<SUBMISSION>
<ACCESSION-NUMBER>0001047469-05-021674
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20050812
<ITEMS>1.01
<ITEMS>9.01
<FILING-DATE>20050817
<DATE-OF-FILING-DATE-CHANGE>20050817
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>AEROGEN INC
<CIK>0001039160
<ASSIGNED-SIC>3841
<IRS-NUMBER>330488580
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-31913
<FILM-NUMBER>051033686
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2071 STIERLIN COURT
<CITY>MOUNTAIN VIEW
<STATE>CA
<ZIP>94043
<PHONE>650 864-7300
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2071 STIERLIN COURT
<CITY>MOUNTAIN VIEW
<STATE>CA
<ZIP>94043
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>a2162258z8-k.htm
<DESCRIPTION>8-K
<TEXT>
<HTML>
<HEAD>
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<FONT SIZE=3 ><A HREF="#05PAL1424_1">QuickLinks</A></FONT>
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<P ALIGN="CENTER"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>Washington, D. C. 20549  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5><B>FORM 8-K  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=3><B>CURRENT REPORT  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=3><B> Pursuant to Section&nbsp;13 or 15(d) of the<BR>
Securities Exchange Act of 1934  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>Date of Report (Date of earliest event reported): </FONT><FONT SIZE=2><B>August&nbsp;12, 2005  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5><B>AEROGEN,&nbsp;INC.<BR>  </B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter) </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>Delaware<BR>  </B></FONT><FONT SIZE=2>(State or other jurisdiction of incorporation) </FONT></P>

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<TD WIDTH="50%" ALIGN="CENTER"><FONT SIZE=2><B>0-31913</B></FONT><FONT SIZE=2><BR>
(Commission File No.)</FONT></TD>
<TD WIDTH="50%" ALIGN="CENTER"><FONT SIZE=2><B>33-0488580</B></FONT><FONT SIZE=2><BR>
(IRS Employer Identification No.)</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2><B>2071 Stierlin Court, Suite 100<BR>
Mountain View, CA 94043<BR>  </B></FONT><FONT SIZE=2>(Address of principal executive offices and zip code) </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>Registrant's
telephone number, including area code: </FONT><FONT SIZE=2><B>(650)&nbsp;864-7300  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check the appropriate box below if the Form&nbsp;8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction&nbsp;A.2. below): </FONT></P>


<P><FONT SIZE=2><FONT FACE="WINGDINGS">&#111;</FONT>&nbsp;&nbsp;Written
communications pursuant to Rule&nbsp;425 under the Securities Act (17&nbsp;CFR&nbsp;230.425) </FONT></P>

<P><FONT SIZE=2><FONT FACE="WINGDINGS">&#253;</FONT>&nbsp;&nbsp;Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act
(17&nbsp;CFR&nbsp;240.14a-12) </FONT></P>

<P><FONT SIZE=2><FONT FACE="WINGDINGS">&#111;</FONT>&nbsp;&nbsp;Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act
(17&nbsp;CFR&nbsp;240.14d-2(b)) </FONT></P>

<P><FONT SIZE=2><FONT FACE="WINGDINGS">&#111;</FONT>&nbsp;&nbsp;Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act
(17&nbsp;CFR&nbsp;240.13e-4(c)) </FONT></P>

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noshade width=100% align=left size=1>
<hr noshade width=100% align=left size=4> </FONT></P>

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<P><FONT SIZE=2><A
NAME="de1424_item_1.01._entry_into_a__de101877"> </A>
<A NAME="toc_de1424_1"> </A>
<BR></FONT><FONT SIZE=2><B>Item 1.01.&nbsp;&nbsp;&nbsp;&nbsp;Entry into a Material Definitive Agreement.    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agreement and Plan of Merger among Nektar Therapeutics, Oski Acquisition Corporation and Aerogen, Inc. dated as of August 12, 2005. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August&nbsp;12, 2005, Aerogen,&nbsp;Inc., a Delaware corporation ("Aerogen"), Nektar Therapeutics, a Delaware corporation ("Nektar") and Oski Acquisition Corporation, a Delaware
corporation and an indirect wholly owned subsidiary of Nektar ("Merger Sub"), entered into an Agreement and Plan of Merger dated as of August&nbsp;12, 2005 (the "Merger Agreement"), pursuant to
which, subject to satisfaction or waiver of the conditions therein, Nektar will acquire, through the merger of Merger Sub with and into Aerogen (the "Merger"), all of the outstanding capital stock of
Aerogen. As a result of the Merger, Aerogen will become an indirect wholly owned subsidiary of Nektar. The total value of the transaction is approximately $32&nbsp;million. The Merger Agreement
provides that Nektar has the option to pay the purchase price in all cash or a combination of cash and stock. On August&nbsp;16, 2005, Nektar notified Aerogen that it was exercising its option to
pay the entire purchase price in cash. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the terms of the Merger Agreement, upon consummation of the Merger, each share of Aerogen common stock (other than those held by stockholders who exercise appraisal rights under
Delaware law) will be exchanged for $0.75 per common share and each share of Aerogen A-1 preferred stock (other than those held by stockholders who exercise appraisal rights under Delaware
law) will be exchanged for approximately $29.0251. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
boards of directors of Nektar and Aerogen have approved the Merger, which is subject to Aerogen stockholder's approval and other closing conditions. In order to induce Nektar to
enter into the Merger Agreement, certain stockholders of Aerogen who own in the aggregate approximately 52% of Aerogen's A-1 preferred stock and 30% of the voting power of the stockholders
on an as-converted basis have entered into voting agreements with Nektar pursuant to which they have agreed, among other things, to vote in favor of the adoption of the Merger Agreement.
The Merger is expected to be consummated in the fourth quarter of this year; however, there can be no assurances that the Merger will be consummated in that time period or at all. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed as an
exhibit to this Current Report on Form&nbsp;8-K and incorporated herein by reference. The Merger Agreement has been included to provide investors and security holders with information
regarding its terms. It is not intended to provide any other factual information about Aerogen. The Merger Agreement contains representations and warranties that the parties to the Merger Agreement
made to and solely for the benefit of each other. The assertions embodied in such representations and
warranties are qualified by information contained in confidential disclosure schedules that the parties exchanged in connection with signing the Merger Agreement. Accordingly, investors and security
holders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances, since they were only made as of the date of the Merger Agreement and
are modified in important part by the underlying disclosure schedules. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the
Merger Agreement, which subsequent information may or may not be fully reflected in Aerogen's public disclosures. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August&nbsp;15, 2005, Aerogen and Nektar released a press release announcing that they had entered into the Merger Agreement. A copy of that press release is attached as an exhibit
to this Current Report on Form&nbsp;8-K and incorporated herein by reference. At the time the press release was issued, Nektar had not yet exercised its option to pay the purchase price
in cash. </FONT></P>

<P><FONT SIZE=2><B>Additional Information about the Merger and Where to Find It  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Merger, Aerogen intends to file&nbsp;a proxy statement and other relevant materials, with the Securities and Exchange Commission (the
"SEC"). INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN </FONT></P>

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<BR>

<P><FONT SIZE=2>IMPORTANT
INFORMATION ABOUT THE MERGER. The proxy statement and other relevant materials (when they become available), and any other documents filed by Aerogen with the SEC, may be obtained free of
charge at the SEC's web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by Aerogen by contacting Aerogen,&nbsp;Inc., 2071
Stierlin Court, Suite 100, Mountain View, California 94043, Attn: Investor Relations. Investors and security holders are urged to read the proxy statement and the other relevant materials when they
become available before making any voting or investment decision with respect to the Merger. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aerogen
and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Aerogen in favor of the Merger. Information
about the executive officers and directors of Aerogen and their ownership of Aerogen common stock and any change in control arrangements is set forth in Aerogen's Form&nbsp;10-K, which
was filed with the SEC on April&nbsp;15, 2005, as amended by Amendment No.&nbsp;1 on Form&nbsp;10-K/A, which was filed with the SEC on April&nbsp;19, 2005. Investors and security
holders may obtain more detailed information
regarding the direct and indirect interests of Aerogen and its executive officers and directors in the Merger by reading the proxy statement regarding the Merger when it becomes available. </FONT></P>


<P><FONT SIZE=2><A
NAME="de1424_item_9.01._financial_statements_and_exhibits."> </A>
<A NAME="toc_de1424_2"> </A>
<BR></FONT><FONT SIZE=2><B>Item 9.01.&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits.    <BR>    </B></FONT></P>

<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD><FONT SIZE=2>Exhibits:
</FONT></DD></DL>
<BR>

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<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>2.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="92%"><FONT SIZE=2>Agreement and Plan of Merger, dated as of August&nbsp;12, 2005, among Nektar Therapeutics, Oski Acquisition Corporation and Aerogen,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2><BR>
99.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="92%"><FONT SIZE=2><BR>
Press Release, dated August&nbsp;15, 2005, entitled "Nektar to Acquire Aerogen to Broaden Pulmonary Technology Base and Strengthen Capabilities for Treatment in the Acute Care Setting."</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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NAME="page_jc1424_1_3"> </A> </FONT></P>

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<BR></FONT><FONT SIZE=2><B>SIGNATURE    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized. </FONT></P>

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<TD COLSPAN=2><FONT SIZE=2><B>AEROGEN, INC.</B></FONT></TD>
</TR>
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<TD WIDTH="46%"><FONT SIZE=2><BR>
Dated: August 17, 2005</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="46%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>ROBERT S. BREUIL</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>Name:</FONT></TD>
<TD WIDTH="46%"><FONT SIZE=2>Robert S. Breuil</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="46%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>Title:</FONT></TD>
<TD WIDTH="46%"><FONT SIZE=2>Chief Financial Officer and Vice President of Corporate Development</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

<HR NOSHADE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ka1424_exhibits"> </A>
<A NAME="toc_ka1424_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXHIBITS    <BR>    </B></FONT></P>

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<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>2.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="92%"><FONT SIZE=2>Agreement and Plan of Merger, dated as of August&nbsp;12, 2005, among Nektar Therapeutics, Oski Acquisition Corporation and Aerogen,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2><BR>
99.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="92%"><FONT SIZE=2><BR>
Press Release, dated August&nbsp;15, 2005, entitled "Nektar to Acquire Aerogen to Broaden Pulmonary Technology Base and Strengthen Capabilities for Treatment in the Acute Care Setting."</FONT></TD>
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<BR>
<P><br><A NAME="05PAL1424_1">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<UL>
<FONT SIZE=2><A HREF="#toc_de1424_1">Item 1.01. Entry into a Material Definitive Agreement.</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_de1424_2">Item 9.01. Financial Statements and Exhibits.</A></FONT><BR>
</UL>
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<FONT SIZE=2><A HREF="#toc_jc1424_1">SIGNATURE</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ka1424_1">EXHIBITS</A></FONT><BR>
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<TYPE>EX-2.1
<SEQUENCE>2
<FILENAME>a2162258zex-2_1.htm
<DESCRIPTION>EXHIBIT 2.1
<TEXT>
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</HEAD>
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<P ALIGN="RIGHT"><FONT SIZE=2><B>Exhibit 2.1  </B></FONT></P>

<P><FONT SIZE=2><hr
noshade width=100% align=left size=4>
<hr noshade width=100% align=left size=1> </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=4><B>AGREEMENT AND PLAN OF MERGER  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>Dated as of August&nbsp;12, 2005  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B> among  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5><B>NEKTAR THERAPEUTICS  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5><B> OSKI ACQUISITION CORPORATION  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>and  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5><B>AEROGEN,&nbsp;INC.  </B></FONT></P>

<P><FONT SIZE=5><B> <HR NOSHADE WIDTH=100% ALIGN=LEFT SIZE=1>
<HR NOSHADE WIDTH=100% ALIGN=LEFT SIZE=4>  </B></FONT></P>

<HR NOSHADE>
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<P ALIGN="CENTER"><FONT SIZE=2><B>TABLE OF CONTENTS</B></FONT></P>

