
         of the Purchased Assets.

     e)  PATENTS: All costs and fees pertaining to the prosecution, registration
         and renewal of the Patents have been duly paid with all the relevant
         registries and all agents' fees and work in progress has been paid for
         and will have been paid for at the Closing. The Seller

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         exclusively owns all right, title and interest to and in the Patents
         free an clear of any encumbrances.

     f)  NON-CONTRAVENTION; CONSENTS: To the best of the knowledge of the
         Seller, neither the execution and delivery of the Agreement, nor the
         consummation or performance of any of the transactions contemplated
         hereunder, will directly or indirectly (with or without notice or lapse
         of time):

               (i)  contravene, conflict with or result in a violation of, or
                    give any governmental body the right to challenge any of the
                    transactions contemplated hereunder or to exercise any
                    remedy or obtain any relief under, any order, judgment or
                    decree of any court or other governmental agency to which
                    the Seller, or any of the Tangible Assets, is subject; or

               (ii) contravene, conflict with or result in a violation of any of
                    the terms or requirements of, or give any governmental body
                    the right to revoke, withdraw, suspend, cancel, terminate or
                    modify, any governmental authorization that is to be
                    included in the Tangible Assets or is held by the Seller.

3.2      The representations and warranties of the Seller are expressly limited
         to those set forth in this Article 3.1. No other representations or
         warranties, of whatever nature and whatever kind, are given by the
         Seller in relation to this Agreement.

3.3      The Seller does not represent or warrant the suitability, usefulness or
         applicability of the Purchased Assets. The Seller does not represent or
         warrant either that the Tangible Assets are in good and/or working
         condition.

3.4      The Buyers performed a due diligence and site visit at the Seller's
         premises and purchase the Purchased Assets in an "as is" condition.

3.5      The representations and warranties made by the Seller under this
         Agreement terminate one year after the Closing and shall be limited to
         a maximum amount equivalent to:

         a)  The Cash Consideration; plus

         b)  The net proceeds (after deduction of costs and fees) from the sale
             of the Lynx Shares (Share Consideration); plus

         c)  Any remaining Lynx Shares (Share Consideration) not sold by the
             Seller and therefore still owned by the Seller.

               ARTICLE.4 REPRESENTATIONS AND WARRANTIES OF SOLEXA

4.1      Solexa represents and warrants to the Seller as of the Signing Date and
         the Closing, as follows:

     a)  ORGANIZATION: Solexa is an entity duly organized, validly existing and
         in good standing under the laws of England and Wales. Solexa is not
         aware of any circumstances which could (i) adversely affect the
         legality, validity or enforceability of this Agreement or (ii)

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         adversely impair its ability to perform fully on a timely basis its
         obligations under this Agreement.

     b)  AUTHORIZATION: Solexa has the corporate power and authority to execute
         and deliver this Agreement and to perform fully its obligations
         hereunder.

     c)  LITIGATION: There is no action, claim, suit, judgement, injunction,
         order or decree pending, or to Solexa's knowledge threatened, against
         Solexa that relates to the transactions contemplated by this Agreement,
         nor are there agreements or envisaged agreements which are capable of
         impacting on Solexa's ability to fulfill its obligations under this
         Agreement.

4.2      The representations and warranties of Solexa are expressly limited to
         those set forth in Article 4.1. No other representations or warranties,
         of whatever nature and whatever kind, are given by Solexa in relation
         to this Agreement.

                ARTICLE.5 REPRESENTATIONS AND WARRANTIES OF LYNX

5.1      Subject to Schedule 5.1, Lynx represents and warrants to the Seller as
         of the Signing Date and of the Closing as follows:

     a)  ORGANIZATION: Lynx is an entity duly organized, validly existing and in
         good standing under the laws of the jurisdiction of its incorporation,
         with the requisite power and authority to own and use its properties
         and assets and to carry on its business as currently conducted. Neither
         Lynx nor any of its subsidiaries (the"SUBSIDIARIES") is in violation of
         any of the provisions of its respective certificate or articles of
         incorporation, bylaws or other organizational or charter documents.
         Lynx and each of its Subsidiaries is duly qualified to do business and
         is in good standing as a foreign corporation or other entity in each
         jurisdiction in which the nature of the business conducted or property
         owned by it makes such qualification necessary, except where the
         failure to be so qualified or in good standing, as the case may be,
         could not, individually or in the aggregate, (i) adversely affect the
         legality, validity or enforceability of this Agreement, (ii) have or
         result in a material adverse effect on the results of operations,
         assets, prospects, business or condition (financial or otherwise) of
         Lynx, or (iii) adversely impair Lynx's ability to perform fully on a
         timely basis its obligations under this Agreement (any of (i), (ii) or
         (iii), a "MATERIAL ADVERSE EFFECT").

     b)  AUTHORIZATION: Lynx has the requisite corporate power and authority to
         enter into and to consummate the transactions contemplated by this
         Agreement and otherwise to carry out its obligations hereunder and
         thereunder. The execution and delivery of this Agreement and the
         consummation by it of the transactions contemplated hereby have been
         duly authorized by all necessary action on its part and no further
         consent or action is required by its board of directors or its
         stockholders. This Agreement has been (or upon delivery will be) duly
         executed by Lynx and is, or when delivered in accordance with the terms
         hereof, will constitute, the valid and binding obligation of Lynx
         enforceable against it in accordance with its terms.

     c)  NO CONFLICTS: The execution, delivery and performance of this Agreement
         and the consummation by Lynx of the transactions contemplated hereby do
         not and will not (i)

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         conflict with or violate any provision of Lynx's certificate or
         articles of incorporation, bylaws or other organizational or charter
         documents, (ii) conflict with, or constitute a default (or an event
         that with notice or lapse of time or both would become a default)
         under, or give to others any rights of termination, amendment,
         acceleration or cancellation (with or without notice, lapse of time or
         both) of, any agreement, credit facility, debt or other instrument
         (evidencing Lynx's debt or otherwise) or other understanding to which
         Lynx is a party or by which any property or asset of Lynx is bound or
         affected, except to the extent that such conflict, default or
         termination right could not reasonably be expected to have a Material
         Adverse Effect, or (iii) result in a violation of any law, rule,
         regulation, order, judgment, injunction, decree or other restriction of
         any court or governmental authority to which Lynx is subject (including
         U.S. federal and state securities laws and regulations), or by which
         any property or asset of Lynx or of its Subsidiaries is bound or
         affected.

     d)  LITIGATION: There is no action, claim, suit, judgement, injunction,
         order or decree pending, or to Lynx's knowledge threatened, against
         Lynx that relates to the transactions contemplated by this Agreement,
         nor are there agreements or envisaged agreements which are capable of
         impacting Lynx's ability to fulfill its obligations under this
         Agreement.

     e)  ISSUANCE OF THE LYNX SHARES: The Lynx Shares are duly authorized and,
         when issued and paid for in accordance with this Agreement, will be
         duly and validly issued, fully paid and nonassessable, free and clear
         of all liens and shall not be subject to preemptive rights or similar
         rights of stockholders.

     f)  CAPITALIZATION: The number of shares and type of all authorized, issued
         and outstanding capital stock, options and other securities of Lynx
         (whether or not presently convertible into or exercisable or
         exchangeable for shares of capital stock of Lynx) is set forth in
         SCHEDULE 5.F. All outstanding shares of capital stock are duly
         authorized, validly issued, fully paid and nonassessable and have been
         issued in compliance with all applicable securities laws.

         Except as set forth in SCHEDULE 5.F, there are no outstanding options,
         warrants, script rights to subscribe to, calls or commitments of any
         character whatsoever relating to, or securities, rights or obligations
         convertible into or exercisable or exchangeable for, or giving any
         person or entity any right to subscribe for or acquire, any shares of
         common stock of Lynx (the "COMMON STOCK"), or contracts, commitments,
         understandings or arrangements by which Lynx is or may become bound to
         issue additional shares of Common Stock, or securities or rights
         convertible or exchangeable into shares of Common Stock. Except as set
         forth in SCHEDULE 5.F, there are no anti-dilution or price adjustment
         provisions contained in any security issued by Lynx (or in any
         agreement providing rights to security holders) and the issue and sale
         of the Lynx Shares will not obligate Lynx to issue shares of Common
         Stock or other securities to any person or entity (other than the
         Seller) and will not result in a right of any holder of Lynx securities
         to adjust the exercise, conversion, exchange or reset price under such
         securities. To the knowledge of Lynx, except as specifically disclosed
         in SCHEDULE 5.F, no person and entity or group of related person and
         entities beneficially owns (as determined pursuant to Rule 13d-3 under
         the U.S. Securities Exchange Act of 1934, as amended, the "EXCHANGE
         ACT"), or has the right to acquire, by agreement with or by obligation
         binding upon Lynx, beneficial ownership of in excess of 5% of the
         outstanding Common Stock, ignoring for

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         such purposes any limitation on the number of shares of Common Stock
         that may be owned at any single time.

     g)  SEC REPORTS; FINANCIAL STATEMENTS: Lynx has filed all reports required
         to be filed by it under the U.S. Securities Act of 1933, as amended
         (the "SECURITIES ACT") and the EXCHANGE ACT, including pursuant to
         Section 13(a) or 15(d) thereof, for the two years preceding the date
         hereof (or such shorter period as Lynx was required by law to file such
         material) (the foregoing materials being collectively referred to
         herein as the "SEC REPORTS" and, together with this Agreement and the
         Schedules to this Agreement, the "DISCLOSURE MATERIALS") on a timely
         basis or has received a valid extension of such time of filing and has
         filed any such SEC Reports prior to the expiration of any such
         extension. As of their respective dates, the SEC Reports complied in
         all material respects with the requirements of the Securities Act and
         the Exchange Act and the rules and regulations of the Commission
         promulgated thereunder, and none of the SEC Reports, when filed,
         contained any untrue statement of a material fact or omitted to state a
         material fact required to be stated therein or necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading. The financial statements of Lynx
         included in the SEC Reports comply in all material respects with
         applicable accounting requirements and the rules and regulations of the
         Commission with respect thereto as in effect at the time of filing.
         Such financial statements have been prepared in accordance with United
         States generally accepted accounting principles applied on a consistent
         basis during the periods involved ("GAAP"), except as may be otherwise
         specified in such financial statements or the notes thereto or, in the
         case of unaudited financial statements, as permitted by Form 10-Q of
         the Commission, and fairly present in all material respects the
         financial position of Lynx and its consolidated subsidiaries as of and
         for the dates thereof and the results of operations and cash flows for
         the periods then ended, subject, in the case of unaudited statements,
         to normal, immaterial, year-end audit adjustments. All material
         agreements, as such contracts are defined in Section 601(a)(10) of
         Regulation S-K under the Securities Act, to which Lynx is a party or to
         which the property or assets of Lynx are subject are included as part
         of or specifically identified in the SEC Reports.