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<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="69%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="6%" ALIGN="CENTER"><FONT SIZE=1><B>PAGE</B></FONT><HR NOSHADE></TH>
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<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP"><FONT SIZE=2><BR>
ARTICLE 1&nbsp;&nbsp;&nbsp;&nbsp;THE MERGER</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 1.1</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
The Merger</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 1.2</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Closing</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
1</FONT></TD>
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<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 1.3</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Effective Time</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 1.4</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Effects of the Merger</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%"><BR><FONT SIZE=2> SECTION 1.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%"><FONT SIZE=2><BR>
Certificate of Incorporation and Bylaws of the Surviving Corporation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 1.6</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Directors of the Surviving Corporation</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 1.7</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Officers of the Surviving Corporation</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
2</FONT></TD>
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<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP"><FONT SIZE=2><BR>
ARTICLE 2&nbsp;&nbsp;&nbsp;&nbsp;EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES; COMPANY STOCK OPTIONS</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 2.1</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Effect on Capital Stock</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
2</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 2.2</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Appraisal Rights</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
3</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 2.3</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Surrender of Certificates</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
4</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 2.4</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Company Stock Options; ESPP; Warrants</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
6</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 2.5</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Withholding Taxes</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 2.6</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Adjustments</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP"><FONT SIZE=2><BR>
ARTICLE 3&nbsp;&nbsp;&nbsp;&nbsp;REPRESENTATIONS AND WARRANTIES OF THE COMPANY</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.1</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Organization, Standing and Corporate Power</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
7</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.2</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Capitalization</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
9</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.3</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Authority; Noncontravention; Voting Requirements</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
10</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.4</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Governmental Approvals</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
11</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%"><BR><FONT SIZE=2> SECTION 3.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%"><FONT SIZE=2><BR>
Company SEC Documents; Undisclosed Liabilities; Internal Controls</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2><BR>
11</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.6</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Absence of Certain Changes or Events</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
13</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.7</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Legal Proceedings</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
14</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.8</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Compliance With Laws; Permits</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
14</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%"><BR><FONT SIZE=2> SECTION 3.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%"><FONT SIZE=2><BR>
Information in Proxy Statement and S-4 Registration Statement</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2><BR>
15</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.10</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Tax Matters</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
16</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.11</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Employee Benefits and Labor Matters</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
17</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.12</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Environmental Matters</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
19</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.13</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Contracts</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
20</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.14</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Real Property</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
21</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.15</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Title to Properties</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
21</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.16</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Intellectual Property</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
22</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.17</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Insurance</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
23</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.18</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Opinion of Financial Advisor</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
23</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.19</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Brokers and Other Advisors</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
24</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 3.20</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
State Takeover Statutes</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
24</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP"><FONT SIZE=2><BR>
ARTICLE 4&nbsp;&nbsp;&nbsp;&nbsp;REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2><BR>
24</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.1</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Organization, Standing and Corporate Power</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
24</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.2</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Authority; Noncontravention</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
24</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.3</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Governmental Approvals</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
25</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.4</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Information Supplied</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
25</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.5</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Ownership and Operations of Merger Sub</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
25</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.6</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Financing</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
25</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.7</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Brokers and Other Advisors</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
25</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.8</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Ownership of Company Capital Stock</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
25</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 4.9</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Parent SEC Documents; Undisclosed Liabilities</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
25</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP"><FONT SIZE=2><BR>
ARTICLE 5&nbsp;&nbsp;&nbsp;&nbsp;COVENANTS AND AGREEMENTS</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
26</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%"><BR><FONT SIZE=2> SECTION 5.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%"><FONT SIZE=2><BR>
Preparation of the Proxy Statement and S-4 Registration Statement; Stockholder Meeting; Board Recommendation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
26</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.2</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Conduct of Business of the Company</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
27</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.3</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
No Solicitation by the Company; Etc</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
29</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.4</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Further Action; Efforts</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
32</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.5</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Public Announcements</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
32</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.6</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Access to Information; Confidentiality</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
33</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.7</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Notification of Certain Matters</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
33</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.8</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Indemnification and Insurance</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
33</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.9</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Securityholder Litigation</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
34</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.10</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Fees and Expenses</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
34</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 5.11</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Third Party Consents</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
34</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP"><FONT SIZE=2><BR>
ARTICLE 6&nbsp;&nbsp;&nbsp;&nbsp;CONDITIONS PRECEDENT</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
34</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 6.1</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Conditions to Each Party's Obligation to Effect the Merger</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
34</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 6.2</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Conditions to Obligations of Parent and Merger Sub</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
35</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 6.3</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Conditions to Obligation of the Company</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
36</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- insert table folio -->
<P ALIGN="CENTER"><FONT SIZE=2>ii</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_lc1423_1_3"> </A>
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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP"><FONT SIZE=2><BR>
ARTICLE 7&nbsp;&nbsp;&nbsp;&nbsp;TERMINATION</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
36</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 7.1</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Termination</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
36</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 7.2</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Effect of Termination</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
38</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 7.3</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Termination Fee</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
38</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 VALIGN="TOP"><FONT SIZE=2><BR>
ARTICLE 8&nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
39</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.1</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Nonsurvival of Representations and Warranties</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
39</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.2</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Amendment or Supplement</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
39</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.3</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Extension of Time, Waiver, Etc</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
39</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.4</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Assignment</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
39</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.5</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Counterparts; Facsimile; Electronic Transmission</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
40</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.6</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Entire Agreement; No Third-Party Beneficiaries</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
40</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.7</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Governing Law; Waiver of Jury Trial</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
40</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.8</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Specific Enforcement</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
40</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.9</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Consent to Jurisdiction</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
40</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.10</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Notices</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
40</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.11</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Severability</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
41</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.12</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Definitions</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
41</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP"><BR><FONT SIZE=2> SECTION 8.13</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP"><FONT SIZE=2><BR>
Interpretation</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
43</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>iii</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_le1423_1_1"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="le1423_agreement_and_plan_of_merger"> </A>
<A NAME="toc_le1423_1"> </A>
<BR></FONT><FONT SIZE=2><B>AGREEMENT AND PLAN OF MERGER    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This AGREEMENT AND PLAN OF MERGER, dated as of August&nbsp;12, 2005 (this "</FONT><FONT SIZE=2><I>Agreement</I></FONT><FONT SIZE=2>"), is among </FONT> <FONT SIZE=2>NEKTAR
THERAPEUTICS</FONT><FONT SIZE=2>, a Delaware corporation ("</FONT><FONT SIZE=2><I>Parent</I></FONT><FONT SIZE=2>"), </FONT><FONT SIZE=2>OSKI ACQUISITION
CORPORATION</FONT><FONT SIZE=2>, a Delaware corporation and an indirect, wholly owned Subsidiary of Parent ("</FONT><FONT SIZE=2><I>Merger Sub</I></FONT><FONT SIZE=2>"), and </FONT> <FONT SIZE=2>AEROGEN,&nbsp;INC</FONT><FONT SIZE=2>. a Delaware
corporation (the "</FONT><FONT SIZE=2><I>Company</I></FONT><FONT SIZE=2>"). Certain terms used in this Agreement are
used as defined in Section&nbsp;8.12. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the respective Boards of Directors of the Company and Merger Sub have approved and declared advisable, and the Board of Directors of Parent has approved, this Agreement and the
merger of Merger Sub with and into the Company (the "</FONT><FONT SIZE=2><I>Merger</I></FONT><FONT SIZE=2>"), on the terms and subject to the conditions provided for in this Agreement; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
concurrently with the execution of this Agreement, and as a condition and inducement to Parent's willingness to enter into this Agreement, certain stockholders of the Company
are contemporaneously with the execution and delivery hereof entering into voting agreements and irrevocable proxies (the "</FONT><FONT SIZE=2><I>Voting Agreements</I></FONT><FONT SIZE=2>"); and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various
conditions to the Merger; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, Parent, Merger Sub
and the Company hereby agree as follows: </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>ARTICLE&nbsp;1  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><I>The Merger</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
1.1</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;The Merger.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Upon the terms and subject to the conditions set forth in this Agreement, and in
accordance with the General Corporation Law of the State of Delaware (the "</FONT><FONT SIZE=2><I>DGCL</I></FONT><FONT SIZE=2>"), at the Effective Time, Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall be the surviving corporation in the Merger (the "</FONT><FONT SIZE=2><I>Surviving
Corporation</I></FONT><FONT SIZE=2>"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
1.2</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Closing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The closing of the Merger (the "</FONT><FONT SIZE=2><I>Closing</I></FONT><FONT SIZE=2>")
shall take place at 10:00&nbsp;a.m. (California time) on a date to be specified by the parties, which date shall be no later than the second business day after satisfaction or waiver of the
conditions set forth in Article&nbsp;6 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), unless
another time or date, or both, are agreed to in writing by the parties hereto. The date on which the Closing is held is herein referred to as the "</FONT><FONT SIZE=2><I>Closing
Date</I></FONT><FONT SIZE=2>." The Closing will be held at the offices of Cooley Godward LLP, 3175 Hanover Street, Palo Alto, California 94304, unless another place is agreed to in writing by the
parties hereto. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
1.3</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Effective Time.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of this Agreement, on the Closing Date (a)&nbsp;the
Company shall file with the Secretary of State of the State of Delaware the Charter Amendment and (b)&nbsp;following the filing of the Charter Amendment, the parties shall file with the Secretary of
State of the State of Delaware a certificate of merger (the "</FONT><FONT SIZE=2><I>Certificate of Merger</I></FONT><FONT SIZE=2>"), executed in accordance with the relevant provisions of the DGCL.
The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such later time as is agreed to by the parties hereto and
specified in the Certificate of Merger but in no event any earlier than the time the Charter Amendment is accepted for filing by the Secretary of State of the State of Delaware (the time at which the
Merger becomes effective is herein referred to as the "</FONT><FONT SIZE=2><I>Effective Time</I></FONT><FONT SIZE=2>"). </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>1</FONT></P>

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<P style='page-break-before:always'></p>
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<A NAME="page_le1423_1_2"> </A>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
1.4</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Effects of the Merger.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;From and after the Effective Time, the Merger shall have the effects set
forth in this Agreement and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
1.5</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Certificate of Incorporation and Bylaws of the Surviving Corporation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
certificate of incorporation of the Company, as in effect immediately prior to the Effective Time, shall be amended in the Merger to be in the form of </FONT> <FONT SIZE=2><I>Exhibit&nbsp;A</I></FONT><FONT SIZE=2> hereto and, as so amended, such
certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended as provided therein or by applicable Laws. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Parent
shall take all necessary actions to cause the bylaws of Merger Sub, in the form attached as </FONT><FONT SIZE=2><I>Exhibit&nbsp;B</I></FONT><FONT SIZE=2>
hereto, to be the bylaws of the Surviving Corporation until thereafter amended as provided therein or by applicable Laws. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
1.6</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Directors of the Surviving Corporation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Parent shall take all necessary actions to cause the
directors of Merger Sub immediately prior to the Effective Time to be the directors of the Surviving Corporation immediately following the Effective Time, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as the case may be. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
1.7</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Officers of the Surviving Corporation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The officers of Merger Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation until their respective successors are duly appointed and qualified or their earlier death, resignation or removal in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>ARTICLE&nbsp;2<BR>  </B></FONT><FONT SIZE=2><I>Effect of the Merger on the Capital Stock of the<BR>
Constituent Corporations; Exchange of Certificates; Company Stock Options  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
2.1</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Effect on Capital Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;At
the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of Company Capital Stock or any shares of capital stock of
Merger Sub: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Capital Stock of Merger Sub.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each issued and outstanding share of capital stock of Merger Sub shall be
converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Cancellation of Treasury Stock and Parent-Owned Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Any shares of Company Capital Stock that are owned
by the Company as treasury stock, and any shares of Company Capital Stock owned by Parent or Merger Sub or any other wholly owned Subsidiary of Parent, shall be automatically canceled and shall cease
to exist and no consideration shall be delivered in exchange therefor. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conversion of Company Series&nbsp;A-1 Preferred Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each issued and outstanding share of
Company Series&nbsp;A-1 Preferred Stock (other than shares to be canceled in accordance with Section&nbsp;2.1(a)(ii)&nbsp;and Appraisal Shares) shall be converted into the right to
receive (A)&nbsp;cash in an amount equal to the Preferred Stock Per Share Cash Amount and (B)&nbsp;the number of shares of Parent Common Stock equal to the Preferred Stock Per Share Stock Amount.
Notwithstanding clause "(B)" of this Section&nbsp;2.1(a)(iii), on or before September&nbsp;15, 2005, Parent may elect (in Parent's sole discretion) by giving notice thereof to the Company in
accordance with Section&nbsp;8.10, to pay with respect to each share of Series&nbsp;A-1 Preferred Stock, cash in an amount of $21.7688 in </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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<P><FONT SIZE=2>lieu
of the number of shares of Parent Common Stock that would otherwise be issuable with respect to such share of Series&nbsp;A-1 Preferred Stock pursuant to such clause "(B)" of this
Section&nbsp;2.1(a)(iii)&nbsp;(such election, the "</FONT><FONT SIZE=2><I>Preferred Stock Cash Election</I></FONT><FONT SIZE=2>"). The per share cash amount payable by Parent pursuant to the
Preferred Stock Cash Election is herein referred to as the "</FONT><FONT SIZE=2><I>Preferred Stock Per Share Cash Election Amount</I></FONT><FONT SIZE=2>." If Parent makes the Preferred Stock Cash
Election, Parent shall also make the Common Stock Cash Election (as defined in Section&nbsp;2.1(a)(iv)). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conversion of Company Common Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each issued and outstanding share of Company Common Stock (other than
shares to be canceled in accordance with Section&nbsp;2.1(a)(ii)&nbsp;and Appraisal Shares) shall be converted into the right to receive (A)&nbsp;cash in an amount equal to the Common Stock Per
Share Cash Amount and (B)&nbsp;the number of shares of Parent Common Stock equal to the Common Stock Per Share Stock Amount. Notwithstanding clause "(B)" of this Section&nbsp;2.1(a)(iv), on or
before September&nbsp;15, 2005, Parent may elect (in Parent's sole discretion) by giving notice thereof to the Company in accordance with Section&nbsp;8.10, to pay with respect to each share of
Company Common Stock, cash in an amount of $0.5625 in lieu of the number of shares of Parent Common Stock that would otherwise be issuable with respect to such share of Company Common Stock pursuant
to such clause "(B)" of this Section&nbsp;2.1(a)(iv)&nbsp;(such election, the "</FONT><FONT SIZE=2><I>Common Stock Cash Election</I></FONT><FONT SIZE=2>" and, together with the Preferred Stock
Cash Election, the "</FONT><FONT SIZE=2><I>Parent Election</I></FONT><FONT SIZE=2>"). The per share cash amount payable by Parent pursuant to the Common Stock Cash Election is herein referred to as
the "</FONT><FONT SIZE=2><I>Common Stock Per Share Cash Election Amount</I></FONT><FONT SIZE=2>." If Parent makes the Common Stock Cash Election, Parent shall also make the Preferred Stock Cash
Election. Notwithstanding anything in this Agreement to the contrary, if the shares of Parent Common Stock to be issued in the Merger pursuant to Sections&nbsp;2.1(a)(iii)&nbsp;and
2.1(a)(iv)&nbsp;shall, as of the Effective Time, equal or exceed 20% of the then outstanding shares of Parent Common Stock, Parent shall be deemed to have timely made the Parent Election for all
purposes hereof. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Merger Consideration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As used herein, the term "</FONT><FONT SIZE=2><I>Merger
Consideration</I></FONT><FONT SIZE=2>" means the cash payable, and shares of Parent Common Stock issuable, to former stockholders of the Company pursuant to Sections 2.1(a)(iii)&nbsp;and
2.1(a)(iv)&nbsp;above. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Fractional Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No fraction of a share of Parent Common Stock will be issued by virtue of the Merger, but
in lieu thereof each holder of shares of Company Capital Stock who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock that otherwise would be received by such holder) shall, upon surrender of such holder's Certificate(s) (as defined in Section&nbsp;2.3(a)), or as otherwise provided in Section&nbsp;2.3(d),
receive from Parent an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of: (i)&nbsp;such fraction, multiplied by (ii)&nbsp;the Parent Trading Price. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
2.2</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Appraisal Rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything in this Agreement to the contrary, shares of Company
Capital Stock issued and outstanding immediately prior to the Effective Time that are held by any holder who is entitled to demand and properly demands appraisal of such shares pursuant to, and who
complies in all respects with, the provisions of Section&nbsp;262 of the DGCL ("</FONT><FONT SIZE=2><I>Section&nbsp;262</I></FONT><FONT SIZE=2>") shall not be converted into the right to receive
the Merger Consideration as provided in Sections 2.1(a)(iii)&nbsp;and 2.1(a)(iv), but instead such holder shall be entitled to payment of the fair value of such shares (the
"</FONT><FONT SIZE=2><I>Appraisal Shares</I></FONT><FONT SIZE=2>") in accordance with the provisions of Section&nbsp;262. At the Effective Time, all Appraisal Shares shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each holder of Appraisal Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of
such Appraisal Shares in accordance with the provisions of Section&nbsp;262. Notwithstanding the foregoing, if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to appraisal under Section&nbsp;262 or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

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<P><FONT SIZE=2>Section&nbsp;262,
then the right of such holder to be paid the fair value of such holder's Appraisal Shares under Section&nbsp;262 shall cease and each of such Appraisal Shares shall be deemed to
have been converted at the Effective Time into, and shall have become, the right to receive the Merger Consideration as provided in Section&nbsp;2.1(a)(iii)&nbsp;or Section&nbsp;2.1(a)(iv). The
Company shall (i)&nbsp;deliver prompt notice to Parent of any demands for appraisal of any shares of Company Capital Stock and (ii)&nbsp;the opportunity to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, without the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands, or agree
to do any of the foregoing. Any communication to be made by the Company to any holder of Company Capital Stock with respect to such demands shall be submitted to Parent in advance and shall not be
presented to any holder of Company Capital Stock prior to the Company receiving Parent's consent. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
2.3</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Surrender of Certificates.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Exchange Agent; Parent to Provide Cash and Parent Common Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Prior to the Effective Time, Parent shall
designate a bank, trust company or other institution reasonably acceptable to the Company to act as exchange agent (the "</FONT><FONT SIZE=2><I>Exchange Agent</I></FONT><FONT SIZE=2>") for payment of
the Merger Consideration upon surrender of the certificates that immediately prior to the Effective Time represented shares of Company Capital Stock (each such certificate, a
"</FONT><FONT SIZE=2><I>Certificate</I></FONT><FONT SIZE=2>"). Promptly following the Effective Time, Parent shall make available, or cause to be made available, to the Exchange Agent for exchange in
accordance with this Article&nbsp;2 cash and shares of Parent Common Stock, as applicable, sufficient to pay the aggregate Merger Consideration payable pursuant to
Section&nbsp;2.1(a)(iii)&nbsp;and Section&nbsp;2.1(a)(iv)&nbsp;upon surrender of Certificates representing outstanding shares of Company Capital Stock. In addition, Parent shall make available
as necessary from time to time after the Effective Time as needed, cash in an amount sufficient for payment in lieu of fractional shares pursuant to Section&nbsp;2.1(c) and any dividends or
distributions which holders of shares of Company Capital Stock may be entitled pursuant to Section&nbsp;2.3(e). The funds and shares of Parent Common Stock, as applicable, provided to the Exchange
Agent under this Section&nbsp;2.3(a) are referred to herein as the "</FONT><FONT SIZE=2><I>Exchange Fund.</I></FONT><FONT SIZE=2>" </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Payment Procedures.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Promptly after the Effective Time, the Exchange Agent shall mail to each holder of
record of a Certificate: (i)&nbsp;a letter of transmittal (which shall specify that delivery of the Certificates shall be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent); and (ii)&nbsp;instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration payable and
issuable, as applicable, pursuant to Section&nbsp;2.1(a)(iii)&nbsp;or Section&nbsp;2.1(a)(iv), any cash in lieu of any fractional shares pursuant to Section&nbsp;2.1(c) and any dividends or
other distributions pursuant to Section&nbsp;2.3(e) with respect to each share of Company Preferred Stock or Company Common Stock evidenced by such Certificate. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal, duly completed and validly executed in accordance with such instructions (and such other customary documents as may
reasonably be required by the Exchange Agent), the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration to which such holder is entitled pursuant to
Section&nbsp;2.1(a)(iii)&nbsp;or Section&nbsp;2.1(a)(iv), any payment in lieu of fractional shares which such holder has the right to receive pursuant to Section&nbsp;2.1(c) and any dividends
or distributions payable pursuant to Section&nbsp;2.3(e) with respect to each share of Company Preferred Stock or Company Common Stock evidenced by such Certificate, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership of shares of Company Capital Stock that is not registered in the transfer records of the Company, the proper amount of
Merger Consideration may be paid in exchange therefor to a Person other than the Person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or
shall otherwise be in proper form for transfer and the Person requesting such payment shall pay any transfer and other Taxes required by reason of the payment to a Person other than the registered
holder of such Certificate or establish to the reasonable satisfaction of the Surviving Corporation that such Tax either has been paid </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

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<P><FONT SIZE=2>or
is not applicable. Until surrendered as contemplated by this Section&nbsp;2.3(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration pursuant to Section&nbsp;2.1(a)(iii)&nbsp;or Section&nbsp;2.1(a)(iv)&nbsp;and the right to receive an amount in cash in lieu of the issuance of any
fractional shares in accordance with Section&nbsp;2.1(c) and any dividends or distributions payable pursuant to Section&nbsp;2.3(e) with respect to each share of Company Preferred Stock or Company
Common Stock evidenced by such Certificate. No interest will be paid or will accrue to the benefit of former Company stockholders on the cash portion of the Merger Consideration payable upon surrender
of any Certificate. Any certificates representing shares of Parent Common Stock issued pursuant to Section&nbsp;2.1(a)(iii)&nbsp;or Section&nbsp;2.1(a)(iv)&nbsp;may at the option of Parent be
in uncertificated book entry form unless a physical certificate is requested or is otherwise required by applicable law or regulation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Transfer Books; No Further Ownership Rights in Company Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;At the Effective Time: (i)&nbsp;all shares
of Company Capital Stock outstanding immediately prior to the Effective Time shall automatically be converted into the right to receive the Merger Consideration or canceled and retired in each case as
specified in Section&nbsp;2.1 and shall cease to exist, and all holders of Certificates representing shares of Company Capital Stock that were outstanding immediately prior to the Effective Time
shall cease to have any rights as stockholders of the Company, except the right to receive the Merger Consideration pursuant to Section&nbsp;2.1(a)(iii)&nbsp;or Section&nbsp;2.1(a)(iv), any
payment in lieu of fractional shares pursuant to Section&nbsp;2.1(c) and any dividends or distributions payable pursuant to Section&nbsp;2.3(e) with respect to each share of Company Preferred
Stock or Company Common Stock evidenced by such Certificate upon surrender thereof in accordance with Section&nbsp;2.3(b); and (ii)&nbsp;the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Capital Stock that were outstanding immediately prior to the
Effective Time. All cash paid, and any shares of Parent Common Stock issued, upon the surrender of Certificates in accordance with the terms of this Article&nbsp;2 shall be deemed to have been paid
and issued in full satisfaction of all rights pertaining to the shares of Company Capital Stock previously represented by such Certificates. Subject to Section&nbsp;2.3(f), if, at any time after the
Effective Time, Certificates are presented to the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article&nbsp;2. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Lost, Stolen or Destroyed Certificates.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond, in such reasonable
amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will pay and issue, as applicable, to such Person the
Merger Consideration to be paid or issued pursuant to Section&nbsp;2.1(a)(iii)&nbsp;or Section&nbsp;2.1(a)(iv), any payment in lieu of fractional shares pursuant to Section&nbsp;2.1(c) and any
dividends or distributions payable pursuant to Section&nbsp;2.3(e) for each share of Company Preferred Stock or Company Common Stock evidenced by such lost, stolen or destroyed Certificate. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Distributions With Respect to Unexchanged Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No dividends or other distributions declared or made after
the date of this Agreement with respect to Parent Common Stock with a record date after the Effective Time will be paid to the holders of any unsurrendered Certificates with respect to any shares of
Parent Common Stock represented thereby until the holders of record of such Certificates shall surrender such Certificates, except as provided in Section&nbsp;2.3(d). Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver to the record holders thereof, without interest, (i)&nbsp;promptly after such surrender, the amount of any such
dividends or other distributions with a record date after the Effective Time and theretofore paid with respect to any such whole shares of Parent Common Stock and (ii)&nbsp;at the appropriate
payment date, the amount of dividends or other distributions with a record date after the Effective Time and a payment date subsequent to such surrender payable with respect to any such whole shares
of Parent Common Stock. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Termination of Fund.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Any portion of the Exchange Fund (including the proceeds of any investments thereof)
that remains undistributed to the former holders of the Certificates one year after the Effective Time shall be delivered by the Exchange Agent to the Surviving Corporation upon demand. Any former
holders of Certificates who have not theretofore complied with this Article&nbsp;2 shall thereafter look only to the Surviving Corporation for payment of any Merger Consideration pursuant to
Section&nbsp;2.1(a)(iii)&nbsp;or Section&nbsp;2.1(a)(iv), any cash in lieu of any fractional shares pursuant to Section&nbsp;2.1(c) and any dividends or other distributions pursuant to
Section&nbsp;2.3(e) with respect to the shares of Company Capital Stock formerly represented by such Certificates. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;No Liability.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding any provision of this Agreement to the contrary, none of Parent, the Surviving
Corporation or the Exchange Agent shall be liable to any Person for any amount properly paid from the Exchange Fund or delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Investment of Exchange Fund.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Parent shall cause the Exchange Agent to invest any cash included in the
Exchange Fund in a money market fund registered under the Investment Company Act of 1940, the principal of which is invested solely in obligations issued or guaranteed by the United States Government
and repurchase agreements in respect of such obligations. Any interest and other income resulting from such investment shall be the property of, and shall be paid promptly to, Parent. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
2.4</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Company Stock Options; ESPP; Warrants.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Prior
to the Effective Time, the Company shall use commercially reasonable efforts to cause each option granted pursuant to a Company Stock Plan that is outstanding
immediately prior to the Effective Time (whether or not then vested or exercisable) and that represents the right to acquire shares of Company Common Stock (each, an
"</FONT><FONT SIZE=2><I>Option</I></FONT><FONT SIZE=2>") to be canceled and terminated and converted at the Effective Time into the right to receive a cash amount equal to the Option Consideration
(as hereinafter defined) for each share of Company Common Stock then subject to the Option. Prior to the Effective Time, the Company shall take all actions necessary to terminate the Company Stock
Plans, such termination to be effective at or before the Effective Time. Prior to the Effective Time, Parent shall deposit in a bank account an amount of cash equal to the sum of the aggregate Option
Consideration for each Option then outstanding (subject to any applicable withholding tax), together with instructions that such cash be promptly distributed following the Effective Time to the
holders of such Options in accordance with this Section&nbsp;2.4(a). For purposes of this Agreement, "</FONT><FONT SIZE=2><I>Option Consideration</I></FONT><FONT SIZE=2>" means, with respect to any
share of Company Common Stock issuable under a particular Option, an amount equal to the excess, if any, of: (1)&nbsp;$0.75 over (2)&nbsp;the exercise price payable in respect of such share of
Company Common Stock issuable under such Option (it being understood that if the exercise price payable in respect of such share of Company Common Stock issuable under such Option exceeds the Common
Stock Per Share Amount, the Option Consideration shall be zero). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
rights of participants in the ESPP with respect to any offering period underway immediately prior to the Effective Time under the ESPP shall be determined by
treating the last business day prior to the Effective Time as the last day of such offering period and by making such other pro-rata adjustments as may be necessary to reflect the
shortened offering period but otherwise treating such shortened offering period as a fully effective and completed offering period for all purposes under the ESPP. Prior to the Effective Time, the
Company shall take all actions (including, if appropriate, amending the terms of the ESPP) that are necessary to give effect to the transactions contemplated by this Section&nbsp;2.4(b). </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;Prior
to the Effective Time, the Company shall use commercially reasonable efforts to cause each warrant to purchase shares of Company Common Stock that is outstanding
as of the Effective Time (a "</FONT><FONT SIZE=2><I>Warrant</I></FONT><FONT SIZE=2>") to be canceled and terminated and converted at the Effective Time into the right to receive a cash amount equal
to the Warrant Consideration (as hereinafter defined) for each share of Company Common Stock then subject to the Warrant. Prior to the Effective Time, Parent shall deposit </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>

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<P><FONT SIZE=2>in
a bank account an amount of cash equal to the sum of the aggregate Warrant Consideration for each Warrant then outstanding (subject to any applicable withholding tax), together with instructions
that such cash be promptly distributed following the Effective Time to the holders of such Warrants in accordance with this Section&nbsp;2.4(c). For purposes of this Agreement,
"</FONT><FONT SIZE=2><I>Warrant Consideration</I></FONT><FONT SIZE=2>" means, with respect to any share of Company Common Stock issuable under a particular Warrant, an amount equal to the excess, if
any, of: (1)&nbsp;$0.75; over (2)&nbsp;the exercise price payable in respect of such share of Company Common Stock issuable under such Warrant (it being understood that if the exercise price
payable in respect of such share of Company Common Stock issuable under such Warrant exceeds the Common Stock Per Share Amount, the Warrant Consideration shall be zero). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;The
Company and Parent shall take such steps as may be reasonably requested by any party hereto to cause dispositions of Company equity securities (including derivative
securities) pursuant to the transactions contemplated by this Agreement by each individual who is a director or officer of the Company to be exempt under Rule&nbsp;16b-3 promulgated
under the Exchange Act in accordance with that certain No-Action Letter dated January&nbsp;12, 1999 issued by the Securities and Exchange Commission (the
"</FONT><FONT SIZE=2><I>SEC</I></FONT><FONT SIZE=2>") regarding such matters. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
2.5</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Withholding Taxes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Parent, the Surviving Corporation and the Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable to a former holder of shares of Company Capital Stock, Options or Warrants pursuant to this Agreement such amounts as may be
required to be deducted or withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax Law. To the extent that amounts are so deducted and
withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
2.6</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If during the period from the date of this Agreement through the Effective Time, any
change in the outstanding shares of Parent Common Stock or Company Capital Stock or securities convertible or exchangeable into or exercisable for shares of Parent Common Stock or Company Capital
Stock, shall occur by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares of Parent Common Stock or Company Capital Stock, or any similar
transaction, or any stock dividend thereon with a record date during such period, the Preferred Stock Per Share Cash Amount, Preferred Stock Per Share Stock Amount, Common Stock Per Share Cash Amount,
Common Stock Per Share Stock Amount, Preferred Stock Per Share Cash Election Amount and Common Stock Per Share Cash Election Amount, as applicable, shall be appropriately adjusted to reflect such
change. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>ARTICLE&nbsp;3<BR>  </B></FONT><FONT SIZE=2><I>Representations and Warranties of the Company</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
as set forth in the disclosure schedule (each section of which qualifies the correspondingly numbered representation and warranty to the extent specified therein and such other
representations and warranties to the extent the relevance of a matter in such section of the disclosure schedule to the information called for by such other representation and warranty is reasonably
apparent) delivered by the Company to Parent simultaneously with the execution of this Agreement (the "</FONT><FONT SIZE=2><I>Company Disclosure Schedule</I></FONT><FONT SIZE=2>"), the Company
represents and warrants to Parent and Merger Sub as follows: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.1</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Organization, Standing and Corporate Power.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is
incorporated and has all requisite corporate power and authority necessary to own or lease all of its properties and assets and to carry on its business as it is now being conducted. The Company and
each of its Subsidiaries is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>

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<P><FONT SIZE=2>standing,
individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. For purposes of this Agreement, the term
"</FONT><FONT SIZE=2><I>Company Material Adverse Effect</I></FONT><FONT SIZE=2>" shall mean any change, event, occurrence, violation of any legal, contractual or similar obligation, inaccuracy,
effect or circumstance (any such item, an "</FONT><FONT SIZE=2><I>Effect</I></FONT><FONT SIZE=2>") which individually, or when taken together with all other Effects that have occurred prior to the
date of determination of the occurrence of a Company Material Adverse Effect, (i)&nbsp;is materially adverse to the business or assets (tangible or intangible), capitalization, results of operations
or financial condition of the Company and its Subsidiaries taken as a whole, or (ii)&nbsp;materially impedes the authority of the Company or any of its Subsidiaries, to consummate the Transactions
in accordance with the terms hereof and applicable Laws; </FONT><FONT SIZE=2><I>provided, however,</I></FONT><FONT SIZE=2> that none of the following shall be deemed either alone or in combination to
constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Company Material Adverse Effect: (A)&nbsp;any Effect to the extent resulting
from changes to the U.S. or global economy in general (except to the extent such changes have a materially disproportionate effect on the Company and its Subsidiaries taken as a whole); (B)&nbsp;any
Effect to the extent resulting from changes in the industries in which the Company operates (except to the extent such changes have a materially disproportionate effect on the Company and its
Subsidiaries taken as a whole); (C)&nbsp;any Effect to the extent resulting from fluctuations in the value of currencies; (D)&nbsp;any Effect to the extent resulting from acts of terrorism, war,
national or international calamity or any other similar event (except to the extent such Effect has a materially disproportionate effect on the Company and its Subsidiaries taken as a whole);
(E)&nbsp;any Effect to the extent resulting from the announcement or pendency of this Agreement or any of the Transactions (including any Effect to the extent resulting from any litigation, any loss
of or delay in placing customer orders or any departure or loss of employees to the extent arising from such announcement or pendency of this Agreement or any of the Transactions); (F)&nbsp;any
Effect to the extent resulting from the failure of the Company to meet internal or analysts' expectations or projections (it being understood, however, that the underlying circumstances giving rise to
such failure may be taken into account unless otherwise excluded pursuant to this paragraph); (G)&nbsp;any Effect resulting from expenditures of up to $4.5&nbsp;million in cash in each successive
90&nbsp;day period beginning after the date of this Agreement (it being understood that the first such period begins on the day after the date of this Agreement and ends on the 90<SUP>th</SUP>
day after the date of this Agreement, the second such period begins on the date 91&nbsp;days after the date this Agreement and ends on the 180<SUP>th</SUP> day after the date of this Agreement,
etc.) in the ordinary course of business by the Company and its Subsidiaries taken as a whole; </FONT><FONT SIZE=2><I>provided, however</I></FONT><FONT SIZE=2>, that this clause "(G)" shall no longer
qualify the definition of "Company Material Adverse Effect" if at any time after the date of this Agreement all three of the following conditions are met: (1)&nbsp;the Company's available cash is
less than $1.5&nbsp;million; (2)&nbsp;Parent offers to provide the Company (and does provide, if such offer is accepted by the Company) with an unsecured loan at an interest rate of the lower of
(a)&nbsp;the maximum interest rate permissible by law and (b)&nbsp;15%, payable not earlier than the earlier to occur of (x)&nbsp;the date thirty days following the consummation of a Takeover
Proposal (for purposes of this Section&nbsp;3.1(a) all references to "20%" in the definition of "Takeover Proposal" shall be deemed to refer to "50%" instead) and (y)&nbsp;the first anniversary of
the date of the loan, in an amount sufficient to operate the business of the Company and its Subsidiaries in the ordinary course of business from the date of such offer through the Outside Date, but
in no event greater than $10&nbsp;million, that is not convertible into equity and is
otherwise on commercially reasonable terms (the "Loan"); and (3)&nbsp;the Company does not accept the Loan within five business days of receiving such offer from Parent. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Section&nbsp;3.1(b)
of the Company Disclosure Schedule lists all Subsidiaries of the Company, together with the jurisdiction of organization of each such Subsidiary.
All the outstanding shares of capital stock of, or other equity interests in, each such Subsidiary have been duly authorized and validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company free and clear of all liens, pledges, charges, mortgages, encumbrances, adverse rights or claims and security interests of any kind or nature whatsoever (except
for such transfer restrictions of general applicability as may be provided under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the
"</FONT><FONT SIZE=2><I>Securities Act</I></FONT><FONT SIZE=2>"), and the "blue sky" laws of the various States of the </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>