     h)  MATERIAL CHANGES: Since September 30, 2003, the date of the latest
         financial statements included within the SEC Reports, except as
         specifically disclosed in the SEC Reports, (i) there has been no event,
         occurrence or development that, individually or in the aggregate, has
         had or that could result in a Material Adverse Effect, (ii) Lynx has
         not incurred any liabilities (contingent or otherwise) other than (A)
         trade payables and accrued expenses incurred in the ordinary course of
         business consistent with past practice and (B) liabilities not required
         to be reflected in Lynx's financial statements pursuant to GAAP or
         required to be disclosed in filings made with the Commission, (iii)
         Lynx has not altered its method of accounting or the identity of its
         auditors, (iv) Lynx has not declared or made any dividend or
         distribution of cash or other property to its stockholders or
         purchased, redeemed or made any agreements to purchase or redeem any
         shares of its capital stock, and (v) Lynx has not issued any equity
         securities to any officer, director, or affiliate except pursuant to
         existing Lynx stock option and stock purchase plans.

     i)  PRIVATE PLACEMENT: Neither Lynx nor any person or entity acting on
         Lynx's behalf has sold or offered to sell or solicited any offer to buy
         the Lynx Shares by means of any form of general solicitation or
         advertising. Neither Lynx nor any person or entity acting on Lynx's
         behalf has, directly or indirectly, at any time within the past six
         months, made any offer or sale of any security or solicitation of any
         offer to buy any security under

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         circumstances that would (i) eliminate the availability of the
         exemption from registration under Regulation D under the Securities Act
         in connection with the offer and sale of the Lynx Shares as
         contemplated hereby or (ii) cause the offering of the Lynx Shares
         pursuant to this Agreement to be integrated with prior offerings by
         Lynx for purposes of any applicable law, regulation or stockholder
         approval provisions, including, without limitation, under the rules and
         regulations of any trading market (the Nasdaq Small Cap Market, the New
         York Stock Exchange, the American Stock Exchange or the Nasdaq National
         Market, a "TRADING MARKET"). Lynx is not, and is not an affiliate
         (meaning a person or entity that, directly or indirectly, through one
         or more intermediaries, controls or is controlled by or is under common
         control with a person or entity, an "AFFILIATE") of, an "investment
         company" within the meaning of the Investment Securities Act of 1940,
         as amended. Lynx is not a United States real property holding
         corporation within the meaning of the Foreign Investment in Real
         Property Tax Act of 1980.

     j)  FORM S-3 ELIGIBILITY: Lynx is eligible to register its Common Stock for
         resale by the Seller using Form S-3 promulgated under the Securities
         Act.

     k)  LISTING AND MAINTENANCE REQUIREMENTS: Except as described in Lynx's
         Annual Report for the year ended December 31, 2002 initially filed on
         Form 10-K with the Commission on March 28, 2003, as amended (the
         "ANNUAL REPORT"), Lynx has not, in the two years preceding the date
         hereof, received notice (written or oral) from any Trading Market on
         which the Common Stock is or has been listed or quoted to the effect
         that Lynx is not in compliance with the listing or maintenance
         requirements of such Trading Market.

     l)  REGISTRATION RIGHTS: Except as described in SCHEDULE 5.L, Lynx has not
         granted or agreed to grant to any person or entity any rights
         (including "piggy-back" registration rights) to have any securities of
         Lynx registered with the Commission or any other governmental authority
         that have not been satisfied.

5.2      The representations and warranties of Lynx are expressly limited to
         those set forth in this Article 5.1. No other representations or
         warranties, of whatever nature and whatever kind, are given by Lynx in
         relation to this Agreement.

             ARTICLE.6 OTHER COVENANTS AND AGREEMENTS OF THE SELLER

6.1.     The Seller undertakes to use best endeavours to assist the Buyers in
         completing the legal transfer of the Patents to one or both of the
         Buyers, it being understood that the procedures relating to the
         registration of the Patents in the name of the Buyers will be carried
         out by the Buyers. All third party costs (invoices of third parties,
         registration fees, etc.) in relation thereto, if any, shall be borne by
         the Buyers, whereas no entity in which Serono has a majority of the
         voting rights or a majority of the shares shall be considered as a
         third party. Before instructing any third parties, the Seller shall
         first consult with the Buyers and obtain their written approval.

6.2.     Seller undertakes for a period of two (2) years after the Closing not
         to (i) directly or indirectly compete with either of the Buyers, (ii)
         provide products or services to direct or indirect competitors of the
         Buyers, (iii) acquire participations or other interests in such direct
         or indirect competitors, or (iv) cooperate in any way with, or act for,
         such direct or indirect competitors. This covenant not to compete
         extends to all companies and partnerships controlled by Seller.

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         The relevant market with regard to (i) territory and (ii) products and
         services comprises all markets in which the Buyers, directly or through
         subsidiaries, offer their products and services at the time of the
         asserted infringement of the undertaking.

         Further, during two (2) years after the Closing, Seller will not employ
         (as employee or consultant) any person who is or becomes an employee of
         either of the Buyers on or after the Signing Date, and will not allow
         such employment by any company or partnership controlled by Seller.

         For each infringement of the undertakings made in this Article 6.2,
         Seller owes to the Buyers a contractual penalty of USD 500,000 (five
         hundred thousand United States Dollars) in accordance with art. 161
         para. 1 CO, regardless of the occurrence of actual damages. In
         addition, Seller owes full indemnification for all damages suffered by
         the Buyers (without the right to offset the amount of the contractual
         penalty), and the Buyers may prohibit further infringements of the
         undertakings and require the elimination of any continued infringement.

6.3.     30 days after the Effective Date, Seller shall use best endeavors to
         delete all copies of the Know-How remaining in its possession.

6.4.     For the purpose of assisting the Buyers in achieving the full transfer
         of the Purchased Assets, the Seller shall procure to the Buyers the
         services of Mr. Gerardo Turcatti, three (3) days a week for a period of
         three (3) months from the Closing, subject to vacation entitlement of
         seven (7) days over the period. In relation thereto, the Parties agree
         as follows:

         6.4.1    The salary of Mr Turcatti will be entirely borne by the Seller
                  whereby any additional expenses associated with the provision
                  of the services by Mr. Turcatti will be borne by the Buyers.

         6.4.2    Should the Buyers require the presence of Mr. Turcatti outside
                  of Europe, then Mr. Turcatti shall travel to such place in
                  business class. Mr. Turcatti shall be accommodated in
                  convenient and mutually agreed upon hotels. Any request for
                  the presence of Mr. Turcatti on either of the Buyers'
                  facilities shall be made with, at least, the following written
                  advance notice: two business days for a travel to Solexa's
                  facilities and four business days for a travel to Lynx's
                  facilities.

6.5.

         a)       The Seller agrees to the imprinting, so long as is required by
                  this Section, of the following legend on any certificate
                  evidencing Lynx Shares:

                  THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
                  AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
                  STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
                  THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
                  AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
                  TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
                  ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
                  TRANSACTION NOT SUBJECT

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                  TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
                  ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

         b)       Certificates evidencing Lynx Shares shall not be required to
                  contain such legend or any other legend (i) following any sale
                  of such Lynx Shares while a registration statement covering
                  the resale of such Lynx Shares is effective under the
                  Securities Act, provided that the prospectus delivery
                  requirements of the Securities Act have been met, or (ii)
                  following any sale of such Lynx Shares pursuant to Rule 144
                  under the Securities Act, or (iii) if such Lynx Shares are
                  eligible for sale under Rule 144(k), or (iv) if such legend is
                  not required under applicable requirements of the Securities
                  Act (including judicial interpretations and pronouncements
                  issued by the Staff of the Commission). Lynx shall cause its
                  counsel to issue a legal opinion on the date that the
                  Registration Statement (as defined under art. 8.3 below) is
                  first declared effective by the Commission, the "EFFECTIVE
                  DATE"). Following the Effective Date or at such earlier time
                  as a legend is no longer required for certain Lynx Shares,
                  Lynx will no later than three trading days (any day on which
                  the Common Stock is listed or quoted on the Nasdaq Small Cap
                  Market, the "TRADING DAYS") following the delivery by the
                  Seller to Lynx or the Transfer Agent of a legended certificate
                  representing such Lynx Shares and following delivery by the
                  Seller to Lynx or Lynx's counsel of a signed and completed
                  notice of sale representing that the prospectus delivery
                  requirements of the Securities Act have been met with respect
                  to such sale, deliver or cause to be delivered to the Seller a
                  certificate representing such Lynx Shares that is free from
                  all restrictive and other legends. Lynx may not make any
                  notation on its records or give instructions to any transfer
                  agent of Lynx that enlarge the restrictions on transfer set
                  forth in this Article.

             ARTICLE.7 OTHER COVENANTS AND AGREEMENTS OF THE BUYERS

The Buyers acknowledge that the Seller has entered into a patent assignment
agreement dated June 10, 2002 (the "GSK PATENT ASSIGNMENT AGREEMENT") with Glaxo
Group Limited and SmithKline Beecham Corporation ("GLAXOSMITHKLINE") by which
the latter have assigned certain patent applications to the Seller and by which
the Seller has granted to GlaxoSmithKline a world-wide, non-exclusive license to
use such patents applications for internal research purposes. The Buyers thus
agree to assume the obligation of the Seller under the GSK Patent Assignment
Agreement by granting such license to GlaxoSmithKline on such patent
applications.

  ARTICLE.8 OTHER COVENANTS AND AGREEMENTS OF LYNX AND THE SELLER WITH RESPECT
                               TO THE LYNX SHARES

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8.1.     FURNISHING OF INFORMATION: As long as the Seller owns Lynx Shares, Lynx
         covenants to timely file (or obtain extensions in respect thereof and
         file within the applicable grace period) all reports required to be
         filed by Lynx after the date hereof pursuant to the Exchange Act. Upon
         the request of the Seller, Lynx shall deliver to the Seller a written
         certification of a duly authorized officer as to whether it has
         complied with the preceding sentence. During the earlier of (i) the
         date two years from the Closing or (ii) as long as the Seller owns Lynx
         Shares, if Lynx is not required to file reports pursuant to such laws,
         it will prepare and furnish to the Seller and make publicly available
         in accordance with paragraph (c) of Rule 144 such information as is
         required for the Seller to sell the Lynx Shares under Rule 144. Lynx
         further covenants that it will take such further action as any holder
         of Lynx Shares may reasonably request to satisfy the provisions of Rule
         144 applicable to the issuer of securities relating to transactions for
         the sale of securities pursuant to Rule 144.

8.2.     INTEGRATION: Lynx shall not, and shall use its best efforts to ensure
         that no Affiliates of Lynx shall sell, offer for sale or solicit offers
         to buy or otherwise negotiate in respect of any security (as defined in
         Section 2 of the Securities Act) that would be integrated with the
         offer or sale of the Lynx Shares in a manner that would require the
         registration under the Securities Act of the sale of the Lynx Shares to
         the Seller, or that would be integrated with the offer or sale of the
         Lynx Shares for purposes of the rules and regulations of any Trading
         Market.