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<P><FONT SIZE=2>United
States) (collectively, "</FONT><FONT SIZE=2><I>Liens</I></FONT><FONT SIZE=2>"). Except as set forth in Section&nbsp;3.1(b) of the Company Disclosure Schedule, the Company does not own,
directly or indirectly, any capital stock, voting securities or equity interests in any Person. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;The
Company has delivered or made available to Parent copies of its certificate of incorporation and bylaws (the "</FONT><FONT SIZE=2><I>Company Charter
Documents</I></FONT><FONT SIZE=2>") and copies of the certificates of incorporation and bylaws (or comparable organizational documents) of each of its Subsidiaries listed on Section&nbsp;3.1(a) of
the Company Disclosure Schedule (the "</FONT><FONT SIZE=2><I>Subsidiary Documents</I></FONT><FONT SIZE=2>"), in each case as amended to the date of this Agreement. All such Company Charter Documents
and Subsidiary Documents are in full force and effect and neither the Company nor any of its Subsidiaries is in violation of any of their respective provisions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.2</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Capitalization.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
authorized capital stock of the Company consists of 95,000,000 shares of Company Common Stock and 5,000,000 shares of Company Preferred Stock, of which 1,572,685
shares have been designated as Series&nbsp;A-1 Preferred Stock. At the close of business on August&nbsp;12, 2005: (i)&nbsp;8,337,246 shares of Company Common Stock were issued and
outstanding (none of which were held by the Company in its treasury); (ii)&nbsp;5,482,406 shares of Company Common Stock were reserved for issuance under the Aerogen 2000 Equity Incentive Plan (of
which 4,003,337 shares of Company Common Stock were subject to outstanding options granted thereunder); (iii)&nbsp;12,000 shares of Company Common Stock were reserved for issuance under the Aerogen
2000 Non-Employee Directors' Stock Option Plan (of which 8,000 shares of Company Common Stock were subject to outstanding options granted thereunder); (iv)&nbsp;391,922 shares of Company
Common Stock were reserved for issuance under the Aerogen 1996 Stock Option Plan (of which 174,006 shares of Company Common Stock were subject to outstanding options granted thereunder);
(v)&nbsp;1,591,364 shares of Company Common Stock were reserved for issuance under the 2000 ESPP; (vi)&nbsp;warrants to purchase 11,767,204 shares of Company Common Stock were outstanding; and
(vii)&nbsp;887,061 shares of Company Series&nbsp;A-1 Preferred Stock were issued and outstanding. All outstanding shares of Company Capital Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights. Section&nbsp;3.2(a) of the Company Disclosure Schedule sets forth a list, as of the close of business on August&nbsp;12,
2005, of all outstanding options and warrants to purchase shares of Company Common Stock, and, for each such option or warrant: (A)&nbsp;the particular Company Stock Plan (if any) pursuant to which
any such option was granted; (B)&nbsp;the number of shares of Company Common Stock subject to such option or warrant; (C)&nbsp;the date of grant of such option or warrant; (D)&nbsp;the
expiration date of such option or warrant; (E)&nbsp;the exercise price of such option or warrant; (F)&nbsp;the name of the holder of such option or warrant; and (G)&nbsp;the extent to which
such option or warrant is vested and exercisable as of the date of this Agreement. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar
rights with respect to the Company. Except as set forth above in this Section&nbsp;3.2(a) or in Section&nbsp;3.2(a) of the Company Disclosure Schedule, as of the date of this Agreement, there are
not any shares of Company Capital Stock issued and outstanding or any subscriptions, options, warrants, calls, convertible or exchangeable securities, rights, commitments or agreements of any
character providing for the issuance of any shares of Company Capital Stock. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;None
of the Subsidiaries of the Company is bound by any outstanding subscriptions, options, warrants, calls, convertible or exchangeable securities, rights, commitments
or agreements of any character providing for the issuance or disposition of any shares of capital stock, voting securities or equity interests of any Subsidiary. There are no outstanding obligations
or Contracts of the Company or any of its Subsidiaries to (i)&nbsp;repurchase, redeem or otherwise acquire any shares of capital stock, voting securities or equity interests (or any options,
warrants or other rights to acquire any shares of capital stock, voting securities or equity interests) of the Company or any of its Subsidiaries, or (ii)&nbsp;dispose of any shares of the capital
stock of, or other equity or voting interest in, any of its Subsidiaries. The Company is not a party to any voting agreement, irrevocable proxy, voting agreement, voting trust, rights plan,
anti-takeover plan or registration rights agreement with respect to any shares </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>

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<P><FONT SIZE=2>of
the capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries and, to the Knowledge of the Company, other than the Voting Agreements and the irrevocable
proxies granted pursuant to the Voting Agreements, as of the date of this Agreement, there are no irrevocable proxies and no voting agreements, voting trusts, rights plans, anti-takeover
plans or registration rights agreements with respect to any shares of the capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries. The Rights Agreement dated
as of June&nbsp;5, 2001, by and between the Company and Mellon Investor Services LLC, as amended, has terminated and such Rights Agreement is of no further force and effect. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.3</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Authority; Noncontravention; Voting Requirements.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
Company has all necessary corporate power and authority to execute and deliver this Agreement and, subject to obtaining the Company Stockholder Approval, to perform
its obligations hereunder and to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Transactions, have been duly
authorized and approved by its Board of Directors, and except for obtaining the Company Stockholder Approval for the adoption of this Agreement, no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance by the Company of this Agreement and the consummation by it of the Transactions. This Agreement has been duly executed and delivered by
the Company and, assuming due authorization, execution and delivery hereof by the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that such enforceability: (i)&nbsp;may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of
general application affecting or relating to the enforcement of creditors' rights generally; and (ii)&nbsp;is subject to general principles of equity, whether considered in a proceeding at law or in
equity (collectively, the "</FONT><FONT SIZE=2><I>Bankruptcy and Equity Exception</I></FONT><FONT SIZE=2>"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
Company's Board of Directors, at a meeting duly called and held, has: (i)&nbsp;approved this Agreement and the Merger and, subject to the receipt of the Company
Stockholder Approval (as defined below), the Transactions; (ii)&nbsp;determined that the Merger is in the best interests of the Company and its stockholders and declared the Merger to be advisable;
and (iii)&nbsp;resolved to recommend that the stockholders of the Company adopt this Agreement and approve the Transactions (such recommendation being referred as the
"</FONT><FONT SIZE=2><I>Company Board Recommendation</I></FONT><FONT SIZE=2>"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;Neither
the execution and delivery of this Agreement by the Company nor the consummation by the Company of the Transactions, nor compliance by the Company with any of
the terms or provisions hereof, will: (i)&nbsp;conflict with or violate any provision of the Company Charter Documents or any of the Subsidiary Documents; or (ii)&nbsp;assuming that the
authorizations, consents and approvals referred to in Section&nbsp;3.4 and the Company Stockholder Approval are obtained and the filings referred to in Section&nbsp;3.4 are made:
(A)&nbsp;violate any Law, judgment, writ or injunction of any Governmental Authority applicable to the Company or any of its Subsidiaries or any of their respective properties or assets; or
(B)&nbsp;violate, constitute a material default (or an event which, with notice or lapse of time, or both, would constitute a material default) under, result in the termination of or a right of
termination or cancellation under, impair the Company's rights or alter the rights or obligations of any third party under, accelerate the performance required by, or result in the creation of any
Lien upon any of the respective properties, Intellectual Property or other assets of, the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any loan or credit
agreement, debenture, note, bond, mortgage, indenture, deed of trust, license, lease, contract or other agreement, instrument or obligation (each, a
"</FONT><FONT SIZE=2><I>Contract</I></FONT><FONT SIZE=2>") or Permit that is listed in Section&nbsp;3.13(a) of the Company Disclosure Schedule or that is otherwise material to the business of the
Company and its Subsidiaries taken as a whole, except in the case of clause&nbsp;(ii) of this Section&nbsp;3.3(c) for any such violations, defaults, terminations, impairments, accelerations, liens
or other events which would not reasonably be expected to have a material effect on the business, operations or condition of the Company and its Subsidiaries, taken as a whole. Section&nbsp;3.3(c)
of the Company Disclosure Schedule lists all necessary notices, </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>

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<P><FONT SIZE=2>consents,
waivers and approvals under any of the Company's or any of its Subsidiary's Contracts required to be obtained in connection with the consummation of the Transactions, which, if not obtained,
would result in a material liability or loss of rights or benefits to the Company (or the Surviving Corporation) and its Subsidiaries, taken as a whole, as a result of the Merger. Following the
Effective Time, the Surviving Corporation shall be permitted to exercise all of its rights under each of the Contracts listed in Schedule&nbsp;3.13(a) of the Company Disclosure Schedule without the
payment of any additional amounts or consideration required by the terms of such Contract other than ongoing fees, royalties or payments which the Company or any of its Subsidiaries, as the case may
be, would otherwise be required to pay pursuant to the terms of such Contracts had the transactions contemplated by this Agreement not occurred. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;Assuming
the accuracy of the representations made in Section&nbsp;4.8, the affirmative vote (in person or by proxy) of (i)&nbsp;the holders of a majority of the then
outstanding shares of Company Series&nbsp;A-1 Preferred Stock and each of Xmark Fund, L.P. and Xmark Fund,&nbsp;Ltd; and (ii)&nbsp;of the holders of a majority of the outstanding
shares of Company Series&nbsp;A-1 Preferred Stock and the Company's Common Stock (voting together as a single class on an as-converted-to-Common Stock
basis) at the Company Stockholders Meeting or any adjournment or postponement thereof in favor of (x)&nbsp;the adoption of this Agreement and (y)&nbsp;approval of the Charter Amendment (the
"</FONT><FONT SIZE=2><I>Company Stockholder Approval</I></FONT><FONT SIZE=2>") is the only vote or approval of the holders of any class or series of capital stock of the Company or any of its
Subsidiaries which is necessary to adopt this Agreement and approve the Transactions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.4</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Governmental Approvals.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Except for: (a)&nbsp;the filing with the SEC of a proxy statement relating
to the Company Stockholders Meeting (as amended or supplemented from time to time, the
"</FONT><FONT SIZE=2><I>Proxy Statement</I></FONT><FONT SIZE=2>") in accordance with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "</FONT><FONT SIZE=2><I>Exchange Act</I></FONT><FONT SIZE=2>"), the effectiveness of the registration statement on Form&nbsp;S-4 under the Securities Act to
be filed with the SEC by Parent in connection with the issuance of shares of Parent Common Stock in the Merger (as amended or supplemented from time to time, the
"</FONT><FONT SIZE=2><I>S-4 Registration Statement</I></FONT><FONT SIZE=2>"); and (b)&nbsp;the filing of the Charter Amendment and the Certificate of Merger with the Secretary of State
of the State of Delaware pursuant to the DGCL, no consents or approvals of, or filings, declarations or registrations with, any Governmental Authority are necessary for the execution and delivery of
this Agreement by the Company and the consummation by the Company of the Transactions, other than such other consents, approvals, filings, declarations or registrations that, if not obtained, made or
given, would not, individually or in the aggregate, have a material effect on the business, operations or condition of the Company and its Subsidiaries, taken as a whole, or reasonably be expected to
have a material adverse effect on the Company's ability to consummate the Transactions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.5</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Company SEC Documents; Undisclosed Liabilities; Internal Controls.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
Company has filed and furnished all required reports, schedules, forms, prospectuses and registration, proxy and other statements required to be filed or furnished
by it with or to the SEC since January&nbsp;1, 2003 (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the
"</FONT><FONT SIZE=2><I>Company SEC Documents</I></FONT><FONT SIZE=2>"). None of the Company's Subsidiaries is required to file periodic reports with the SEC pursuant to the Exchange Act. As of their
respective effective dates (in the case of Company SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective filing dates (in
the case of all other Company SEC Documents), the Company SEC Documents complied in all material respects with the requirements of the Exchange Act and the Securities Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder, each as in effect on the applicable date referred to above, applicable to such Company SEC Documents, and none of the Company SEC Documents as
of such respective dates contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The consolidated financial statements (including, in each case, any related notes thereto) of the Company included in the Company SEC Documents (the
"</FONT><FONT SIZE=2><I>Company Financials</I></FONT><FONT SIZE=2>") comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited quarterly statements, as indicated in the notes thereto) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as
of the dates thereof and the consolidated results of their operations and cash flows for the periods indicated (subject, in the case of unaudited quarterly statements, to normal year-end
audit adjustments, none of which has been or will be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;The
Company has established and maintains disclosure controls and procedures (as such term is defined in Rule&nbsp;13a-15 and
Rule&nbsp;15d-15 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to the Company, including its consolidated
Subsidiaries, required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's principal executive officer and
its principal financial officer to allow timely decisions regarding required disclosure; and, except as may be disclosed in reports filed by the Company with the SEC after the date of this Agreement
in accordance with applicable SEC requirements, such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. With respect to each Annual
Report on Form&nbsp;10-K, each Quarterly Report on Form&nbsp;10-Q and each amendment of any such report included in the Company SEC Documents filed since January&nbsp;1,
2003, the principal executive officer and the principal financial officer of Company have made all certifications required by the Sarbanes-Oxley Act of 2002 and any related rules and regulations
promulgated by the SEC. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;The
Company and each of its Subsidiaries has established and maintains, adheres to and enforces a process to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including those policies and procedures that: (i)&nbsp;pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries; (ii)&nbsp;provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and its Subsidiaries are made only in
accordance with appropriate authorizations of management and the board of directors of the Company or its Subsidiaries, as applicable; and (iii)&nbsp;provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries that could have a material effect on the Company's financial
statements. Neither the Company nor any of the Company's independent auditors has identified or been made aware of (i)&nbsp;any significant deficiency or material weakness in the system of internal
accounting controls utilized by the Company and its Subsidiaries, (ii)&nbsp;any fraud, whether or not material, that involves the Company's management or any other current or former employee,
consultant, or director of the Company or any of its Subsidiaries who has a role in the preparation of financial statements or the internal accounting controls utilized by the Company and
Subsidiaries, or (iii)&nbsp;any claim or allegation regarding any of the foregoing. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;Neither
the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any director, officer, agent, employee or other Person acting on behalf of the
Company or any of its Subsidiaries, has: (i)&nbsp;used any corporate or other funds for unlawful contributions, payments or gifts, or made any unlawful expenditures relating to political activity to
government officials or others or </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P>