8.3.     SHELF REGISTRATION:

         a)  No later than the later to occur of (i) 20 days after the Signing
             Date or (ii) 3 days after the Conditions Precedent set forth in
             clauses (i) and (ii) of Article 9.1 having been met, Lynx shall
             prepare and file with the Commission a "Shelf" registration
             statement covering the resale of all the Lynx Shares for an
             offering to be made on a continuous basis pursuant to Rule 415 (the
             "REGISTRATION STATEMENT"). The date on which Lynx files the
             Registration Statement in accordance with the preceding sentence
             referred to herein as the "FILING DATE". The Registration Statement
             shall be on Form S-3 (except if Lynx is not then eligible to
             register for resale of the Lynx Shares on Form S-3, in which case
             such registration shall be on another appropriate form in
             accordance herewith as the Seller may consent) and shall contain
             (except if otherwise directed by the Seller) the "Plan of
             Distribution" attached hereto as SCHEDULE 8.3.A.

         b)  Lynx shall use its best efforts (as that concept is understood
             under English law) to cause the Registration Statement to be
             declared effective by the Commission as promptly as possible after
             the filing thereof, but in any event prior to the date that is 60
             days after the Closing (the "REQUIRED EFFECTIVENESS DATE"), and
             shall use its best efforts (as that concept is understood under
             English law) to keep the Registration Statement continuously
             effective under the Securities Act until the second anniversary of
             the Effective Date or such earlier date when all Lynx Shares
             covered by such Registration Statement have been sold or may be
             sold without volume restrictions pursuant to Rule 144(k) (the
             "EFFECTIVENESS PERIOD").

         c)  Lynx shall notify the Seller in writing promptly (and in any event
             within one Trading Day) after receiving notification from the
             Commission that the Registration Statement has been declared
             effective.

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         d)  Upon the occurrence of any Event (as defined below) and on every
             monthly anniversary thereof until the applicable Event is cured, as
             partial relief for the damages suffered therefrom by the Seller
             (which remedy shall not be exclusive of any other remedies
             available under this Agreement, at law or in equity), Lynx shall
             pay to the Seller an amount of USD 15'000 (fifteen thousand US
             dollars) in cash, as liquidated damages and not as a penalty. The
             payments to which the Seller shall be entitled pursuant to this
             Article 8.3(d) are referred to herein as "Event Payments". Any
             Event Payments payable pursuant to the terms hereof shall apply on
             a pro-rata basis for any portion of a month prior to the cure of an
             Event. In the event Lynx fails to make Event Payments in a timely
             manner, such Event Payments shall bear interest at the rate of 1.5%
             per month (prorated for partial months) until paid in full.

             For such purposes, the occurrence of the Registration Statement not
             being declared effective on or prior to the Required Effectiveness
             Date shall constitute an "Event".

         e)  Notwithstanding anything in this Agreement to the contrary, Lynx
             may, by written notice to the Seller, suspend sales under the
             Registration Statement after the Effective Date thereof and/or
             require that the Seller immediately cease the sale of shares of
             Common Stock pursuant thereto if at any time Lynx determines in
             good faith that the Registration Statement contains an untrue
             statement of a material fact or omits to state a material fact
             required to be stated therein or necessary to make the statements
             therein, in the light of the circumstances under which they were
             made, not misleading and cannot be utilized in connection with the
             sale of shares of Common Stock until it has been appropriately
             amended. Upon receipt of such notice, the Seller shall immediately
             discontinue any sales of Lynx Shares pursuant to such registration
             until the Seller has received copies of a supplemented or amended
             prospectus or until the Seller is advised in writing by Lynx that
             the then-current prospectus may be used and has received copies of
             any additional or supplemental filings that are incorporated or
             deemed incorporated by reference in such prospectus. In no event,
             however, shall this right be exercised to suspend sales beyond the
             period during which (in the good faith determination of Lynx's
             board of directors) the failure to require such suspension would be
             materially detrimental to Lynx. Furthermore, in no event may Lynx
             exercise its rights hereunder for a period of more than 7
             consecutive Trading Days or more than 20 Trading Days in any twelve
             month period. Immediately after the end of any suspension period
             under this Article 8.3(e), Lynx shall take all necessary actions
             (including filing any required supplemental prospectus) to restore
             the effectiveness of the Registration Statement and the ability of
             the Seller to publicly resell its Lynx Shares pursuant to such
             effective Registration Statement.

8.4.     REGISTRATION PROCEDURES: In connection with Lynx's registration
         obligations hereunder, Lynx shall:

         a)  Not less than three Trading Days prior to the filing of the
             Registration Statement or any related prospectus or any amendment
             or supplement thereto (specifically excluding any document that
             would be incorporated or deemed to be incorporated therein by
             reference), furnish to the Seller and to the Seller's counsel
             copies of all such documents proposed to be filed, which documents
             (other than those incorporated or deemed to be incorporated by
             reference) will be subject to the review of the Seller and the
             Seller's counsel. Lynx shall not file a Registration Statement or
             any such prospectus or any amendments or supplements thereto to
             which the Seller shall reasonably object in good

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             faith. In the absence of any reaction from the Seller within three
             working days, the Seller is deemed to consent to such documents
             proposed to be filed.

         b)  (i) Prepare and file with the Commission such amendments, including
             post-effective amendments, to the Registration Statement and the
             prospectus used in connection therewith as may be necessary to keep
             the Registration Statement continuously effective as to the Lynx
             Shares for the Effectiveness Period; (ii) cause the related
             prospectus to be amended or supplemented by any required prospectus
             supplement, and as so supplemented or amended to be filed pursuant
             to Rule 424; (iii) respond as promptly as reasonably possible, and
             in any event within 15 days, to any comments received from the
             Commission with respect to the Registration Statement or any
             amendment thereto and as promptly as reasonably possible provide
             the Seller true and complete copies of all correspondence from and
             to the Commission relating to the Registration Statement; and (iv)
             comply in all material respects with the provisions of the
             Securities Act and the Exchange Act with respect to the disposition
             of all Lynx Shares covered by the Registration Statement during the
             applicable period in accordance with the intended methods of
             disposition by the Seller thereof set forth in the Registration
             Statement as so amended or in such prospectus as so supplemented.

         c)  Notify the Seller and the Seller's counsel as promptly as
             reasonably possible, and (if requested by any such person or
             entity) confirm such notice in writing no later than one Trading
             Day thereafter, of any of the following events: (i) the Commission
             notifies Lynx whether there will be a "review" of the Registration
             Statement; (ii) the Commission comments in writing on the
             Registration Statement (in which case Lynx shall deliver to the
             Seller a copy of such comments and of all written responses
             thereto); (iii) the Registration Statement or any post-effective
             amendment is declared effective; (iv) the Commission or any other
             U.S. Federal or state governmental authority requests any amendment
             or supplement to the Registration Statement or prospectus or
             requests additional information related thereto; (v) the Commission
             issues any stop order suspending the effectiveness of the
             Registration Statement or initiates any proceedings, suits,
             actions, investigations, proceedings ("the Proceedings") for that
             purpose; (vi) Lynx receives notice of any suspension of the
             qualification or exemption from qualification of any Lynx Shares
             for sale in any jurisdiction, or the initiation or threat of any
             Proceeding for such purpose; or (vii) the financial statements
             included in the Registration Statement become ineligible for
             inclusion therein or any statement made in the Registration
             Statement or prospectus or any document incorporated or deemed to
             be incorporated therein by reference is untrue in any material
             respect or any revision to Registration Statement, prospectus or
             other document is required so that it will not contain any untrue
             statement of a material fact or omit to state any material fact
             required to be stated therein or necessary to make the statements
             therein, in the light of the circumstances under which they were
             made, not misleading.

         d)  Use its best efforts (as that concept is understood under English
             law) to avoid the issuance of or, if issued, obtain the withdrawal
             of (i) any order suspending the effectiveness of the Registration
             Statement, or (ii) any suspension of the qualification (or
             exemption from qualification) of any of the Lynx Shares for sale in
             any jurisdiction, at the earliest practicable moment.

         e)  Furnish to the Seller and to the Seller's counsel, without charge,
             at least one conformed copy of the Registration Statement and each
             amendment thereto, including financial statements and schedules,
             all documents incorporated or deemed to be incorporated

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             therein by reference, and all exhibits to the extent requested by
             such person or entity (including those previously furnished or
             incorporated by reference) promptly after the filing of such
             documents with the Commission.

         f)  Promptly deliver to the Seller and to the Seller's counsel, without
             charge, as many copies of the prospectus or prospectuses (including
             each form of prospectus) and each amendment or supplement thereto
             as such person or entity may reasonably request. Lynx hereby
             consents to the use of such prospectus and each amendment or
             supplement thereto by the Seller in connection with the offering
             and sale of the Lynx Shares covered by such prospectus and any
             amendment or supplement thereto.

         g)  (i) In the time and manner required by each Trading Market, prepare
             and file with such Trading Market an additional shares listing
             application covering all of the Lynx Shares; (ii) take all steps
             necessary to cause such Lynx Shares to be approved for listing on
             each Trading Market as soon as possible thereafter; (iii) provide
             to the Seller evidence of such listing; and (iv) maintain the
             listing of the Lynx Shares on each such Trading Market.

         h)  Prior to any public offering of Lynx Shares, use its best efforts
             (as that concept is understood under English law) to register or
             qualify or cooperate with the Seller and the Seller's counsel in
             connection with the registration or qualification (or exemption
             from such registration or qualification) of such Lynx Shares for
             offer and sale under the securities or blue sky laws of such
             jurisdictions within the United States as the Seller requests in
             writing, to keep each such registration or qualification (or
             exemption therefrom) effective during the Effectiveness Period and
             to do any and all other acts or things necessary or advisable to
             enable the disposition in such jurisdictions of the Lynx Shares
             covered by the Registration Statement; provided, however, that Lynx
             shall not be obligated to file any general consent to service of
             process or to qualify as a foreign corporation or as a dealer in
             securities in any jurisdiction in which it is not so qualified or
             to subject itself to taxation in respect of doing business in any
             jurisdiction in which it is not otherwise subject.

         i)  Cooperate with the Seller to facilitate the timely preparation and
             delivery of certificates representing Lynx Shares to be delivered
             to a transferee pursuant to the Registration Statement, which
             certificates shall be free, to the extent permitted by this
             Agreement, of all restrictive legends, and to enable such Lynx
             Shares to be in such denominations and registered in such names as
             the Seller may request.

         j)  Upon the occurrence of any event described in Article 8.4(c)(vii),
             as promptly as reasonably possible, prepare a supplement or
             amendment, including a post-effective amendment, to the
             Registration Statement or a supplement to the related prospectus or
             any document incorporated or deemed to be incorporated therein by
             reference, and file any other required document so that, as
             thereafter delivered, neither the Registration Statement nor such
             prospectus will contain an untrue statement of a material fact or
             omit to state a material fact required to be stated therein or
             necessary to make the statements therein, in the light of the
             circumstances under which they were made, not misleading.

         k)  Comply with all applicable rules and regulations of the Commission.

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8.5.     REGISTRATION EXPENSES. Lynx shall pay (or reimburse the Seller for) all
         fees and expenses incident to the performance of or compliance with
         this Article 8 of this Agreement by Lynx, including without limitation
         (a) all registration and filing fees and expenses, including without
         limitation those related to filings with the Commission, any Trading
         Market and in connection with applicable state securities or Blue Sky
         laws, (b) printing expenses (including without limitation expenses of
         printing certificates for Lynx Shares and of printing prospectuses
         requested by the Seller), (c) messenger, telephone and delivery
         expenses, (d) fees and disbursements of counsel for Lynx, (e) fees and
         expenses of all other persons or entities retained by Lynx in
         connection with the consummation of the transactions contemplated by
         Article 8 of this Agreement, and (f) all listing fees to be paid by
         Lynx to the Trading Market.

8.6.     INDEMNIFICATION.

         a)  Lynx shall, notwithstanding any termination of this Agreement,
             indemnify and hold harmless the Seller, its officers, directors,
             partners, members, agents, brokers (including brokers who offer and
             sell Lynx Shares as principal as a result of a pledge or any
             failure to perform under a margin call of Common Stock), investment
             advisors and employees, each person or entity who controls the
             Seller (within the meaning of Section 15 of the Securities Act or
             Section 20 of the Exchange Act) and the officers, directors,
             partners, members, agents and employees of each such controlling
             person or entity, to the fullest extent permitted by applicable
             law, from and against any and all losses, claims, damages,
             liabilities, settlement costs and expenses, including without
             limitation reasonable attorney's fees ("the Losses"), as incurred,
             arising out of or relating to any untrue or alleged untrue
             statement of a material fact contained in the Registration
             Statement, any prospectus or any form of prospectus or in any
             amendment or supplement thereto or in any preliminary prospectus,
             or arising out of or relating to any omission or alleged omission
             of a material fact required to be stated therein or necessary to
             make the statements therein (in the case of any prospectus or form
             of prospectus or supplement thereto, in the light of the
             circumstances under which they were made) not misleading, except to
             the extent, but only to the extent, that (i) such untrue
             statements, alleged untrue statements, omissions or alleged
             omissions are based solely upon information regarding the Seller
             furnished in writing to Lynx by the Seller expressly for use
             therein, or to the extent that such information relates to the
             Seller or the Seller's proposed method of distribution of Lynx
             Shares and was reviewed and expressly approved in writing by the
             Seller expressly for use in the Registration Statement, such
             prospectus or such form of prospectus or in any amendment or
             supplement thereto or (ii) in the case of an occurrence of an event
             of the type specified in Article 8.4(c)(v)-(vii), the use by the
             Seller of an outdated or defective prospectus after Lynx has
             notified the Seller in writing that the prospectus is outdated or
             defective and prior to the receipt by the Seller of the Advice
             contemplated in Article 8.7 below. Lynx shall notify the Seller
             promptly of the institution, threat or assertion of any Proceeding
             of which Lynx is aware in connection with the transactions
             contemplated by this Agreement.

         b)  INDEMNIFICATION BY THE SELLER. The Seller shall indemnify and hold
             harmless Lynx, its directors, officers, agents and employees, each
             Person who controls Lynx (within the meaning of Section 15 of the
             Securities Act and Section 20 of the Exchange Act), and the
             directors, officers, agents or employees of such controlling
             Persons, to the fullest extent permitted by applicable law, from
             and against all Losses, as incurred, arising solely out of any
             untrue statement of a material fact contained in the

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             Registration Statement, any prospectus, or any form of prospectus,
             or in any amendment or supplement thereto, or arising solely out of
             any omission of a material fact required to be stated therein or
             necessary to make the statements therein (in the case of any
             prospectus or form of prospectus or supplement thereto, in the
             light of the circumstances under which they were made) not
             misleading to the extent, but only to the extent, that such untrue
             statement or omission is contained in any information so furnished
             in writing by the Seller to Lynx specifically for inclusion in such
             Registration Statement or such prospectus or to the extent that (i)
             such untrue statements or omissions are based solely upon
             information regarding the Seller furnished in writing to Lynx by
             the Seller expressly for use therein, or to the extent that such
             information relates to the Seller or the Seller's proposed method
             of distribution of the Lynx Shares and was reviewed and expressly
             approved in writing by the Seller expressly for use in the
             Registration Statement, such Prospectus or such form of Prospectus
             or in any amendment or supplement thereto or (ii) in the case of an
             occurrence of an event of the type specified in Article
             8.4(c)(v)-(vii), the use by the Seller of an outdated or defective
             Prospectus after Lynx has notified the Seller in writing that the
             Prospectus is outdated or defective and prior to the receipt by the
             Seller of the Advice contemplated in Article 8.7 below. In no event
             shall the liability of the Seller hereunder be greater in amount
             than two million dollars (USD $2,000,000).

         c)  Conduct of Indemnification Proceedings. If any Proceeding shall be
             brought or asserted against any person or entity entitled to
             indemnity hereunder (an "INDEMNIFIED PARTY"), such Indemnified
             Party shall promptly notify the person or entity from whom
             indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the
             Indemnifying Party shall assume the defense thereof, including the
             employment of counsel reasonably satisfactory to the Indemnified
             Party and the payment of all fees and expenses incurred in
             connection with defense thereof; provided, that the failure of any
             Indemnified Party to give such notice shall not relieve the
             Indemnifying Party of its obligations or liabilities pursuant to
             this Agreement, except (and only) to the extent that it shall be
             finally determined by a court of competent jurisdiction (which
             determination is not subject to appeal or further review) that such
             failure shall have proximately and materially adversely prejudiced
             the Indemnifying Party.

             An Indemnified Party shall have the right to employ separate
             counsel in any such Proceeding and to participate in the defense
             thereof, but the fees and expenses of such counsel shall be at the
             expense of such Indemnified Party or Parties unless: (i) the
             Indemnifying Party has agreed in writing to pay such fees and
             expenses; or (ii) the Indemnifying Party shall have failed promptly
             to assume the defense of such Proceeding and to employ counsel
             reasonably satisfactory to such Indemnified Party in any such
             Proceeding; or (iii) the named parties to any such Proceeding
             (including any impleaded parties) include both such Indemnified
             Party and the Indemnifying Party, and such Indemnified Party shall
             have been advised by counsel that a conflict of interest is likely
             to exist if the same counsel were to represent such Indemnified
             Party and the Indemnifying Party (in which case, if such
             Indemnified Party notifies the Indemnifying Party in writing that
             it elects to employ separate counsel at the expense of the
             Indemnifying Party, the Indemnifying Party shall not have the right
             to assume the defense thereof and such counsel shall be at the
             expense of the Indemnifying Party). The Indemnifying Party shall
             not be liable for any settlement of any such Proceeding effected
             without its written consent, which consent shall not be
             unreasonably withheld. No Indemnifying Party shall, without the
             prior written consent of the Indemnified Party, effect any
             settlement of any pending Proceeding in respect of which any

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             Indemnified Party is a party, unless such settlement includes an
             unconditional release of such Indemnified Party from all liability
             on claims that are the subject matter of such Proceeding.

             All fees and expenses of the Indemnified Party (including
             reasonable fees and expenses to the extent incurred in connection
             with investigating or preparing to defend such Proceeding in a
             manner not inconsistent with this Article) shall be paid to the
             Indemnified Party, as incurred, within ten Trading Days of written
             notice thereof to the Indemnifying Party (regardless of whether it
             is ultimately determined that an Indemnified Party is not entitled
             to indemnification hereunder; provided, that the Indemnifying Party
             may require such Indemnified Party to undertake to reimburse all
             such fees and expenses to the extent it is finally judicially
             determined that such Indemnified Party is not entitled to
             indemnification hereunder).

         d)  Contribution. If a claim for indemnification under Article 8.6(a)
             is unavailable to an Indemnified Party (by reasons other than the
             specified exclusions to indemnification), then each Indemnifying
             Party, in lieu of indemnifying such Indemnified Party, shall
             contribute to the amount paid or payable by such Indemnified Party
             as a result of such Losses, in such proportion as is appropriate to
             reflect the relative fault of the Indemnifying Party and
             Indemnified Party in connection with the actions, statements or
             omissions that resulted in such Losses as well as any other
             relevant equitable considerations. The relative fault of such
             Indemnifying Party and Indemnified Party shall be determined by
             reference to, among other things, whether any action in question,
             including any untrue or alleged untrue statement of a material fact
             or omission or alleged omission of a material fact, has been taken
             or made by, or relates to information supplied by, such
             Indemnifying Party or Indemnified Party, and the parties' relative
             intent, knowledge, access to information and opportunity to correct
             or prevent such action, statement or omission. The amount paid or
             payable by a party as a result of any Losses shall be deemed to
             include, subject to the limitations set forth in Article 8.6, any
             reasonable attorneys' or other reasonable fees or expenses incurred
             by such party in connection with any Proceeding to the extent such
             party would have been indemnified for such fees or expenses if the
             indemnification provided for in this Article was available to such
             party in accordance with its terms.

             The parties hereto agree that it would not be just and equitable if
             contribution pursuant to this Article 8.6(c) were determined by
             prorata allocation or by any other method of allocation that does
             not take into account the equitable considerations referred to in
             the immediately preceding paragraph. Notwithstanding the provisions
             of this Article 8.6(c), the Seller shall not be required to
             contribute, in the aggregate, any amount in excess of the amount by
             which the proceeds actually received by the Seller from the sale of
             the Lynx Shares subject to the Proceeding exceeds the amount of any
             damages that the Seller has otherwise been required to pay by
             reason of such untrue or alleged untrue statement or omission or
             alleged omission. No person or entity guilty of fraudulent
             misrepresentation (within the meaning of Section 11(f) of the
             Securities Act) shall be entitled to contribution from any person
             or entity who was not guilty of such fraudulent misrepresentation.

             The indemnity and contribution agreements contained in this Article
             are in addition to any liability that the Indemnifying Parties may
             have to the Indemnified Parties.

                                       22

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                                                     EXECUTION COPY - 22 03 2004

8.7.     DISPOSITIONS. The Seller agrees that it will comply with the prospectus
         delivery requirements of the Securities Act as applicable to it in
         connection with sales of Lynx Shares pursuant to the Registration
         Statement. The Seller further agrees that, upon receipt of a notice
         from Lynx of the occurrence of any event of the kind described in
         Articles 8.4(c)(v), (vi) or (vii), the Seller will discontinue
         disposition of such Lynx Shares under the Registration Statement until
         the Seller's receipt of the copies of the supplemented prospectus
         and/or amended Registration Statement contemplated by Article 8.4(j),
         or until it is advised in writing (the "Advice") by Lynx that the use
         of the applicable prospectus may be resumed, and, in either case, has
         received copies of any additional or supplemental filings that are
         incorporated or deemed to be incorporated by reference in such
         prospectus or Registration Statement. Lynx may provide appropriate stop
         orders to enforce the provisions of this paragraph.