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<P><FONT SIZE=2>established
or maintained any unlawful or unrecorded funds, in any case in violation of Section&nbsp;30A of the Exchange Act; or (ii)&nbsp;accepted or received any unlawful contributions,
payments, gifts or expenditures. Except as set forth in the Company SEC Documents filed by the Company and publicly available prior to the date of this Agreement (the "</FONT><FONT SIZE=2><I>Filed
Company SEC Documents</I></FONT><FONT SIZE=2>"), between the Company's proxy statement dated April&nbsp;19, 2004 and the date of this Agreement, no event has occurred that would be required to be
reported as a "Certain Relationship or Related Transaction" pursuant to Item 404 of Regulation&nbsp;S-K promulgated by the SEC. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Neither
the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) of the type and
magnitude required to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP or the notes thereto, except liabilities: (i)&nbsp;as and to
the extent set forth on the unaudited consolidated balance sheet of the Company and its Subsidiaries as of June&nbsp;30, 2005 (the "</FONT><FONT SIZE=2><I>Balance Sheet
Date</I></FONT><FONT SIZE=2>") (including the notes thereto) included in the Filed Company SEC Documents); or (ii)&nbsp;incurred after the Balance Sheet Date in the ordinary course of business
consistent with past practice that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.6</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Absence of Certain Changes or Events.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Except as disclosed in the Filed Company SEC Documents,
between the Balance Sheet Date and the date of this Agreement, the Company and its
Subsidiaries carried on and operated their respective businesses in all material respects in the ordinary course of business consistent with past practice. Between the Balance Sheet Date and the date
of this Agreement, there has not been, accrued or arisen: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;any
changes, events, occurrences or circumstances that, individually or in the aggregate, had or would reasonably be expected to have a Company Material Adverse Effect; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;any
acquisition by the Company or any Subsidiary of, or agreement by the Company or any Subsidiary to acquire by merging or consolidating with, or by purchasing any
assets or equity securities of, or by any other manner, any business or corporation, partnership, association or other business organization or division thereof, or other acquisition or agreement to
acquire any assets or any equity securities that are material, individually or in the aggregate, to the business of the Company or its Subsidiaries; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;any
declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Company's or any of
its Subsidiaries' capital stock, or any purchase, redemption or other acquisition by the Company or any of its Subsidiaries of any of the Company's capital stock or any other securities of the Company
or its Subsidiaries or any options, warrants, calls or rights to acquire any such shares or other securities except for repurchases from Employees following their termination pursuant to the terms of
their stock option or purchase agreements; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;any
split, combination or reclassification of any of the Company's or any of its Subsidiaries' capital stock; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;any
granting by the Company or any of its Subsidiaries of any increase in compensation or fringe benefits or any payment by the Company or any of its Subsidiaries of any
bonus or any payment (whether in cash or equity) or increase by the Company or any of its Subsidiaries of severance payment, termination payments or bonus payment or any entry by the Company or any of
its Subsidiaries into any effective (as of the date of this Agreement) employment, severance, termination or indemnification agreement or any agreement the benefits of which are contingent or the
terms of which are materially altered upon the occurrence of a transaction involving the Company of the nature contemplated hereby (either alone or upon the occurrence of additional or subsequent
events); </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;any
material change by the Company in its accounting methods, principles or practices, except as required by concurrent changes in GAAP; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;any
debt, capital lease or other debt or equity financing transaction by the Company or any of its Subsidiaries or entry into any agreement by the Company or any of
its Subsidiaries in connection with any such transaction; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;any
termination of any Material Contract to which the Company or any of its Subsidiaries was a party or by which it was bound which was in effect as of the Balance
Sheet Date; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;any
material restructuring activities by the Company or any of its Subsidiaries, including any material reductions in force, lease terminations, restructuring of
contracts or similar actions; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;any
sale, lease, license, encumbrance or other disposition of any properties or assets except the sale, lease or disposition (other than through licensing) of property
or assets which are not material, individually or in the aggregate, to the business of Company and its Subsidiaries, taken as a whole, or the license of Company products, in each case, in the ordinary
course of business and in a manner consistent with past practice; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi)&nbsp;&nbsp;any
material revaluation by the Company of any of its assets, including, without limitation, writing down the value of capitalized inventory or writing off notes or
accounts receivable other than in the ordinary course of business consistent with past practice. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.7</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Legal Proceedings.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Other than any legal, administrative, arbitral or other proceedings related to
patent prosecutions in the ordinary course of business, and other than as described in Section&nbsp;3.7 of the Company Disclosure Schedule, there is no pending or, to the Knowledge of the Company,
threatened in writing, action, suit, claim or legal, administrative, arbitral or other proceeding against, or, to the Knowledge of the Company, governmental or regulatory investigation of, the Company
or any of its Subsidiaries, nor is there any injunction, order, judgment, ruling or decree imposed (or, to the Knowledge of the Company, threatened in writing to be imposed) upon the Company, any of
its Subsidiaries or the assets of the Company or any of its Subsidiaries (including their respective rights in any Intellectual Property) by or before any Governmental Authority. There has not been
since January&nbsp;1, 2003, nor are there currently any internal investigations or inquiries being conducted by the Company, the Company's Board of Directors (or any committee thereof) or, to the
Company's Knowledge, any third party at the request of any of the foregoing concerning any financial, accounting, tax, conflict of interest, illegal activity, fraudulent or deceptive conduct or other
misfeasance or malfeasance issues. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.8</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Compliance With Laws; Permits.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
Company and its Subsidiaries are in compliance in all material respects with all laws (including common law), statutes, ordinances, codes, rules, regulations,
decrees and orders of Governmental Authorities (collectively, "</FONT><FONT SIZE=2><I>Laws</I></FONT><FONT SIZE=2>") applicable to the Company or any of its Subsidiaries, any of their properties or
other assets or any of their businesses or operations. Since January&nbsp;1, 2002, neither the Company nor any of its Subsidiaries has received written notice to the effect that a Governmental
Authority claimed or alleged that the Company or any of its Subsidiaries was not in compliance in a material respect with any Law applicable to the Company or any of its Subsidiaries, any of their
material properties or other assets or any of their businesses or operations. As of the date of this Agreement, there is no judgment, injunction, order or decree binding upon the Company or any of its
Subsidiaries. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
Company and each of its Subsidiaries holds all material licenses, franchises, permits, certificates, approvals and authorizations from Governmental Authorities, or
required by Governmental Authorities to be obtained, in each case necessary for the conduct of their respective businesses (collectively, "</FONT><FONT SIZE=2><I>Permits</I></FONT><FONT SIZE=2>").
The Company and each of its Subsidiaries is in compliance in all material </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>14</FONT></P>

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<P><FONT SIZE=2>respects
with the terms of all Permits. Since January&nbsp;1, 2002, neither the Company nor any of its Subsidiaries has received written notice to the effect that a Governmental Authority was
considering the amendment, termination, revocation or cancellation of any Permit. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;The
Company is not in receipt of any pending notice of, and not subject to, any pending adverse inspection, finding of deficiency, finding of non-compliance,
compelled or voluntary recall, investigation, penalty for corrective or remedial action or other compliance or enforcement action (including any of the foregoing indicating that any of the Company's
Products are misbranded or adulterated as defined in 21 U.S.C. &sect;321, </FONT><FONT SIZE=2><I>et seq</I></FONT><FONT SIZE=2>., as amended, and the rules and regulations promulgated
thereunder), in each case relating to any of its products or to the Company's Knowledge, to the facilities in which such products are manufactured, collected or handled, by the Food and Drug
Administration (the "</FONT><FONT SIZE=2><I>FDA</I></FONT><FONT SIZE=2>") or applicable equivalent foreign regulatory authorities. The Company is in compliance with all applicable registration and
listing requirements set forth at 21 U.S.C. &sect;360 and all similar applicable laws and regulations. To the Knowledge of the Company, the Company has not made any false statements on, or
omissions from, the applications, approvals, reports and other submissions to the FDA or applicable equivalent foreign regulatory authorities or in or from any other records and documentation prepared
or maintained to comply with the requirements of the FDA or applicable equivalent foreign regulatory authorities relating to the Company's products that would, individually or in the aggregate,
reasonably be expected to have a material effect on the business, operation or condition of the Company and its Subsidiaries, taken as a whole. No Company product has been recalled, suspended or
discontinued as a result of any action by the FDA or any applicable equivalent foreign regulatory authorities, by the Company or, to the Knowledge of the Company, any licensee or distributor of any of
the Company's products. Neither the Company, nor to the Knowledge of the Company any officer, key employee or agent of the Company, has been convicted of any crime or engaged in any conduct that would
reasonably be expected to result in debarment under 21 U.S.C. Section&nbsp;335a or any similar state law or regulation. The clinical, preclinical, safety and other studies or tests conducted by or
on behalf of or sponsored, by the Company or in which the Company's products or product candidates under development have participated, were and, if still pending, are being conducted in material
compliance with standard medical and scientific procedures. The Company has operated within, and currently is in material compliance with, all applicable rules, regulations and policies of the FDA and
applicable equivalent foreign regulatory authorities for such studies. The Company has not received any notices or other correspondence from the FDA or applicable equivalent foreign regulatory
authorities requiring the termination, suspension, or modifications of any clinical, preclinical, safety or other studies or tests. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.9</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Information in Proxy Statement and S-4 Registration Statement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Proxy Statement and
any other document filed with the SEC by the Company in connection with the Merger (taking into account any amendment thereof or supplement thereto), at the date first mailed to the stockholders of
the Company, at the time of the Company Stockholders Meeting and at the time filed with the SEC, as the case may be, will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, and the Proxy Statement and
such other documents filed with the SEC by the Company will comply in all material respects with the provisions of the Exchange Act; </FONT><FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2>, </FONT> <FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>,
that no representation is made by the Company with respect to statements made therein based on information supplied by Parent or Merger Sub for
inclusion in such documents. All information supplied or to be supplied by the Company for inclusion or incorporation by reference in the S-4 Registration Statement, shall not, at the time
the S-4 Registration Statement, if applicable, is filed with the SEC and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.10</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Tax Matters.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
Company and each of its Subsidiaries has timely filed, or has caused to be timely filed on its behalf (taking into account an extension of time within which to
file), all Tax Returns required to be filed by it for which the last day for timely filing has past, and all such Tax Returns and elections are accurate and complete in all material respects. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
Company and each of its Subsidiaries has timely paid all Taxes it is required to pay (whether or not shown to be due on such Tax Returns) and timely paid or withheld
with respect to its employees and other third parties (and timely paid over any withheld amounts to the appropriate Taxing authority) all federal and state income taxes, Federal Insurance Contribution
Act, Federal Unemployment Tax Act and other Taxes required to be withheld or paid by it. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;The
most recent financial statements contained in the Filed Company SEC Documents reflect an adequate reserve for all Taxes payable by the Company and its Subsidiaries
for all taxable periods and portion thereof through the date of such financial statements. Since the date of such financial statements, neither the Company nor any of its Subsidiaries has incurred any
liability for Taxes other than in the ordinary course of business. No deficiency with respect to Taxes has been asserted or assessed against the Company or any of its Subsidiaries. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;Neither
the Company nor any of its Subsidiaries has constituted either a "distributing corporation" or a "controlled corporation" (within the meaning of
Section&nbsp;355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section&nbsp;355 of the Code since January&nbsp;1, 2002. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;To
the Knowledge of the Company, no audit or other administrative or court proceedings are pending with any Governmental Authority with respect to Taxes of the Company
or any of its Subsidiaries and no written notice thereof has been received and is outstanding. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Neither
the Company nor any of its Subsidiaries is a party to any contract, agreement, plan or other arrangement that, individually or collectively, would give rise to
the payment of any amount which would not be deductible by reason of Section&nbsp;280G of the Code or would give rise to an excise Tax pursuant to Section&nbsp;4999 of the Code. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;The
Company has made available to Parent copies of: (i)&nbsp;all income and franchise Tax Returns of the Company and its Subsidiaries for the preceding three taxable
years; and (ii)&nbsp;any audit report issued within the last three years (or otherwise with respect to any audit or proceeding in progress) relating to income and franchise Taxes of the Company or
any of its Subsidiaries. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;The
Company is not and has not been at any time during the 5-year period ending on the Closing Date a "United States real property holding corporation"
within the meaning of Section&nbsp;897 of the Code. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Neither
the Company nor any of its Subsidiaries has engaged in a "reportable transaction," as set forth in Treas. Reg. &sect; 1.6011-4(b), or any
transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service has determined to be a tax avoidance transaction and identified by
notice, regulation, or other form of published guidance as a "listed transaction," as set forth in Treas. Reg. &sect; 1.6011-4(b)(2). </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of this Agreement: (i)&nbsp;"</FONT><FONT SIZE=2><I>Taxes</I></FONT><FONT SIZE=2>" shall mean: (A)&nbsp;all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments or liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts, (B)&nbsp;any
liability for the payment of any amounts of the type described in clause&nbsp;(A) of this Section&nbsp;3.10(j)(i)&nbsp;as a result of being a member of an affiliated, consolidated, combined or
unitary group for any period, and (C)&nbsp;any </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P>

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<P><FONT SIZE=2>liability
for the payment of any amounts of the type described in clauses (A)&nbsp;or (B)&nbsp;of this Section&nbsp;3.10(j)(i)&nbsp;as a result of any express or implied obligation to
indemnify any other Person or as a result of any obligations under any agreements or arrangements with any other Person with respect to such amounts and including any liability for taxes of a
predecessor or transferor entity; and (ii)&nbsp;"</FONT><FONT SIZE=2><I>Tax Returns</I></FONT><FONT SIZE=2>" shall mean any return, report, claim for refund, estimate, information return or
statement, tax election or other similar document relating to or required to be filed with any Governmental Authority with respect to Taxes. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.11</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Employee Benefits and Labor Matters.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Section&nbsp;3.11(a)
of the Company Disclosure Schedule sets forth an accurate and complete list as of the date of this Agreement, separately with respect to each
country in which the Company or any of its Subsidiaries has employees, of all Company Plans (as defined below). "</FONT><FONT SIZE=2><I>Company Plans</I></FONT><FONT SIZE=2>" shall mean the following
as of the date of this Agreement: (i)&nbsp;all "employee benefit plans" (as defined in Section&nbsp;3(3) of the Employee Retirement Income Security Act of 1974, as amended
("</FONT><FONT SIZE=2><I>ERISA</I></FONT><FONT SIZE=2>")); and (ii)&nbsp;all other employee benefit plans, agreements or arrangements, whether written, unwritten or otherwise, or funded or
unfunded, that in the case of either clause "(i)" or clause "(ii)" of this sentence: (A)&nbsp;providing for bonus or other incentive compensation, equity or equity-based compensation, retirement
benefit, deferred compensation, change in control rights or benefits, termination or severance benefits, stock purchase, sick leave, vacation pay, salary continuation, hospitalization, medical
insurance, life insurance, fringe benefits or other compensation; and (B)&nbsp;to which the Company or any of its Subsidiaries has any obligation or liability (contingent or otherwise) thereunder
for current or former directors, consultants or employees of the Company or any of its Subsidiaries (the "</FONT><FONT SIZE=2><I>Employees</I></FONT><FONT SIZE=2>"); </FONT><FONT SIZE=2><I>provided,
however</I></FONT><FONT SIZE=2>, that any plan, agreement or arrangement providing for "at will" employment which can be terminated without liability in excess of $50,000 shall not constitute a
Company Plan. Section&nbsp;3.11(a) of the Company Disclosure Schedule separately sets forth as of the date of this Agreement each Company Plan which is a "multiemployer plan," as defined in
Section&nbsp;3(37) of ERISA (a "</FONT><FONT SIZE=2><I>Multiemployer Plan</I></FONT><FONT SIZE=2>"), or is or has been subject to Sections 4063 or 4064 of ERISA. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;True,
current and complete copies of the following documents, with respect to each of the Company Plans (other than a Multiemployer Plan), have been delivered or made
available to Parent by the Company, to the extent applicable: (i)&nbsp;any plans (including all amendments thereto) and any related trust documents, insurance contracts, administrative service
agreements or other funding arrangements (including amendments thereto); (ii)&nbsp;the most recent Forms 5500 and all schedules thereto and the most recent actuarial report, if any; (iii)&nbsp;the
most recent IRS determination letter; (iv)&nbsp;all material correspondence to or from any governmental agency relating to any Company Plans; and (v)&nbsp;summary plan descriptions, together with
the summary(ies) of material modifications, if any. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;The
Company Plans are being maintained, in all material respects, in accordance with their terms and with all applicable provisions of ERISA, the Code and other
applicable Laws. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;Each
Company Plan that is intended to meet the requirements for country specific tax-favored treatment under Subchapter D of Chapter 1 of Subtitle A of the
Code (in the case of tax-favored treatment for US federal income tax purposes) or other applicable Laws (other than the Laws of the United States or jurisdictions located within the United
States and its territories) meets such requirements, including: (i)&nbsp;any Company Plans intended to qualify under Section&nbsp;401 of the Code are so qualified; and (ii)&nbsp;any trusts
intended to be exempt from federal income taxation under Section&nbsp;501 of the Code are so exempt. Nothing has occurred with respect to the operation of the Company Plans that, notwithstanding the
taking of corrective action by the Company, would reasonably be expected to cause the loss of such tax favored treatment, qualification or exemption, or the imposition of any liability, penalty or tax
under ERISA, the Code or other applicable Law. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>17</FONT></P>