8.8.     NO PIGGYBACK ON REGISTRATIONS. Other than pursuant to the exercise of
         existing registration rights by certain stockholders of Lynx as
         specified in SCHEDULE 8.8 hereto, neither Lynx nor any of its security
         holders (other than the Seller in such capacity pursuant hereto) may
         include securities of Lynx in the Registration Statement other than the
         Lynx Shares, and Lynx shall not after the date hereof enter into any
         agreement providing any such right to any of its security holders.

8.9.     PIGGY-BACK REGISTRATIONS. If at any time during the Effectiveness
         Period there is not an effective Registration Statement covering all of
         the Lynx Shares and Lynx shall determine to prepare and file with the
         Commission a registration statement relating to an offering for its own
         account or the account of others under the Securities Act of any of its
         equity securities, other than on Form S-4 or Form S-8 (each as
         promulgated under the Securities Act) or their then equivalents
         relating to equity securities to be issued solely in connection with
         any acquisition of any entity or business or equity securities issuable
         in connection with stock option or other employee benefit plans, then
         Lynx shall send to the Seller written notice of such determination and
         if, within fifteen days after receipt of such notice, the Seller shall
         so request in writing, Lynx shall include in such registration
         statement all or any part of such Lynx Shares the Seller requests to be
         registered.

8.10.    OTHER REGISTRATION STATEMENTS. Except for the filing of the
         Registration Statement, and except as provided in SCHEDULE 8.10, Lynx
         shall not, for a period from the Signing Date until the day that is 21
         days after the Closing, file with the Commission a registration
         statement relating to an offering for its own account or the account of
         others under the Securities Act of any of its equity securities.

                         ARTICLE.9 CONDITIONS PRECEDENT

9.1.     The respective obligations of the Parties to effect the transactions
         contemplated under this Agreement shall be subject to the following
         conditions precedent having been met (the "CONDITIONS PRECEDENT"):

         (i)      Written consent of the Commissioner by which the Commissioner
                  shall approve the sale of the Purchased Assets to the Buyers,
                  as per the terms of this Agreement;

         (ii)     Written consent of the Debt Restructuring Court approving the
                  sale of the Purchased Assets to the Buyers, as per the terms
                  of this Agreement;

                                       23

<PAGE>

                                                     EXECUTION COPY - 22 03 2004

         (iii)    Filing of the Registration Statement by Lynx as defined under
                  8.3 above; and

         (iv)     No material adverse change to the condition of the Purchased
                  Assets between the Signing Date and the Closing.

9.2.     The Seller undertakes and agrees to use its best efforts to have the
         Conditions Precedent set forth in clauses (i) and (ii) of Article 9.1
         met as soon as possible after the Signing Date, provided however the
         Buyers acknowledge and agree that the Seller has not the power to
         influence the decisions which shall be taken (at their sole and entire
         discretion) by the Commissioner and by the Debt Restructuring Court.

9.3.     Should the Conditions Precedent not be met on or before April 30, 2004,
         then this Agreement shall be automatically terminated, without
         prejudice to rights and liabilities accrued by any party prior to such
         termination.

                            ARTICLE.10 MISCELLANEOUS

10.1.    FURTHER ASSURANCES OF THE SELLER: The Seller shall execute and/or cause
         to be delivered to the Buyers such instruments and other documents, and
         shall take such other actions, as the Buyers may reasonably request
         (prior to, at or after the Closing) for the purpose of carrying out or
         evidencing any of the transactions contemplated hereunder.

10.2.    PUBLICITY. Promptly following the realization of the Condition
         Precedent 9.1 (ii), Lynx and Solexa shall issue a joint press release,
         the contents of which shall be mutually agreed upon between the
         Parties.

10.3.    SEVERAL OBLIGATIONS OF THE BUYERS: Except where the context clearly
         indicates otherwise, the Buyers' obligations under this Agreement are
         several and not joint .

10.4.    SEVERABILITY: Should one or several provisions of this Agreement be or
         become invalid, then the Parties hereto shall substitute such invalid
         provisions by valid ones, which in their economic effect come so close
         to the invalid provisions that it can be reasonably assumed that the
         Parties would have concluded this Agreement with such new provisions.
         In case such provisions cannot be found or agreed upon, the invalidity
         of one or several provisions of this Agreement shall not affect the
         validity of the Agreement as a whole, unless the invalid provisions are
         of such essential importance for this Agreement that it is to be
         reasonably assumed that the Parties would not have concluded this
         Agreement without the invalid provisions.

10.5.    NOTICES: All notices, requests, demands, waivers and other
         communications required or permitted to be given under the Agreements
         shall be in writing and shall be deemed to have been duly given if
         delivered personally or mailed, if sent by certified or registered mail
         with postage prepaid, or if sent by telegram, telefax or by e-mail, as
         follows:

         (i) If to the Seller, to the following address:

         Manteia SA
         Zone Industrielle

                                       24

<PAGE>

                                                     EXECUTION COPY - 22 03 2004

         1267 Coinsins
         Switzerland

         with copy to:

     a)  Bruno Vocat
         C/o BfB Societe Fiduciaire SA
         Avenue de Jomini 8
         Case Postale 156
         1009 Lausanne
         Switzerland
         Telephone: (+41-21) 641 46 46
         Fax:       (+41-21) 641 46 40

     b)  Lenz & Staehelin
         Attn Guy Vermeil
         Grand'Rue 25
         1211 Geneve 11
         Switzerland
         Telephone: (+41-22) 318 7000
         Fax:       (+41-22) 318 7001

     or to such other person or address as the Seller shall from time to time
     specify by notice in writing to be sent by certified mail only to the
     Buyers.

     (ii)   If to the Buyers, to:

     a)  Lynx Therapeutics, Inc
         Attention: Kevin P. Corcoran
         25861 Industrial Bld, Hayward,
         CA 94545 USA
         Tel 510 670 93 00
         Fax 510 670 93 03

     b)  Solexa Limited
         Attention: Nick McCooke
         Chesterford Research Park
         Little Chesterford Nr Saffron Walden
         Essex CB10 1 XL, England
         Tel 44 (0) 1799 532 300
         Fax 44(0) 1799 532 301

     or to such other person or address as the Buyers shall from time to time
     specify by notice in writing to be sent by certified mail only to the
     Seller.

10.6.    ENTIRE AGREEMENT: This Agreement (including the Schedules hereto)
         constitutes the entire agreement and supersedes all prior agreements
         and understandings, both written and oral, between the Parties with
         respect to the subject matter hereof.

10.7.    AMENDMENT: Except as otherwise expressly provided herein, no amendment,
         modification or discharge of this Agreement, and no waiver hereunder,
         shall be valid or binding unless

                                       25

<PAGE>

                                                     EXECUTION COPY - 22 03 2004

         set forth in writing and duly executed by the Party against whom
         enforcement of the amendment, modification, discharge or waiver is
         sought. Any such waiver shall constitute a waiver only with respect to
         the specific matter described in such writing and shall in no way
         impair the rights of the Party granting such waiver in any other
         respect or at any other time. Neither the waiver by any of the Parties
         of a breach of or a default under any of the provisions of this
         Agreement, nor the failure by any of the Parties, on one or more
         occasions, to enforce any of the provisions of this Agreement or to
         exercise any right or privilege hereunder, shall be construed as a
         waiver of any other breach or default of a similar nature, or as a
         waiver of any of such provisions, rights or privileges hereunder.

10.8.    COUNTERPARTS: The Parties may execute this Agreement in separate
         counterparts (no one of which need contain the signatures of all
         Parties), each of which will be an original and all of which together
         will constitute one and the same instrument.

10.9.    ASSIGNMENT: This Agreement shall not be assignable or otherwise
         transferable by any Party without the prior written consent of the
         others Parties hereto.

10.10.   GOVERNING LAW: This Agreement shall be governed by, construed and
         enforced in accordance with the laws of Switzerland.

10.11.   ARBITRATION: Any dispute, controversy or claim arising out of or in
         relation to this Agreement, including the validity, invalidity, breach
         or termination thereof, shall be settled by arbitration in accordance
         with the Swiss Rules of International Arbitration of the Swiss Chambers
         of Commerce in force on the date when the Notice of Arbitration is
         submitted in accordance with these Rules.

         The number of arbitrators shall be one. The seat of the arbitration
         shall be in Geneva. The arbitral proceedings shall be conducted in
         English language.

                                       26

<PAGE>

                                                     EXECUTION COPY - 22 03 2004

IN WITNESS THEREOF, the Parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of this March 22., 2004.

MANTEIA SA                                          SOLEXA LIMITED

/s/ Francois Naef                                   /s/ Nick McCooke
----------------------                              ----------------------------
Francois Naef                                       Nick McCooke
                                                    Chief Executive Officer

                                                    LYNX THERAPEUTICS

                                                    /s/ Kevin P. Corcoran
                                                    ----------------------------
                                                    Kevin P. Corcoran
                                                    President and
                                                    Chief Executive Officer

                                       27<PAGE>

                                                                    EXHIBIT 10.1

                         ALNYLAM PHARMACEUTICALS, INC.

         2002 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN, AS AMENDED

1.       DEFINITIONS.

         Unless otherwise specified or unless the context otherwise requires,
         the following terms, as used in this Alnylam Pharmaceuticals, Inc. 2002
         Employee, Director and Consultant Stock Plan, have the following
         meanings:

                  Administrator means the Board of Directors, unless it has
                  delegated power to act on its behalf to the Committee, in
                  which case the Administrator means the Committee.

                  Affiliate means a corporation which, for purposes of Section
                  424 of the Code, is a parent or subsidiary of the Company,
                  direct or indirect.

                  Board of Directors means the Board of Directors of the
                  Company.

                  Change of Control means a merger or consolidation of the
                  Company whether or not approved by the Board of Directors,
                  other than a merger or consolidation which would result in the
                  voting securities of the Company outstanding immediately prior
                  thereto continuing to represent (either by remaining
                  outstanding or by being converted into voting securities of
                  the surviving entity or the parent of such corporation) at
                  least 50% of the total voting power represented by the voting
                  securities of the Company or such surviving entity or parent
                  of such corporation outstanding immediately after such merger
                  or consolidation, or the stockholders of the Company approve
                  an agreement for the sale or disposition by the Company of all
                  or substantially all of the Company's assets.

                  Code means the United States Internal Revenue Code of 1986, as
                  amended.

                  Committee means the committee of the Board of Directors to
                  which the Board of Directors has delegated power to act under
                  or pursuant to the provisions of the Plan.

                  Common Stock means shares of the Company's common stock,
                  $.0001 par value per share.

                  Company means Alnylam Pharmaceuticals, Inc., a Delaware
                  corporation.

                  Disability or Disabled means permanent and total disability as
                  defined in Section 22(e)(3) of the Code.

<PAGE>

                  Employee means any employee of the Company or of an Affiliate
                  (including, without limitation, an employee who is also
                  serving as an officer or director of the Company or of an
                  Affiliate), designated by the Administrator to be eligible to
                  be granted one or more Stock Rights under the Plan.