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<P><FONT SIZE=2><A
NAME="page_lk1423_1_18"> </A> </FONT> <FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;Neither the Company, nor any of its Subsidiaries nor any other Person who is treated as a single employer together with the Company or any of its Subsidiaries pursuant
to Section&nbsp;414(b), (c), (m)&nbsp;(o) of ERISA (all of the foregoing, "</FONT><FONT SIZE=2><I>ERISA Affiliates</I></FONT><FONT SIZE=2>") has any unsatisfied liability with respect to any
complete or partial withdrawal from any Multiemployer Plan, or the termination or reorganization of any Multiemployer Plan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;All
contributions (including all employer contributions and employee salary reduction contributions) required to have been made under any of the Company Plans (including
workers compensation) or by Law (without regard to any waivers granted under Section&nbsp;412 of the Code) to any funds or trusts established thereunder or in connection therewith have been made by
the due date thereof (including any valid extension) or the failure to have timely made such contribution has been corrected. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;None
of the Company Plans provide for post-employment life or health insurance, or other welfare benefits coverage for any participant or any beneficiary of
a participant, except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("</FONT><FONT SIZE=2><I>COBRA</I></FONT><FONT SIZE=2>") or other applicable
Laws. Each of the Company and any ERISA Affiliate which maintains a "group health plan" within the meaning Section&nbsp;5000(b)(1) of the Code has complied with the notice and continuation
requirements of Section&nbsp;4980B of the Code, COBRA, Part&nbsp;6 of Subtitle&nbsp;B of Title&nbsp;I of ERISA. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;Except
as provided in any Company Plans or in any employment agreement delivered or made available by the Company to Parent prior to the date of this Agreement, neither
the execution and delivery of this Agreement nor the consummation of the Transactions will: (i)&nbsp;result in any payment becoming due to any Employee; (ii)&nbsp;increase any benefits otherwise
payable under any Company Plan; or (iii)&nbsp;result in the acceleration of the time of payment or vesting of any such benefits under any such plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;No
stock or other security issued by the Company or any of its Subsidiaries forms a material part of the assets of any Company Plan. For purposes of this
Section&nbsp;3.11(i), a Company Stock Plan shall not be deemed to be a Company Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;None
of the current Employees is represented in his or her capacity as an employee of the Company or any of its Subsidiaries by any labor organization or works council
or similar representative. Neither the Company nor any of its Subsidiaries has recognized any labor organization, nor has any labor organization been elected as the collective bargaining agent of any
Employees, nor is the Company or any of its Subsidiaries a party to any collective bargaining agreement or union contract recognizing any labor organization as the bargaining agent of any Employees.
There is no union organization activity involving any of the Employees, pending or, to the Knowledge of the Company, threatened in writing. There is no picketing, pending or, to the Knowledge of the
Company, threatened in writing, and there are no strikes, slowdowns, work stoppages, lockouts, arbitrations or other similar labor disputes involving any of the Employees pending or, to the Knowledge
of the Company, threatened in writing. There has been no "mass layoff" or "plant closing" (as defined by the Worker Adjustment and Retraining Notification Act and any similar state or local "mass
layoff" or "plant closing" law) with respect to the Company or any of its Subsidiaries since January&nbsp;1, 2003. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;There
is no agreement, plan, arrangement or other contract covering any Employee that, considered individually or considered collectively with any other such agreements,
plans, arrangements or other contracts, will, or could reasonably be expected to, give rise directly or indirectly to the payment of any amount that would be characterized as a "parachute payment"
within the meaning of Section&nbsp;280G(b)(1) of the Code. There is no agreement, plan, arrangement or other contract by which the Company or any of its Subsidiaries is bound to compensate any
Employee for excise taxes paid pursuant to Section&nbsp;4999 of the Code. Section&nbsp;3.11(k) of the Company Disclosure Schedule lists as of the date of this Agreement all Persons who the Company
reasonably believes are "disqualified </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>18</FONT></P>

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<P><FONT SIZE=2>individuals"
(within the meaning of Section&nbsp;280G of the Code and the regulations promulgated thereunder) as determined as of the date of this Agreement. No compensation shall be includable in
the gross income of any Employee as a result of the operation of Section&nbsp;409A of the Code with respect to any applicable arrangements or agreements in effect prior to the Effective Time. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.12</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Environmental Matters.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
Company and each of its Subsidiaries is in compliance in all material respects with all applicable Environmental Laws. Neither the Company nor any of its
Subsidiaries has received any notice of any obligation, liability, order, settlement, judgment, injunction or decree relating to or arising under Environmental Laws. No facts, circumstances or
conditions exist with respect to the Company or any of its Subsidiaries that would reasonably be expected to give rise to Environmental Liabilities to the Company or its Subsidiaries in excess of
$100,000 in any individual instance or $250,000 in the aggregate. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
Company has made available to Parent copies of all environmentally related audits, studies, reports, analyses and results of investigations that are in the Company's
possession and have been performed with respect to currently or previously owned, leased or operated properties of the Company or any of its Subsidiaries. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;To
the Knowledge of the Company, there is not now, nor has there been in the past, on, in or under any real property owned, leased or operated by the Company or any of
its Subsidiaries: (i)&nbsp;any underground storage tanks, above-ground storage tanks, dikes or impoundments; (ii)&nbsp;any asbestos-containing materials; (iii)&nbsp;any polychlorinated
biphenyls; or (iv)&nbsp;any radioactive substances. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;The
Hazardous Materials Activities of the Company and its Subsidiaries prior to the Closing have not resulted in the exposure of any Person to a Hazardous Material in a
manner which has caused or could reasonably be expected to cause an adverse health effect to any such Person. Neither the Company nor any of its Subsidiaries has entered into any agreement that may
require it to guarantee, reimburse, pledge, defend, hold harmless or indemnify any other party with respect to liabilities arising out of Environmental Laws or the Hazardous Materials Activities of
the Company or any of its Subsidiaries. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;For
purposes of this Agreement: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Environmental Laws</I></FONT><FONT SIZE=2>" means all Laws relating in any way to the environment, preservation or reclamation of natural
resources, the presence, management or Release of, or exposure to, Hazardous Materials, or to human health and safety, including the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. &sect; 9601 </FONT><FONT SIZE=2><I>et seq.</I></FONT><FONT SIZE=2>), the Hazardous Materials Transportation Act (49 U.S.C. App. &sect; 1801 </FONT><FONT SIZE=2><I>et
seq.</I></FONT><FONT SIZE=2>), the Resource Conservation and Recovery Act (42 U.S.C. &sect; 6901 </FONT><FONT SIZE=2><I>et seq.</I></FONT><FONT SIZE=2>), the Clean Water Act (33 U.S.C.
&sect; 1251 </FONT><FONT SIZE=2><I>et seq.</I></FONT><FONT SIZE=2>), the Clean Air Act (42 U.S.C. &sect;&nbsp;7401 </FONT><FONT SIZE=2><I>et seq.</I></FONT><FONT SIZE=2>), the Toxic
Substances Control Act (15 U.S.C. &sect;&nbsp;2601 </FONT><FONT SIZE=2><I>et seq.</I></FONT><FONT SIZE=2>), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
&sect;&nbsp;136 </FONT><FONT SIZE=2><I>et seq.</I></FONT><FONT SIZE=2>), and the Occupational Safety and Health Act (29 U.S.C. &sect;&nbsp;651 </FONT><FONT SIZE=2><I>et
seq.</I></FONT><FONT SIZE=2>), as each has been amended and the regulations promulgated pursuant thereto and all analogous state, local or foreign laws and regulations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Environmental Liabilities</I></FONT><FONT SIZE=2>" means, with respect to any Person, all liabilities, obligations, responsibilities, remedial
actions, losses, damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by any other Person or arising under any Environmental Law, in any case to the extent based upon or arising under any
Environmental Law, environmental Permit or order or agreement with any Governmental Authority or other Person under Environmental Laws. </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>19</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Hazardous Materials</I></FONT><FONT SIZE=2>" means any material, substance of waste that is regulated, classified, or otherwise characterized
under or pursuant to any Environmental Law as "hazardous," "toxic,"
"pollutant," "contaminant," "radioactive" or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, urea formaldehyde
insulation, chlorofluorocarbons and all other ozone-depleting substances. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Hazardous Materials Activities</I></FONT><FONT SIZE=2>" means the transportation, transfer, recycling, storage, use, treatment, manufacture,
removal, remediation, release, exposure of others to, sale, or distribution of any Hazardous Material or any product or waste containing a Hazardous Material, or product manufactured with Ozone
depleting substances, including, without limitation, any required labeling, payment of waste fees or charges (including so-called e-waste fees) and compliance with any product
take-back or product content requirements. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Release</I></FONT><FONT SIZE=2>" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, disposing or migrating into or through the environment or any natural or man-made structure. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.13</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Contracts.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Set
forth in Section&nbsp;3.13(a) of the Company Disclosure Schedule is a list as of the date of this Agreement of each of the following Contracts to which the Company
or any of its Subsidiaries is a party or by which any of their assets are bound and under which the Company or any of its Subsidiaries has any rights or obligations: (i)&nbsp;each Contract that
would be required to be filed as an exhibit to a Registration Statement on Form&nbsp;S-1 under the Securities Act or an Annual Report on Form&nbsp;10-K under the Exchange
Act if such registration statement or report was filed by the Company with the SEC on the date of this Agreement; (ii)&nbsp;each Contract that limits, curtails or restricts in any material respect
the ability of the Company or any of its Subsidiaries to compete in any geographic area or line of business; (iii)&nbsp;each joint venture agreement; (iv)&nbsp;each indemnification, employment or
other Contract with any director, officer or other Affiliate of the Company or its Subsidiaries; (v)&nbsp;each loan or credit agreement, mortgage, indenture, note or other Contract or instrument
evidencing indebtedness for borrowed money by the Company or any of its Subsidiaries or any Contract or instrument pursuant to which indebtedness for borrowed money is guaranteed by the Company or any
of its Subsidiaries; (vi)&nbsp;each joint development, customer or supply Contract of the Company or any Subsidiary of the Company that involved payments to or from the Company or any Subsidiary of
the Company in fiscal year 2004 in excess of $300,000; (vii)&nbsp;each "single source" supply Contract of the Company or any Subsidiary of the Company; (viii)&nbsp;each exclusive sales
representative or distribution Contract; (ix)&nbsp;each collective bargaining agreement; (x)&nbsp;each lease, rental or other occupancy Contract involving real property; (xi)&nbsp;each lease or
rental Contract involving personal property and payments in excess of $250,000 per year; (xii)&nbsp;each consulting Contract that is not terminable by the Company or its Subsidiaries on notice of
31&nbsp;days or less without liability or financial obligation to the Company; (xiii)&nbsp;each Contract or plan, any of the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the Transactions (either alone or upon the occurrence of additional or subsequent events) or the value of any of the benefits of which will be
calculated on the basis of any of the Transactions (either alone or upon the occurrence of additional or subsequent events); (xiv)&nbsp;each material agreement related to the settlement of
litigation or claims against the Company or any of its Subsidiaries entered into within five years prior to the date of this Agreement and with any continuing obligations; (xv)&nbsp;each Contract,
or group of Contracts with a Person (or group of affiliated Persons), the termination or breach of which would reasonably be expected to have a Company Material Adverse Effect, and (xvii)&nbsp;each
commitment or agreement to enter into any of the foregoing (each Contract and other document listed on Section&nbsp;3.13(a) of the Company Disclosure Schedule being referred to as a
"</FONT><FONT SIZE=2><I>Material Contract</I></FONT><FONT SIZE=2>"). The Company has made available to Parent copies of each Material Contract in existence as of the date of this Agreement, together
with all amendments and supplements thereto. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>20</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Each
of the Material Contracts is valid, binding and in full force and effect and is enforceable in accordance with its terms by the Company and its Subsidiaries party
thereto, subject to the Bankruptcy and Equity Exception. Neither the Company nor any of its Subsidiaries is in violation or default in any material respect under any Material Contract, nor, to the
Knowledge of the Company, does any condition exist that, with notice or lapse of time or both, would constitute a violation or default in any material respect thereunder by the Company or its
Subsidiaries party thereto. To the Knowledge of the Company, no other party to any Material Contract is in violation or default in any material respect thereunder, nor does any condition exist that
with notice or lapse of time or both would constitute a violation or default in any material respect by any such other party thereunder. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.14</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Real Property.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;None
of the Company or its Subsidiaries own any real property. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Section&nbsp;3.14(b)
of the Company Disclosure Schedule identifies each Contract pursuant to which the Company or any of its Subsidiaries leases real property from any
other Person as of the date of this Agreement. All real property leased to the Company or any of its Subsidiaries, including all buildings, structures, fixtures and other improvements leased to the
Company or any of its Subsidiaries, are referred to as the "</FONT><FONT SIZE=2><I>Company Real Property</I></FONT><FONT SIZE=2>." The present use and operation of the Company Real Property is
authorized by, and is in compliance in all material respects with, all applicable zoning, land use, building, fire, health, labor, safety and other Laws. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;There
are no parties other than the Company or any of its Subsidiaries occupying, or with a right to occupy, the Company Real Property. Neither the Company nor any of
its Subsidiaries owes brokerage commissions or finders fees with respect to any such Company Real Property or would owe any such fees if any existing Contract relating to any Company Real Property
were renewed pursuant to any renewal options contained in such Contract. The Company Real Property is in good operating condition and repair, free from structural, physical and mechanical defects, is
maintained in a manner consistent with standards generally followed with respect to similar properties, and is structurally sufficient and otherwise suitable for the conduct of the business as
presently conducted. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.15</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Title to Properties.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company and each of its Subsidiaries: (a)&nbsp;has good title to all
properties and other assets which are reflected on the unaudited consolidated balance sheet of the Company and its Subsidiaries as of September&nbsp;30, 2004 as being owned by the Company or one of
its Subsidiaries (or acquired after the Balance Sheet Date) which are, individually or in the aggregate, material to the business of the Company and its Subsidiaries taken as a whole (except
properties sold or otherwise disposed of since the Balance Sheet Date in the ordinary course of business consistent with past practice and not in violation of this Agreement), free and clear of all
Liens except: (i)&nbsp;statutory liens securing payments not yet due; (ii)&nbsp;security interests, mortgages and pledges that are disclosed in the Filed Company SEC Documents that secure
indebtedness that is reflected in the unaudited consolidated financial statements of the Company and its Subsidiaries as of September&nbsp;30, 2004; and (iii)&nbsp;such other imperfections or
irregularities of title or other Liens that, individually or in the aggregate, do not and would not reasonably be expected to materially affect the use of the properties or assets subject thereto or
otherwise materially impair the business operations of the Company or its Subsidiaries as currently conducted; and (b)&nbsp;is the lessee or sublessee of all leasehold estates and leasehold
interests reflected in the Filed Company SEC Documents (or acquired after the Balance Sheet Date) which are, individually or in the aggregate, material to the business of the Company and its
Subsidiaries taken as a whole (other than any such leaseholds whose scheduled terms have expired subsequent to the date of such Filed Company SEC Documents). The Company and each of its Subsidiaries
enjoys peaceful and undisturbed possession under all such leases in all material respects. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>21</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.16</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Intellectual Property.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Section&nbsp;3.16(a)
of the Company Disclosure Schedule lists, as of the date of this Agreement, all Registered Intellectual Property Rights owned by, filed in the
name of, or applied for, by the Company (the "</FONT><FONT SIZE=2><I>Company Registered Intellectual Property</I></FONT><FONT SIZE=2>") and lists, as of the date of this Agreement, any actions that
must be taken by the Company within ninety (90)&nbsp;days of the date of this Agreement, including the payment of any registration, maintenance or renewal fees or the filing of any responses to PTO
office actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any Registered Intellectual Property Rights.
"</FONT><FONT SIZE=2><I>Registered Intellectual Property Rights</I></FONT><FONT SIZE=2>" as used herein shall mean all United States, international and foreign: (i)&nbsp;patents, including
applications therefor; (ii)&nbsp;registered trademarks, applications to register trademarks, including intent-to-use applications, or other registrations or applications
related to trademarks; (iii)&nbsp;copyright registrations and applications to register copyrights; (iv)&nbsp;registered mask works and applications to register mask works; and (v)&nbsp;any other
Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by, any private, state, government or other public
or quasi-public legal authority at any time. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
Company and its Subsidiaries are the sole and exclusive owners of, or have a valid right to use, sell or license, as the case may be, all Intellectual Property used,
sold or licensed by the Company and its Subsidiaries, as applicable, in the business of the Company and its Subsidiaries as conducted as of the date of this Agreement or as contemplated by the Company
as of the date of this Agreement to be conducted. In each case in which the Company has acquired any Intellectual Property from any person, the Company has obtained a valid and enforceable assignment
sufficient to irrevocably transfer all rights in and to such Intellectual Property (including the right to seek past and future damages with respect thereto) to the Company. All Intellectual Property
used in or necessary to the conduct of Company's business as conducted as of the date of this Agreement or as contemplated by the Company as of the date of this Agreement to be conducted was written
and created solely by either (i)&nbsp;employees of the Company acting within the scope of their employment who have validly and irrevocably assigned all of their rights, including all Intellectual
Property rights therein, to the Company or (ii)&nbsp;by third parties who have validly and irrevocably assigned all of their rights, including all Intellectual Property rights therein, to the
Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;No
person who has licensed any Intellectual Property to the Company has ownership rights or license rights to improvements made by or for the Company in such
Intellectual Property. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;No
government funding, facilities of a university, college, other educational institution or research center or funding from third parties was used in the development of
any Intellectual Property owned by or exclusively licensed to the Company. No current or former employee, consultant or independent contractor of Company, who was involved in, or who contributed to,
the creation or development of any Intellectual Property owned by or exclusively licensed to the Company, has performed services for the government, university, college, or other educational
institution or research center during a period of time during which such employee, consultant or independent contractor was also performing services for Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;The
products and operation of the business of the Company and its Subsidiaries and the use of the Intellectual Property owned by the Company and its Subsidiaries in
connection therewith do not infringe, misappropriate or constitute an unauthorized use of or violate any Intellectual Property right (including any right to privacy or publicity) of any third party or
constitute unfair competition or trade practices under the laws of any jurisdiction. As of the date of this Agreement, the Company has not received notice from any person claiming that such operation
or any act, product, technology or service (including products, technology or services currently under development) of the Company infringes or misappropriates any Intellectual Property of any person
or constitutes unfair competition or trade practices under the laws of any jurisdiction (nor does the Company have Knowledge of any basis therefor). The Intellectual Property owned by or licensed to
the Company and each of its Subsidiaries includes all of the Intellectual Property used in and/or necessary to enable the Company and its </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>22</FONT></P>