                  Fair Market Value of a Share of Common Stock means:

                  (1)      If the Common Stock is listed on a national
                  securities exchange or traded in the over-the-counter market
                  and sales prices are regularly reported for the Common Stock,
                  the closing or last price of the Common Stock on the Composite
                  Tape or other comparable reporting system for the trading day
                  immediately preceding the applicable date;

                  (2)      If the Common Stock is not traded on a national
                  securities exchange but is traded on the over-the-counter
                  market, if sales prices are not regularly reported for the
                  Common Stock for the trading day referred to in clause (1),
                  and if bid and asked prices for the Common Stock are regularly
                  reported, the mean between the bid and the asked price for the
                  Common Stock at the close of trading in the over- the-counter
                  market for the trading day on which Common Stock was traded
                  immediately preceding the applicable date; and

                  (3)      If the Common Stock is neither listed on a national
                  securities exchange nor traded in the over-the-counter market,
                  such value as the Administrator, in good faith, shall
                  determine.

                  ISO means an option meant to qualify as an incentive stock
                  option under Section 422 of the Code.

                  Non-Qualified Option means an option which is not intended to
                  qualify as an ISO.

                  Option means an ISO or Non-Qualified Option granted under the
                  Plan.

                  Option Agreement means an agreement between the Company and a
                  Participant delivered pursuant to the Plan, in such form as
                  the Administrator shall approve.

                  Participant means an Employee, director or consultant of the
                  Company or an Affiliate to whom one or more Stock Rights are
                  granted under the Plan. As used herein, "Participant" shall
                  include "Participant's Survivors" where the context requires.

                  Plan means this Alnylam Pharmaceuticals, Inc. 2002 Employee,
                  Director and Consultant Stock Plan.

                  Shares means shares of the Common Stock as to which Stock
                  Rights have been or may be granted under the Plan or any
                  shares of capital stock into which the Shares are changed or
                  for which they are exchanged within the provisions of
                  Paragraph 3

                                       2
<PAGE>
\
                  of the Plan. The Shares issued under the Plan may be
                  authorized and unissued shares or shares held by the Company
                  in its treasury, or both.

                  Stock Grant means a grant by the Company of Shares under the
                  Plan.

                  Stock Grant Agreement means an agreement between the Company
                  and a Participant delivered pursuant to the Plan, in such form
                  as the Administrator shall approve.

                  Stock Right means a right to Shares of the Company granted
                  pursuant to the Plan -- an ISO, a Non-Qualified Option or a
                  Stock Grant.

                  Survivor means a deceased Participant's legal representatives
                  and/or any person or persons who acquired the Participant's
                  rights to a Stock Right by will or by the laws of descent and
                  distribution.

2.       PURPOSES OF THE PLAN.

         The Plan is intended to encourage ownership of Shares by Employees and
directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options and Stock Grants.

3.       SHARES SUBJECT TO THE PLAN.

         (a)      The number of Shares which may be issued from time to time
pursuant to this Plan shall be 2,862,356, or the equivalent of such number of
Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction in accordance with Paragraph 23 of the Plan.

         If an Option ceases to be "outstanding", in whole or in part, or if the
Company shall reacquire any Shares issued pursuant to a Stock Grant, the Shares
which were subject to such Option and any Shares so reacquired by the Company
shall be available for the granting of other Stock Rights under the Plan. Any
Option shall be treated as "outstanding" until such Option is exercised in full,
or terminates or expires under the provisions of the Plan, or by agreement of
the parties to the pertinent Option Agreement.

4.       ADMINISTRATION OF THE PLAN.

         The Administrator of the Plan will be the Board of Directors, except to
the extent the Board of Directors delegates its authority to the Committee, in
which case the Committee shall be the Administrator. Subject to the provisions
of the Plan, the Administrator is authorized to:

                                       3
<PAGE>

         a.       Interpret the provisions of the Plan or of any Option or Stock
                  Grant and to make all rules and determinations which it deems
                  necessary or advisable for the administration of the Plan;

         b.       Determine which Employees, directors and consultants shall be
                  granted Stock Rights;

         c.       Determine the number of Shares for which a Stock Right or
                  Stock Rights shall be granted;

         d.       Specify the terms and conditions upon which a Stock Right or
                  Stock Rights may be granted; and

         e.       Adopt any sub-plans applicable to residents of any specified
                  jurisdiction as it deems necessary or appropriate in order to
                  comply with or take advantage of any tax laws applicable to
                  the Company or to Plan Participants or to otherwise facilitate
                  the administration of the Plan, which sub-plans may include
                  additional restrictions or conditions applicable to Options or
                  Shares acquired upon exercise of Options.

provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under
it shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee. In addition, if the Administrator is the
Committee, the Board of Directors may take any action under the Plan that would
otherwise be the responsibility of the Committee.

         If permissible under applicable law, the Board of Directors or the
Committee may allocate all or any portion of its responsibilities and powers to
any one or more of its members and may delegate all or any portion of its
responsibilities and powers to any other person selected by it. Any such
allocation or delegation may be revoked by the Board of Directors or the
Committee at any time.

5.       ELIGIBILITY FOR PARTICIPATION.

         The Administrator will, in its sole discretion, name the Participants
in the Plan, provided, however, that each Participant must be an Employee,
director or consultant of the Company or of an Affiliate at the time a Stock
Right is granted. Notwithstanding the foregoing, the Administrator may authorize
the grant of a Stock Right to a person not then an Employee, director or
consultant of the Company or of an Affiliate; provided, however, that the actual
grant of such Stock Right shall be conditioned upon such person becoming
eligible to become a Participant at or prior to the time of the execution of the
Agreement evidencing such Stock Right. ISOs may be granted only to Employees.
Non-Qualified Options and Stock Grants may

                                       4
<PAGE>

be granted to any Employee, director or consultant of the Company or an
Affiliate. The granting of any Stock Right to any individual shall neither
entitle that individual to, nor disqualify him or her from, participation in any
other grant of Stock Rights.

6.       TERMS AND CONDITIONS OF OPTIONS.

         Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto. The Option
Agreements shall be subject to at least the following terms and conditions:

         A.       Non-Qualified Options: Each Option intended to be a
                  Non-Qualified Option shall be subject to the terms and
                  conditions which the Administrator determines to be
                  appropriate and in the best interest of the Company, subject
                  to the following minimum standards for any such Non-Qualified
                  Option:

                  a.       Option Price: Each Option Agreement shall state the
                           option price (per share) of the Shares covered by
                           each Option, which option price shall be determined
                           by the Administrator but shall not be less than the
                           par value per share of Common Stock.

                  b.       Each Option Agreement shall state the number of
                           Shares to which it pertains;

                  c.       Each Option Agreement shall state the date or dates
                           on which it first is exercisable and the date after
                           which it may no longer be exercised, and may provide
                           that the Option rights accrue or become exercisable
                           in installments over a period of months or years, or
                           upon the occurrence of certain conditions or the
                           attainment of stated goals or events; and

                  d.       Exercise of any Option may be conditioned upon the
                           Participant's execution of a Share purchase agreement
                           in form satisfactory to the Administrator providing
                           for certain protections for the Company and its other
                           shareholders, including requirements that:

                           i.       The Participant's or the Participant's
                                    Survivors' right to sell or transfer the
                                    Shares may be restricted; and

                           ii.      The Participant or the Participant's
                                    Survivors may be required to execute letters
                                    of investment intent and must also
                                    acknowledge that the Shares will bear
                                    legends noting any applicable restrictions.

                                       5
<PAGE>

         B.       ISOs: Each Option intended to be an ISO shall be issued only
                  to an Employee and be subject to the following terms and
                  conditions, with such additional restrictions or changes as
                  the Administrator determines are appropriate but not in
                  conflict with Section 422 of the Code and relevant regulations
                  and rulings of the Internal Revenue Service:

                  a.       Minimum standards: The ISO shall meet the minimum
                           standards required of Non-Qualified Options, as
                           described in Paragraph 6(A) above, except clause (a)
                           thereunder.

                  b.       Option Price: Immediately before the ISO is granted,
                           if the Participant owns, directly or by reason of the
                           applicable attribution rules in Section 424(d) of the
                           Code:

                           i.       10% or less of the total combined voting
                                    power of all classes of stock of the Company
                                    or an Affiliate, the Option price per share
                                    of the Shares covered by each ISO shall not
                                    be less than 100% of the Fair Market Value
                                    per share of the Shares on the date of the
                                    grant of the Option; or

                           ii.      More than 10% of the total combined voting
                                    power of all classes of stock of the Company
                                    or an Affiliate, the Option price per share
                                    of the Shares covered by each ISO shall not
                                    be less than 110% of the said Fair Market
                                    Value on the date of grant.

                  c.       Term of Option: For Participants who own:

                           i.       10% or less of the total combined voting
                                    power of all classes of stock of the Company
                                    or an Affiliate, each ISO shall terminate
                                    not more than ten years from the date of the
                                    grant or at such earlier time as the Option
                                    Agreement may provide; or

                           ii.      More than 10% of the total combined voting
                                    power of all classes of stock of the Company
                                    or an Affiliate, each ISO shall terminate
                                    not more than five years from the date of
                                    the grant or at such earlier time as the
                                    Option Agreement may provide.

                  d.       Limitation on Yearly Exercise: The Option Agreements
                           shall restrict the amount of ISOs which may become
                           exercisable in any calendar year (under this or any
                           other ISO plan of the Company or an Affiliate) so
                           that the aggregate Fair Market Value (determined at
                           the time each ISO is granted) of the stock with
                           respect to which ISOs are exercisable for the first
                           time by the Participant in any calendar year does not
                           exceed $100,000.

                                       6
<PAGE>

7.       TERMS AND CONDITIONS OF STOCK GRANTS.

         Each offer of a Stock Grant to a Participant shall state the date prior
to which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Stock Grant Agreement shall be in a form
approved by the Administrator and shall contain terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards:

         (a)      Each Stock Grant Agreement shall state the purchase price (per
                  share), if any, of the Shares covered by each Stock Grant,
                  which purchase price shall be determined by the Administrator
                  but shall not be less than the minimum consideration required
                  by the Delaware General Corporation Law on the date of the
                  grant of the Stock Grant;

         (b)      Each Stock Grant Agreement shall state the number of Shares to
                  which the Stock Grant pertains; and

         (c)      Each Stock Grant Agreement shall include the terms of any
                  right of the Company to restrict or reacquire the Shares
                  subject to the Stock Grant, including the time and events upon
                  which such reacquisition rights shall accrue and the purchase
                  price therefor, if any.

8.       EXERCISE OF OPTIONS AND ISSUE OF SHARES.

         An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company or its designee, together with provision
for payment of the full purchase price in accordance with this Paragraph for the
Shares as to which the Option is being exercised, and upon compliance with any
other condition(s) set forth in the Option Agreement. Such notice shall be
signed by the person exercising the Option, shall state the number of Shares
with respect to which the Option is being exercised and shall contain any
representation required by the Plan or the Option Agreement. Payment of the
purchase price for the Shares as to which such Option is being exercised shall
be made (a) in United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of Common Stock
having a Fair Market Value equal as of the date of the exercise to the cash
exercise price of the Option and held for at least six months, or (c) at the
discretion of the Administrator, by delivery of the grantee's personal note, for
full, partial or no recourse, bearing interest payable not less than annually at
market rate on the date of exercise and at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, with or without the
pledge of such Shares as collateral, or (d) at the discretion of the
Administrator, in accordance with a cashless exercise program established with a
securities brokerage firm, and approved by the Administrator, or (e) at the
discretion of the Administrator, by any combination of (a), (b), (c) and (d)
above. Notwithstanding the foregoing, the Administrator shall accept only such
payment on exercise of an ISO as is permitted by Section 422 of the Code.

                                       7
<PAGE>

         The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the issuance and delivery of the
Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or "blue sky" laws)
which requires the Company to take any action with respect to the Shares prior
to their issuance. The Shares shall, upon delivery, be fully paid,
non-assessable Shares.

         The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to an
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 26) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.

         The Administrator may, in its discretion, amend any term or condition
of an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant's Survivors, if the amendment is
adverse to the Participant, and (iii) any such amendment of any ISO shall be
made only after the Administrator determines whether such amendment would
constitute a "modification" of any Option which is an ISO (as that term is
defined in Section 424(h) of the Code) or would cause any adverse tax
consequences for the holder of such ISO.

9.       ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.

         A Stock Grant (or any part or installment thereof) shall be accepted by
executing the Stock Grant Agreement and delivering it to the Company or its
designee, together with provision for payment of the full purchase price, if
any, in accordance with this Paragraph for the Shares as to which such Stock
Grant is being accepted, and upon compliance with any other conditions set forth
in the Stock Grant Agreement. Payment of the purchase price for the Shares as to
which such Stock Grant is being accepted shall be made (a) in United States
dollars in cash or by check, or (b) at the discretion of the Administrator,
through delivery of shares of Common Stock held for at least six months and
having a Fair Market Value equal as of the date of acceptance of the Stock Grant
to the purchase price of the Stock Grant, or (c) at the discretion of the
Administrator, by delivery of the grantee's personal note, for full or partial
recourse as determined by the Administrator, bearing interest payable not less
than annually at no less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by
any combination of (a), (b) and (c) above.

         The Company shall then reasonably promptly deliver the Shares as to
which such Stock Grant was accepted to the Participant (or to the Participant's
Survivors, as the case may be), subject to any escrow provision set forth in the
Stock Grant Agreement. In determining what constitutes "reasonably promptly," it
is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation

                                       8
<PAGE>

(including, without limitation, state securities or "blue sky" laws) which
requires the Company to take any action with respect to the Shares prior to
their issuance.

         The Administrator may, in its discretion, amend any term or condition
of an outstanding Stock Grant or Stock Grant Agreement provided (i) such term or
condition as amended is permitted by the Plan, and (ii) any such amendment shall
be made only with the consent of the Participant to whom the Stock Grant was
made, if the amendment is adverse to the Participant.

10.      RIGHTS AS A SHAREHOLDER.

         No Participant to whom a Stock Right has been granted shall have rights
as a shareholder with respect to any Shares covered by such Stock Right, except
after due exercise of the Option or acceptance of the Stock Grant and tender of
the full purchase price, if any, for the Shares being purchased pursuant to such
exercise or acceptance and registration of the Shares in the Company's share
register in the name of the Participant.

11.      ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

         By its terms, a Stock Right granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) as approved by the Administrator in its discretion and
set forth in the applicable Option Agreement or Stock Grant Agreement.
Notwithstanding the foregoing, an ISO transferred except in compliance with
clause (i) above shall no longer qualify as an ISO. The designation of a
beneficiary of a Stock Right by a Participant, with the prior approval of the
Administrator and in such form as the Administrator shall prescribe, shall not
be deemed a transfer prohibited by this Paragraph. Except as provided above, a
Stock Right shall only be exercisable or may only be accepted, during the
Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Stock Right or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon a Stock Right, shall be null and void.

12.      EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR
         DEATH OR DISABILITY.

         Except as otherwise provided in a Participant's Option Agreement, in
the event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised an Option, the following rules apply:

         a.       A Participant who ceases to be an employee, director or
                  consultant of the Company or of an Affiliate (for any reason
                  other than termination "for cause", Disability, or death for
                  which events there are special rules in Paragraphs 13, 14,

                                       9
<PAGE>

                  and 15, respectively), may exercise any Option granted to him
                  or her to the extent that the Option is exercisable on the
                  date of such termination of service, but only within such term
                  as the Administrator has designated in a Participant's Option
                  Agreement.

         b.       Except as provided in Subparagraph (c) below, or Paragraph 14
                  or 15, in no event may an Option intended to be an ISO, be
                  exercised later than three months after the Participant's
                  termination of employment.

         c.       The provisions of this Paragraph, and not the provisions of
                  Paragraph 14 or 15, shall apply to a Participant who
                  subsequently becomes Disabled or dies after the termination of
                  employment, director status or consultancy, provided, however,
                  in the case of a Participant's Disability or death within
                  three months after the termination of employment, director
                  status or consultancy, the Participant or the Participant's
                  Survivors may exercise the Option within one year after the
                  date of the Participant's termination of service, but in no
                  event after the date of expiration of the term of the Option.

         d.       Notwithstanding anything herein to the contrary, if subsequent
                  to a Participant's termination of employment, termination of
                  director status or termination of consultancy, but prior to
                  the exercise of an Option, the Board of Directors determines
                  that, either prior or subsequent to the Participant's
                  termination, the Participant engaged in conduct which would
                  constitute "cause", then such Participant shall forthwith
                  cease to have any right to exercise any Option.

         e.       A Participant to whom an Option has been granted under the
                  Plan who is absent from work with the Company or with an
                  Affiliate because of temporary disability (any disability
                  other than a permanent and total Disability as defined in
                  Paragraph 1 hereof), or who is on leave of absence for any
                  purpose, shall not, during the period of any such absence, be
                  deemed, by virtue of such absence alone, to have terminated
                  such Participant's employment, director status or consultancy
                  with the Company or with an Affiliate, except as the
                  Administrator may otherwise expressly provide.

         f.       Except as required by law or as set forth in a Participant's
                  Option Agreement, Options granted under the Plan shall not be
                  affected by any change of a Participant's status within or
                  among the Company and any Affiliates, so long as the
                  Participant continues to be an employee, director or
                  consultant of the Company or any Affiliate.

13.      EFFECT ON OPTIONS OF TERMINATION OF SERVICE "FOR CAUSE".

         Except as otherwise provided in a Participant's Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:

                                       10
<PAGE>

         a.       All outstanding and unexercised Options as of the time the
                  Participant is notified his or her service is terminated "for
                  cause" will immediately be forfeited.

         b.       For purposes of this Plan, "cause" shall include (and is not
                  limited to) dishonesty with respect to the Company or any
                  Affiliate, insubordination, substantial malfeasance or
                  non-feasance of duty, unauthorized disclosure of confidential
                  information, breach by the Participant of any provision of any
                  employment, consulting, advisory, nondisclosure,
                  non-competition or similar agreement between the Participant
                  and the Company, and conduct substantially prejudicial to the
                  business of the Company or any Affiliate. The determination of
                  the Administrator as to the existence of "cause" will be
                  conclusive on the Participant and the Company.

         c.       "Cause" is not limited to events which have occurred prior to
                  a Participant's termination of service, nor is it necessary
                  that the Administrator's finding of "cause" occur prior to
                  termination. If the Administrator determines, subsequent to a
                  Participant's termination of service but prior to the exercise
                  of an Option, that either prior or subsequent to the
                  Participant's termination the Participant engaged in conduct
                  which would constitute "cause", then the right to exercise any
                  Option is forfeited.

         d.       Any definition in an agreement between the Participant and the
                  Company or an Affiliate, which contains a conflicting
                  definition of "cause" for termination and which is in effect
                  at the time of such termination, shall supersede the
                  definition in this Plan with respect to that Participant.

14.      EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

         Except as otherwise provided in a Participant's Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:

         a.       To the extent that the Option has become exercisable but has
                  not been exercised on the date of Disability; and

         b.       In the event rights to exercise the Option accrue
                  periodically, to the extent of a pro rata portion through the
                  date of Disability of any additional vesting rights that would
                  have accrued on the next vesting date had the Participant not
                  become Disabled. The proration shall be based upon the number
                  of days accrued in the current vesting period prior to the
                  date of Disability.

         A Disabled Participant may exercise such rights only within the period
ending one year after the date of the Participant's termination of employment,
directorship or consultancy, as the case may be, notwithstanding that the
Participant might have been able to exercise the Option as

                                       11
<PAGE>

to some or all of the Shares on a later date if the Participant had not become
Disabled and had continued to be an employee, director or consultant or, if
earlier, within the originally prescribed term of the Option.

         The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.

15.      EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

         Except as otherwise provided in a Participant's Option Agreement, in
the event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:

         a.       To the extent that the Option has become exercisable but has
                  not been exercised on the date of death; and

         b.       In the event rights to exercise the Option accrue
                  periodically, to the extent of a pro rata portion through the
                  date of death of any additional vesting rights that would have
                  accrued on the next vesting date had the Participant not died.
                  The proration shall be based upon the number of days accrued
                  in the current vesting period prior to the Participant's date
                  of death.

         If the Participant's Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one year after the date
of death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.

16.      EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.

         In the event of a termination of service (whether as an employee,
director or consultant) with the Company or an Affiliate for any reason before
the Participant has accepted a Stock Grant, such offer shall terminate.

         For purposes of this Paragraph 16 and Paragraph 17 below, a Participant
to whom a Stock Grant has been offered and accepted under the Plan who is absent
from work with the Company or with an Affiliate because of temporary disability
(any disability other than a permanent and total Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not,
during the period of any such absence, be deemed, by virtue of such absence
alone, to

                                       12
<PAGE>

have terminated such Participant's employment, director status or consultancy
with the Company or with an Affiliate, except as the Administrator may otherwise
expressly provide.

         In addition, for purposes of this Paragraph 16 and Paragraph 17 below,
any change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.

17.      EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE"
         OR DEATH OR DISABILITY.

         Except as otherwise provided in a Participant's Stock Grant Agreement,
in the event of a termination of service (whether as an employee, director or
consultant), other than termination "for cause," Disability, or death for which
events there are special rules in Paragraphs 18,19, and 20, respectively, before
all Company rights of repurchase shall have lapsed, then the Company shall have
the right to repurchase that number of Shares subject to a Stock Grant as to
which the Company's repurchase rights have not lapsed.