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<P><FONT SIZE=2>Subsidiaries
to conduct their business in the manner in which such businesses are being conducted as of the date of this Agreement and as contemplated by the Company as of the date of this Agreement
to be conducted, including the design, development, manufacture, use, import and sale of the products of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;As
of the date of this Agreement, neither the Company nor any of its Subsidiaries has licensed any of its Intellectual Property to any Person on an exclusive basis or
has joint ownership of any of its Intellectual Property, nor has the Company or any of its Subsidiaries entered into any Contract limiting its ability to exploit fully any of its Intellectual Property
(excluding Intellectual Property licensed on a nonexclusive basis to customers in the ordinary course of business consistent with past practice). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;No
non-public, proprietary Intellectual Property material to the business of the Company and its Subsidiaries taken as a whole as conducted as of the date of
this Agreement have been authorized to be disclosed or actually disclosed by the Company or any of its Subsidiaries to any employee or third party other than pursuant to a non-disclosure
agreement or that are subject to other confidentiality obligations that protects the proprietary interests of the Company and its Subsidiaries in and to such Intellectual Property. The Company and its
Subsidiaries have taken reasonable security measures to protect the confidentiality of confidential Intellectual Property of the Company and its Subsidiaries. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;To
the Knowledge of the Company, all material Intellectual Property owned by the Company or any of its Subsidiaries are valid and enforceable (except with respect to
items for which applications are pending). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;To
the Knowledge of the Company, no third party is infringing, violating, misusing or misappropriating any material Intellectual Property of the Company or any of its
Subsidiaries, and no such claims have been made against a third party by the Company or any of its Subsidiaries since January&nbsp;1, 2002. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;Neither
this Agreement nor the transactions contemplated by this Agreement, including the assignment to Parent or Surviving Corporation, by operation of law or
otherwise, pursuant to this Agreement, of any contracts or agreement to which the Company is a party, will result in (i)&nbsp;either Parent's or the Surviving Corporation's granting, pursuant to any
contract to which the Company is a party, to any third party any right to or with respect to any Intellectual Property owned by, or licensed to, either of them, (ii)&nbsp;either the Parent's or the
Surviving Corporation's being bound by, or subject to, any non-compete or other restriction on the operation or scope of their respective businesses pursuant to any contract to which the
Company is a party, or (iii)&nbsp;either the Parent's or the Surviving Corporation's being obligated, pursuant to any contract to which the Company is a party, to pay any royalties or other amounts
to any third party in excess of those payable by the Company prior to the Closing. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.17</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Insurance.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;All material insurance policies of the Company and its Subsidiaries as of the date of
this Agreement (the "</FONT><FONT SIZE=2><I>Policies</I></FONT><FONT SIZE=2>") are in full force and effect. Neither the Company nor any of its Subsidiaries is in material breach or default, and
neither the Company nor any of its Subsidiaries have taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit
termination or modification of any of the Policies. No notice of cancellation or termination has been received by the Company with respect to any such Policy (except with respect to Policies that have
been replaced with similar policies). The Company has provided or made available to Parent accurate and complete copies of all Policies. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.18</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Opinion of Financial Advisor.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Aquilo Partners
("</FONT><FONT SIZE=2><I>Aquilo</I></FONT><FONT SIZE=2>") has delivered its opinion, dated as of the date of this Agreement, to the effect that, as of such date, and subject to the various
assumptions and qualifications set forth therein, the Merger Consideration to be paid to the holders of Common Stock of the Company is fair from a financial point of view to such holders (the
"</FONT><FONT SIZE=2><I>Fairness Opinion</I></FONT><FONT SIZE=2>"). </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>23</FONT></P>

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NAME="page_lm1423_1_24"> </A> </FONT></P>

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<P><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 3.19</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Brokers and Other Advisors.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Except for Aquilo, the fees and expenses of which will be paid by
the
Company, no broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission, or the reimbursement of
expenses, in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Subsidiaries. The Company has delivered or made available to Parent a copy of
the Company's engagement letter with Aquilo, which letter describes all fees payable to Aquilo in connection with the Transactions, all agreements under which any such fees or any expenses are payable
and all indemnification and other agreements related to the engagement of Aquilo by the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
3.20</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;State Takeover Statutes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No "fair price," "moratorium," "control share acquisition," "business
combination" or other similar antitakeover statute or regulation enacted under state or federal laws in the United States (with the exception of Section&nbsp;203 of the DGCL
("</FONT><FONT SIZE=2><I>Section&nbsp;203</I></FONT><FONT SIZE=2>")) applicable to the Company is applicable to the Merger or the other Transactions. Assuming the accuracy of the representations
made in Section&nbsp;4.8, the action of the Board of Directors of the Company in approving this Agreement (and the Transactions) and the Voting Agreements (and the transactions contemplated thereby)
is sufficient to render inapplicable to this Agreement (and the Transactions) and the Voting Agreements (and the transactions contemplated thereby) the restrictions on "business combinations" (as
defined in Section&nbsp;203) as set forth in Section&nbsp;203. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="lm1423_article_4_representations_and___art02597"> </A>
<A NAME="toc_lm1423_1"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;4    <BR>    <BR>    </B></FONT><FONT SIZE=2><I>Representations and Warranties of Parent and Merger Sub</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
and Merger Sub jointly and severally represent and warrant to the Company as follows (provided that the representations and warranties contained in Section&nbsp;4.9 shall be of
no force and effect and deemed stricken from this Agreement if Parent makes the Parent Election): </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.1</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Organization, Standing and Corporate Power.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.2</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Authority; Noncontravention.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Each
of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement and to perform their respective obligations hereunder
and to consummate the Transactions. The execution, delivery and performance by Parent and Merger Sub of this Agreement, and the consummation by Parent and Merger Sub of the Transactions, have been
duly authorized and approved by their respective Boards of Directors (and promptly following the execution hereof will be adopted by Parent as the sole stockholder of Merger Sub) and no other
corporate action on the part of Parent and Merger Sub is necessary to authorize the execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by them of the
Transactions, subject only to the filing of the Certificate of Merger pursuant to the DGCL. This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming due
authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each of them in accordance with its
terms, subject to the Bankruptcy and Equity Exception. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Neither
the execution and delivery of this Agreement by Parent and Merger Sub, nor the consummation by Parent or Merger Sub of the Transactions, nor compliance by Parent
or Merger Sub with any of the terms or provisions hereof, will: (i)&nbsp;conflict with or violate any provision of the certificate of incorporation or bylaws of Parent or Merger Sub; or
(ii)&nbsp;assuming that the authorizations, consents and approvals referred to in Section&nbsp;4.3 are obtained and the filings referred to in Section&nbsp;4.3 are made: (A)&nbsp;violate any
Law, judgment, writ or injunction of any Governmental Authority applicable to Parent or any of its Subsidiaries or any of their respective properties or assets; or (B)&nbsp;violate, conflict with,
result in the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>24</FONT></P>

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<P><FONT SIZE=2>termination
or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of, Parent or Merger Sub or any of
their respective Subsidiaries under, any of the terms, conditions or provisions of any Contract to which Parent, Merger Sub or any of their respective Subsidiaries is a party, or by which they or any
of their respective properties or assets may be bound or affected except, in the case of clause "(ii)" of this sentence, for such violations, conflicts, losses, defaults, terminations, cancellations,
accelerations or Liens as, individually or in the aggregate, would not reasonably be expected to prevent or materially delay or materially impair the ability of Parent or Merger Sub to consummate the
Transactions (a "</FONT><FONT SIZE=2><I>Parent Material Adverse Effect</I></FONT><FONT SIZE=2>"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.3</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Governmental Approvals.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Except for: (a)&nbsp;filings required under, and compliance with
applicable requirements of, the Securities Act, the Exchange Act and the rules of The Nasdaq Stock Market; and (b)&nbsp;the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware pursuant to the DGCL, no consents or approvals of, or filings, declarations or registrations with, any Governmental Authority are necessary for the execution and delivery of this
Agreement by Parent and Merger Sub or the consummation by Parent and Merger Sub of the Transactions, other than such other consents, approvals, filings, declarations or registrations that, if not
obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.4</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Information Supplied.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The information furnished or to be furnished by Parent or Merger Sub for
inclusion in (i)&nbsp;the S-4 Registration Statement, if applicable, will not, at the time the S-4 Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading, (ii)&nbsp;Proxy Statement will not, at the time the Proxy Statement is first mailed to the stockholders of the
Company and at the time of the Company Stockholders Meeting, contain any 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 light of the circumstances under which they were made, not misleading. The S-4 Registration Statement, if applicable, will comply in all material respects with the
provisions of the Securities Act and the Exchange Act; </FONT><FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2>, </FONT><FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>, that no representation is made
by Parent or Merger Sub with respect to statements made in the S-4 Registration Statement based on information supplied by the Company for inclusion in the S-4 Registration
Statement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.5</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Ownership and Operations of Merger Sub.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Parent owns beneficially and of record all of the
outstanding capital stock of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Transactions, has engaged in no other business activities and has conducted its operations only
as contemplated hereby. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.6</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Financing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Parent has, and will have at the Effective Time, sufficient cash resources available to
pay the cash portion of the Merger Consideration pursuant to the Merger. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.7</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Brokers and Other Advisors.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or any of its
Subsidiaries. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.8</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Ownership of Company Capital Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Neither Parent nor Merger Sub "own" (within the meaning of
Section&nbsp;203) or have, within the last three years, "owned" any shares of Company Capital Stock. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
4.9</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Parent SEC Documents; Undisclosed Liabilities.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Parent
has filed and furnished all required reports, schedules, forms, prospectuses and registration, proxy and other statements required to be filed or furnished by it
with or to the SEC since January&nbsp;1, 2003 (collectively, and in each case including all exhibits and schedules thereto and </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>25</FONT></P>

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<P><FONT SIZE=2>documents
incorporated by reference therein, the "</FONT><FONT SIZE=2><I>Parent SEC Documents</I></FONT><FONT SIZE=2>"). None of Parent's Subsidiaries is required to file periodic reports with the
SEC pursuant to the Exchange Act. As of their respective effective dates (in the case of Parent SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act)
and as of their respective filing dates (in the case of all other Parent SEC Documents), Parent SEC Documents complied in all material respects with the requirements of the Exchange Act and the
Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder, each as in effect on the applicable date referred to above, applicable to such Parent SEC
Documents, and none of Parent SEC Documents as of such respective dates contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
consolidated financial statements (including, in each case, any related notes thereto) of Parent included in Parent SEC Documents (the
"</FONT><FONT SIZE=2><I>Parent Financials</I></FONT><FONT SIZE=2>") comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited quarterly statements, as indicated in the notes thereto) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of Parent and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows for the periods indicated (subject, in the case of unaudited quarterly statements, to normal year-end audit
adjustments, none of which has been or will be, individually or in the aggregate, material to Parent and its Subsidiaries, taken as a whole). </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="lm1423_article_5_covenants_and_agreements"> </A>
<A NAME="toc_lm1423_2"> </A>
<BR></FONT><FONT SIZE=2><B>ARTICLE&nbsp;5    <BR>    <BR>    </B></FONT><FONT SIZE=2><I>Covenants and Agreements</I></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.1</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Preparation of the Proxy Statement and S-4 Registration Statement; Stockholder Meeting; Board
Recommendation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;As
promptly as reasonably practicable following the date of this Agreement, the Company, in consultation with Parent, shall prepare and file the Proxy Statement with the
SEC and Parent shall promptly prepare and file with the SEC the S-4 Registration Statement in which the Proxy Statement will be included; </FONT><FONT SIZE=2><I>provided,
however</I></FONT><FONT SIZE=2>, that if Parent makes the Parent Election, then after Parent has made the Parent Election, it shall no longer be obligated to prepare or file with the SEC the
S-4 Registration Statement. Each of the parties shall cause the Proxy Statement and S-4 Registration Statement, if applicable, to comply as to form in all material respects
with the applicable provisions of the Securities Act and Exchange Act. The parties hereto shall use commercially reasonable efforts to: (i)&nbsp;respond to any comments on the Proxy Statement or
S-4 Registration Statement, if applicable, or requests for additional information from the SEC with respect thereto as soon as practicable after receipt of any such comments or requests;
(ii)&nbsp;cause the Proxy Statement to be mailed to the stockholders of the Company as promptly as practicable following clearance by the SEC, and (iii)&nbsp;cause the S-4 Registration
Statement, if applicable, to be declared effective as promptly as practicable after its filing with the SEC and to be kept effective as long as is necessary to consummate the Merger and other
Transactions. The Company shall promptly: (A)&nbsp;notify Parent upon the receipt of any such comments or requests; and (B)&nbsp;provide Parent with copies of correspondence between the Company
and its Representatives, on the one hand, and the SEC and its staff, on the other hand, with respect to the Proxy Statement. Prior to responding to such comments or requests or the filing or mailing
of the Proxy Statement: (1)&nbsp;the Company shall provide Parent with a reasonable opportunity to review and comment on any drafts of the Proxy Statement and related correspondence and filings; and
(2)&nbsp;to the extent practicable, the Company and its outside counsel shall permit Parent and its outside counsel to participate in communications with the SEC and its staff (including all
meetings and telephone conferences) relating to the Proxy Statement, this Agreement or any of the Transactions. Subject to Section&nbsp;5.3(c), the Proxy Statement shall include the Company Board
Recommendation and a copy of the written opinion of Aquilo referred to in Section&nbsp;3.18. If at any time prior to the Company </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>26</FONT></P>