18.      EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE "FOR CAUSE".

         Except as otherwise provided in a Participant's Stock Grant Agreement,
the following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause":

         a.       All Shares subject to any Stock Grant shall be immediately
                  subject to repurchase by the Company at the purchase price, if
                  any, thereof.

         b.       For purposes of this Plan, "cause" shall include (and is not
                  limited to) dishonesty with respect to the employer,
                  insubordination, substantial malfeasance or non-feasance of
                  duty, unauthorized disclosure of confidential information,
                  breach by the Participant of any provision of any employment,
                  consulting, advisory, nondisclosure, non-competition or
                  similar agreement between the Participant and the Company, and
                  conduct substantially prejudicial to the business of the
                  Company or any Affiliate. The determination of the
                  Administrator as to the existence of "cause" will be
                  conclusive on the Participant and the Company.

         c.       "Cause" is not limited to events which have occurred prior to
                  a Participant's termination of service, nor is it necessary
                  that the Administrator's finding of "cause" occur prior to
                  termination. If the Administrator determines, subsequent to a
                  Participant's termination of service, that either prior or
                  subsequent to the Participant's termination the Participant
                  engaged in conduct which would constitute "cause," then the
                  Company's right to repurchase all of such Participant's Shares
                  shall apply.

                                       13
<PAGE>

         d.       Any definition in an agreement between the Participant and the
                  Company or an Affiliate, which contains a conflicting
                  definition of "cause" for termination and which is in effect
                  at the time of such termination, shall supersede the
                  definition in this Plan with respect to that Participant.

19.      EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

         Except as otherwise provided in a Participant's Stock Grant Agreement,
the following rules apply if a Participant ceases to be an employee, director or
consultant of the Company or of an Affiliate by reason of Disability: to the
extent the Company's rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable; provided, however, that in the event such
rights of repurchase lapse periodically, such rights shall lapse to the extent
of a pro rata portion of the Shares subject to such Stock Grant through the date
of Disability as would have lapsed had the Participant not become Disabled. The
proration shall be based upon the number of days accrued prior to the date of
Disability.

         The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.

20.      EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
         CONSULTANT.

         Except as otherwise provided in a Participant's Stock Grant Agreement,
the following rules apply in the event of the death of a Participant while the
Participant is an employee, director or consultant of the Company or of an
Affiliate: to the extent the Company's rights of repurchase have not lapsed on
the date of death, they shall be exercisable; provided, however, that in the
event such rights of repurchase lapse periodically, such rights shall lapse to
the extent of a pro rata portion of the Shares subject to such Stock Grant
through the date of death as would have lapsed had the Participant not died. The
proration shall be based upon the number of days accrued prior to the
Participant's death.

21.      PURCHASE FOR INVESTMENT.

         Unless the offering and sale of the Shares to be issued upon the
particular exercise or acceptance of a Stock Right shall have been effectively
registered under the Securities Act of 1933, as now in force or hereafter
amended (the "1933 Act"), the Company shall be under no obligation to issue the
Shares covered by such exercise unless and until the following conditions have
been fulfilled:

                                       14
<PAGE>

         a.       The person(s) who exercise(s) or accept(s) such Stock Right
                  shall warrant to the Company, prior to the receipt of such
                  Shares, that such person(s) are acquiring such Shares for
                  their own respective accounts, for investment, and not with a
                  view to, or for sale in connection with, the distribution of
                  any such Shares, in which event the person(s) acquiring such
                  Shares shall be bound by the provisions of the following
                  legend which shall be endorsed upon the certificate(s)
                  evidencing their Shares issued pursuant to such exercise or
                  such grant:

                           "The shares represented by this certificate have been
                           taken for investment and they may not be sold or
                           otherwise transferred by any person, including a
                           pledgee, unless (1) either (a) a Registration
                           Statement with respect to such shares shall be
                           effective under the Securities Act of 1933, as
                           amended, or (b) the Company shall have received an
                           opinion of counsel satisfactory to it that an
                           exemption from registration under such Act is then
                           available, and (2) there shall have been compliance
                           with all applicable state securities laws."

         b.       At the discretion of the Administrator, the Company shall have
                  received an opinion of its counsel that the Shares may be
                  issued upon such particular exercise or acceptance in
                  compliance with the 1933 Act without registration thereunder.

22.      DISSOLUTION OR LIQUIDATION OF THE COMPANY.

         Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised and all
Stock Grants which have not been accepted will terminate and become null and
void; provided, however, that if the rights of a Participant or a Participant's
Survivors have not otherwise terminated and expired, the Participant or the
Participant's Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent
that the Stock Right is exercisable or subject to acceptance as of the date
immediately prior to such dissolution or liquidation.

23.      ADJUSTMENTS.

         Upon the occurrence of any of the following events, a Participant's
rights with respect to any Stock Right granted to him or her hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in a
Participant's Option Agreement or Stock Grant Agreement:

         A.       Stock Dividends and Stock Splits. If (i) the shares of Common
Stock shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, or (ii) additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock, the number of shares of
Common Stock deliverable upon the exercise or acceptance of such Stock Right may
be

                                       15
<PAGE>

appropriately increased or decreased proportionately, and appropriate
adjustments may be made including, in the purchase price per share, to reflect
such events.

         B.       Corporate Transactions. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets other than a transaction to merely change the state of
incorporation (a "Corporate Transaction"), the Administrator or the board of
directors of any entity assuming the obligations of the Company hereunder (the
"Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or
acquiring entity (provided, that, at the discretion of the Administrator, all
unvested Options shall be made fully or partially exercisable for purposes of
this Subparagraph upon the closing of the Corporate Transaction); or (ii) upon
written notice to the Participants, provide that all Options must be exercised
(either to the extent then exercisable or, at the discretion of the
Administrator, all Options being made fully or partially exercisable for
purposes of this Subparagraph), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the Shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully or partially exercisable for purposes of this Subparagraph) over the
exercise price thereof.

         With respect to outstanding Stock Grants, the Administrator or the
Successor Board, shall either (i) make appropriate provisions for the
continuation of such Stock Grants by substituting on an equitable basis for the
Shares then subject to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity; or
(ii) upon written notice to the Participants, provide that all Stock Grants must
be accepted (to the extent then subject to acceptance) within a specified number
of days of the date of such notice, at the end of which period the offer of the
Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Stock Grants over the purchase price thereof, if any. In
addition, in the event of a Corporate Transaction, the Administrator may waive
any or all Company repurchase rights with respect to outstanding Stock Grants.

         Notwithstanding the foregoing, individual Option Agreements and Stock
Grant Agreements may provide for different adjustments than those set forth
herein.

         C.       Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company other than a Corporate
Transaction pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock, a
Participant upon exercising or accepting a Stock Right after the
recapitalization or reorganization shall be entitled to receive for the purchase
price paid upon such exercise or acceptance the number of replacement securities
which would have been

                                       16
<PAGE>

received if such Stock Right had been exercised or accepted prior to such
recapitalization or reorganization.

         D.       Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to Subparagraph A, B or C above with respect to ISOs
shall be made only after the Administrator determines whether such adjustments
would constitute a "modification" of such ISOs (as that term is defined in
Section 424(h) of the Code) or would cause any adverse tax consequences for the
holders of such ISOs. If the Administrator determines that such adjustments made
with respect to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments, unless the holder of an ISO specifically
requests in writing that such adjustment be made and such writing indicates that
the holder has full knowledge of the consequences of such "modification" on his
or her income tax treatment with respect to the ISO.

24.      ISSUANCES OF SECURITIES.

         Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Stock Rights. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company
prior to any issuance of Shares pursuant to a Stock Right.

25.      FRACTIONAL SHARES.

         No fractional shares shall be issued under the Plan and the person
exercising a Stock Right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.

26.      CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS: TERMINATION OF ISOs.

         The Administrator, at the written request of any Participant, may in
its discretion take such actions as may be necessary to convert such
Participant's ISOs (or any portions thereof) that have not been exercised on the
date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the Participant is an employee of
the Company or an Affiliate at the time of such conversion. At the time of such
conversion, the Administrator (with the consent of the Participant) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator

                                       17
<PAGE>

takes appropriate action. The Administrator, with the consent of the
Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.

27.      WITHHOLDING.

         In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise or acceptance of a Stock Right or in connection with a
Disqualifying Disposition (as defined in Paragraph 28) or upon the lapsing of
any right of repurchase, the Company may withhold from the Participant's
compensation, if any, or may require that the Participant advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the statutory minimum amount of such withholdings unless a
different withholding arrangement, including the use of shares of the Company's
Common Stock or a promissory note, is authorized by the Administrator (and
permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date prior to
the date of exercise. If the fair market value of the shares withheld is less
than the amount of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant's payment of
such additional withholding.

28.      NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

         Each Employee who receives an ISO must agree to notify the Company in
writing immediately after the Employee makes a Disqualifying Disposition of any
shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition
is defined in Section 424(c) of the Code and includes any disposition (including
any sale or gift) of such shares before the later of (a) two years after the
date the Employee was granted the ISO, or (b) one year after the date the
Employee acquired Shares by exercising the ISO, except as otherwise provided in
Section 424(c) of the Code. If the Employee has died before such stock is sold,
these holding period requirements do not apply and no Disqualifying Disposition
can occur thereafter.

29.      TERMINATION OF THE PLAN.

         The Plan will terminate on 10 years after adoption, the date which is
ten years from the earlier of the date of its adoption by the Board of Directors
and the date of its approval by the shareholders. The Plan may be terminated at
an earlier date by vote of the shareholders or the Board of Directors of the
Company; provided, however, that any such earlier termination shall not affect
any Option Agreements or Stock Grant Agreements executed prior to the effective
date of such termination.

                                       18
<PAGE>

30.      AMENDMENT OF THE PLAN AND AGREEMENTS.

         The Plan may be amended by the shareholders of the Company. The Plan
may also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Stock Rights granted under
the Plan or Stock Rights to be granted under the Plan for favorable federal
income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code, and to the
extent necessary to qualify the shares issuable upon exercise or acceptance of
any outstanding Stock Rights granted, or Stock Rights to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers. Any amendment
approved by the Administrator which the Administrator determines is of a scope
that requires shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect his or her rights under a
Stock Right previously granted to him or her. With the consent of the
Participant affected, the Administrator may amend outstanding Option Agreements
and Stock Grant Agreements in a manner which may be adverse to the Participant
but which is not inconsistent with the Plan. In the discretion of the
Administrator, outstanding Option Agreements and Stock Grant Agreements may be
amended by the Administrator in a manner which is not adverse to the
Participant.

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<PAGE>

31.      EMPLOYMENT OR OTHER RELATIONSHIP.

         Nothing in this Plan or any Option Agreement or Stock Grant Agreement
shall be deemed to prevent the Company or an Affiliate from terminating the
employment, consultancy or director status of a Participant, nor to prevent a
Participant from terminating his or her own employment, consultancy or director
status or to give any Participant a right to be retained in employment or other
service by the Company or any Affiliate for any period of time.

32.      GOVERNING LAW.

         This Plan shall be construed and enforced in accordance with the law of
the State of Delaware.

                                               As amended through August 1, 2003

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