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<P><FONT SIZE=2>Stockholders
Meeting any event shall occur, or fact or information shall be discovered by the Company, that is required to be set forth in an amendment of or a supplement to the Proxy Statement, the
Company shall, in accordance with the procedures set forth in this Section&nbsp;5.1(a), prepare and file with the SEC such amendment or supplement as soon thereafter as is reasonably practicable and
cause such amendment or supplement to be distributed to the stockholders of the Company if and to the extent required by applicable Law. Parent or Company, as the case may be, agrees to furnish all
information concerning Parent or the Company and its Subsidiaries, as applicable, as the other party may reasonably request in connection with the preparation and filing of the Proxy Statement and
S-4 Registration Statement, if applicable, or any of the foregoing matters described in this Section&nbsp;5.1(a). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
Company shall, as soon as practicable, following the clearance of the Proxy Statement by the SEC, establish a record date for, duly call, give notice of, convene and
hold a meeting of its stockholders (the "</FONT><FONT SIZE=2><I>Company Stockholders Meeting</I></FONT><FONT SIZE=2>") for the purpose of obtaining the Company Stockholder Approval. Subject to
Section&nbsp;5.3(c), the Company shall, through its Board of Directors, make the Company Board Recommendation. The Company shall cause the Company Stockholders Meeting to be called, noticed,
convened, held and conducted, and all proxies solicited by it in connection with the Company Stockholders Meeting to be solicited in compliance with the DGCL, the Company Charter Documents and all
other applicable Laws. The Company shall use commercially reasonable efforts to solicit from its stockholders proxies in favor of the adoption of this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.2</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conduct of Business of the Company.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Except as permitted or contemplated by this Agreement, as set
forth on Schedule&nbsp;5.2 or as required by applicable Law, during the period from the date of this Agreement until the Effective Time, unless Parent otherwise consents in writing (which consent,
if requested by the Company on or after the 90<SUP>th</SUP> day after the date of this Agreement, will not be unreasonably withheld or delayed), the Company shall, and shall cause each of its
Subsidiaries to: (x)&nbsp;conduct its business in the ordinary course consistent with past practice; (y)&nbsp;comply in all material respects with all applicable Laws and the requirements of all
Material Contracts; and (z)&nbsp;use commercially reasonable efforts to: (i)&nbsp;maintain and preserve intact its business organization and the goodwill of those having business relationships
with it; and (ii)&nbsp;retain the services of its present officers and key employees. Without limiting the generality of the foregoing, except as permitted or contemplated by this Agreement, as set
forth on Schedule&nbsp;5.2 or as required by applicable Law, during the period from the date of this Agreement until the Effective Time, the Company shall not, and shall not permit any of its
Subsidiaries to, unless Parent otherwise consents in writing (which consent, if requested by the Company on or after the 90<SUP>th</SUP> day after the date of this Agreement, will not be
unreasonably withheld or delayed): </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;(i)&nbsp;issue,
sell, grant, dispose of, pledge or otherwise encumber any shares of its capital stock, voting securities, equity interests or any securities or rights
convertible into, exchangeable or exercisable for or evidencing the right to subscribe for any shares of its capital stock, voting securities or equity interests, or any rights, warrants, options,
calls, commitments or any other agreements of any character to purchase or acquire any shares of its capital stock, voting securities, equity interests or any securities or rights convertible into,
exchangeable or exercisable for or evidencing the right to subscribe for, any shares of its capital stock, voting securities or equity interests; </FONT><FONT SIZE=2><I>provided,
however</I></FONT><FONT SIZE=2>, that the Company may issue shares of Company Common Stock to participants in the ESPP in accordance with the terms thereof, or upon the exercise of options to purchase
shares of Company Common Stock, in each case that are outstanding on the date of this Agreement (or that are granted or issued after the date of this Agreement in compliance with this Agreement) and
in accordance with the terms thereof; (ii)&nbsp;redeem, purchase or otherwise acquire any outstanding shares of Company Capital Stock, or any rights, warrants or options to acquire any shares of
Company Capital Stock, other than pursuant to any restricted stock purchase agreement or any similar Contract in existence as of the date of this Agreement and disclosed to Parent; (iii)&nbsp;except
for the quarterly dividends to the holders of the Company Series&nbsp;A-1 Preferred Stock, declare, set aside for payment or pay any dividend on, or make any other distribution in
respect of, any shares of Company Capital Stock or otherwise make any payments to its stockholders in their capacity as such (other than dividends by a direct or indirect wholly owned Subsidiary of
the </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>27</FONT></P>

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<P><FONT SIZE=2>Company
to its parent); (iv)&nbsp;split, combine, subdivide or reclassify any shares of Company Capital Stock; or (v)&nbsp;waive any stock repurchase rights, accelerate, amend or change the period
of exercisability of Options, or reprice any Options or authorize cash payments in exchange for any Options; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;incur
any indebtedness for borrowed money or guarantee any indebtedness, other than borrowings from the Company by a direct or indirect wholly owned Subsidiary of the
Company or under the Company's and its Subsidiaries' existing credit facilities, in any case in the ordinary course of business consistent with past practice; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;sell,
transfer, lease, license, mortgage, encumber or otherwise dispose of (including pursuant to a sale-leaseback transaction or an asset securitization
transaction) any of its properties or assets (including securities of Subsidiaries) to any Person, except: (i)&nbsp;for the sale of inventory in the ordinary course of business consistent with past
practice; (ii)&nbsp;pursuant to Contracts in force at the date of this Agreement and disclosed to Parent; or (iii)&nbsp;dispositions of obsolete assets; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;make
any capital expenditures, except in the ordinary course of business consistent with past practice and in an amount not in excess of $1,000,000 in the aggregate for
the Company and its Subsidiaries taken as a whole during any three-consecutive month period; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;make
any acquisition (by purchase of securities or assets, merger, consolidation or otherwise) of any other Person, business or division; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;make
any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or loan or advance (other than advances to its employees in
the ordinary course of business consistent with past practice) to, any Person other than in the ordinary course of business consistent with past practice; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;(1)
increase in any manner the compensation of or the fringe benefits of, pay or grant any bonus, change of control, severance or termination pay to any of its
directors, officers or employees or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation,
profit sharing, health or other welfare, pension, retirement, severance, deferred compensation or other compensation or benefit plan with, for or in respect of any stockholder, director, officer,
other employee or consultant, other than: (i)&nbsp;as required pursuant to applicable Law or the terms of agreements in effect as of the date of this Agreement; and (ii)&nbsp;increases in
salaries, wages and benefits of employees (other than officers) made in the ordinary course of business consistent with past practice; or (2)&nbsp;hire officers or directors, or hire any
non-officer Employee (other than pursuant to offer letters and letter agreements entered into in the ordinary course of business consistent with past practice with employees who are
terminable "at will") or enter into any collectively bargained agreement; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;make
or change any material election concerning Taxes or Tax Returns (other than elections made in the ordinary course of business), settle or compromise any Tax
liability or refund, file any amendment to a Tax Return, enter into any closing agreement or consent to any extension or waiver of any limitation period with respect to Taxes; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;make
any material changes in financial or tax accounting methods, principles or practices or change an annual accounting period, except insofar as may be required by a
change in GAAP or applicable Law; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;except
for the Charter Amendment, amend the Company Charter Documents or the Subsidiary Documents; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;adopt
a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization, merger, consolidation or other reorganization; </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>28</FONT></P>

<HR NOSHADE>
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<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;enter
into any binding agreement, agreement in principle, letter of intent, memorandum of understanding or similar agreement with respect to any material joint venture,
strategic partnership or alliance; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;commence
or settle any lawsuit, threat of any lawsuit or proceeding or other investigation by or against the Company or any Subsidiary or relating to any of their
businesses, properties or assets; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;grant
any exclusive rights with respect to any Company Intellectual Property; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;enter
into or renew any Contracts containing, or otherwise subject the Surviving Corporation or Parent to, any non-competition, exclusivity, "most favored
nations" or other preferential pricing or other material restrictions on the Company or the Surviving Corporation or Parent, or any of their respective businesses, following the Closing; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;modify
or amend in a manner adverse in any material respect to the Company, or terminate any Material Contract in effect as of the date of this Agreement, or waive,
release or assign any material rights or claims thereunder, in each case, in a manner adverse in any material respect to the Company, other than any modification, amendment or termination of any such
Material Contract in the ordinary course of business, consistent with past practice; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;agree,
in writing or otherwise, to take any of the actions described in clauses "(a)" through "(p)" of this sentence. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.3</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;No Solicitation by the Company; Etc.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Upon
the execution of this Agreement, the Company shall cause its and its Subsidiaries' respective directors, officers, financial advisors, attorneys, accountants and
agents to (and the Company shall use commercially reasonable efforts to cause its and its Subsidiaries' employees to) immediately cease any existing discussions or negotiations with any Person other
than Parent and its Subsidiaries and their respective Representatives (any such Person, a "Third Party") with respect to a Takeover Proposal (as defined below). The Company shall cause its and its
Subsidiaries' respective directors, officers, financial advisors, attorneys, accountants and agents not to (and the Company shall use commercially reasonable efforts to cause its and its Subsidiaries'
employees not to): (i)&nbsp;solicit, initiate, knowingly facilitate, knowingly encourage or knowingly induce any announcement of, or the initiation of any proposals that constitute, or any inquiry
or proposal from any Third Party that would reasonably be expected to lead to, any Takeover Proposal; or (ii)&nbsp;participate in any discussions or negotiations with any Third Party regarding, or
furnish to any Third Party any non-public information with respect to, any Takeover Proposal; </FONT><FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2>, </FONT> <FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>, that notwithstanding anything to the
contrary contained in this Section&nbsp;5.3 or elsewhere in this Agreement, if the Company receives a
bona fide written Takeover Proposal not solicited by the Company in violation of this Section&nbsp;5.3 that the Board of Directors of the Company determines in good faith (after consultation with
its financial advisor) is reasonably likely to result in a Superior Proposal and with respect to which the Board of Directors of the Company determines in good faith, after consulting with outside
legal counsel, that the failure to take the following actions would be inconsistent with its fiduciary duties to the Company's stockholders, then the Company and its Subsidiaries and their respective
directors, officers and Representatives may (but only prior to obtaining the Company Stockholder Approval), in response to such Takeover Proposal: (A)&nbsp;furnish information with respect to the
Company and its Subsidiaries to the Person making such Takeover Proposal (and to such Person's Representatives), but only after: (1)&nbsp;such Person enters into a confidentiality agreement with the
Company, the terms of which are at least as restrictive on the recipient's use and disclosure of confidential information as the restrictions imposed on Parent contained in the
Non-Disclosure Agreement; and (2)&nbsp;prior to or concurrently with the delivery to such Person, the Company delivers to Parent written notice of its intention to furnish such
information and furnishes to Parent all such information not previously provided to Parent; and (B)&nbsp;participate in discussions and negotiations with such Person (and with such Person's
Representatives) regarding such Takeover Proposal, provided that prior to or concurrently with entering into discussions and negotiations with such Person, the Company gives Parent written notice of
the Company's intention to enter into discussions and negotiations with such Person. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>29</FONT></P>

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<P><FONT SIZE=2><A
NAME="page_lo1423_1_30"> </A> </FONT> <FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;In addition to the other obligations of the Company set forth in this Section&nbsp;5.3, as promptly as practicable after any member of the Company's Board of Directors
or any of the Company's officers becomes aware of the receipt by the Company of any Takeover Proposal or any request for non-public information or inquiry that could reasonably be expected
to lead to a Takeover Proposal, the Company shall provide Parent with oral and written notice of the material terms and conditions of such Takeover Proposal, request or inquiry; the identity of the
Person or group making any such Takeover Proposal, request or inquiry and a copy of any such Takeover Proposal, request for non-public information or inquiry that is in writing. After any
member of the Company's Board of Directors or any of the Company's officers becomes aware of the receipt by the Company of any Takeover Proposal or any request for non-public information
or inquiry that could reasonably be expected to lead to a Takeover Proposal, the Company shall keep Parent currently and reasonably informed regarding the status and material details of any such
Takeover Proposal, request or inquiry and shall promptly provide Parent a copy of any such Takeover Proposal, request for non-public information or inquiry that is in writing. The Company
shall provide Parent with 48&nbsp;hours prior notice (or such lesser prior notice as is provided to the members of the Board of Directors) of any meeting of its Board of Directors at which its Board
of Directors is expected, as of the time such notice is given, to consider any Takeover Proposal. If, at any later time, it becomes expected that the Board of Directors will consider a particular
Takeover Proposal or if the Board of Directors considers a particular Takeover Proposal at any meeting of the Board of Directors, then the Company shall promptly inform Parent of such expectation or
consideration. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;Except
as permitted by this Section&nbsp;5.3(c): (i)&nbsp;neither the Board of Directors of the Company nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, the Company Board Recommendation; (ii)&nbsp;neither the Company nor any of its officers or member of the Board of Directors
shall recommend, and neither the Board of Directors of the Company nor any committee thereof shall approve or recommend (or propose publicly to approve or recommend), any Takeover Proposal (provided
that it shall not constitute a breach of this clause "(ii)" of this Section&nbsp;5.3(c) if an officer or member of the Board of Directors of the Company, without the prior knowledge or consent of
the Company's Board of Directors, directly contravenes the instructions of the Company's Board of Directors to comply with the terms of this clause "(ii)" of this Section&nbsp;5.3(c) and recommends
a Takeover Proposal, if, within three business days of receiving a written request to do so from Parent, the Company's Board of Directors, issues a widely disseminated press release reaffirming the
Company Board Recommendation and explicitly rejecting such Takeover Proposal (it being understood that if Parent does not make such a request with respect to such recommendation by an officer or
member of the Board of Directors of the Company, then the recommendation by such officer or member of the Board of Directors of the Company shall not be deemed to constitute a breach of the terms of
this clause "(ii)" of this Section&nbsp;5.3(c))); and (iii)&nbsp;neither the Board of Directors of the Company nor any committee thereof shall authorize or cause the Company or any of its
Subsidiaries to enter into any letter of intent, agreement in principle, memorandum of understanding, merger, acquisition, purchase or similar agreement related to any Takeover Proposal (except for
confidentiality agreements in accordance with Section&nbsp;5.3(a)). Notwithstanding the foregoing or any other provision of this Agreement, prior to obtaining Stockholder Approval, the Board of
Directors of the Company may, in response to the receipt of a Superior Proposal (which has not been withdrawn), withdraw or modify the Company Board Recommendation (each such case, a
"</FONT><FONT SIZE=2><I>Change of Recommendation</I></FONT><FONT SIZE=2>") with respect to the Merger, and, following any such withdrawal or modification of the Company Board Recommendation, may
approve or recommend, and may propose publicly to approve or recommend, such Superior Proposal and may, contemporaneously with the termination of this Agreement pursuant to Section&nbsp;7.1(e)(iii),
cause the Company to enter into a letter of intent, agreement in principle, memorandum of understanding, merger, acquisition or purchase agreement or other agreement related to any Superior Proposal,
if all of the following conditions in clauses (1)&nbsp;through (5)&nbsp;are met: (1)&nbsp;the Company shall have delivered to Parent written </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>30</FONT></P>

<HR NOSHADE>
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<!-- ZEQ.=1,SEQ=34,EFW="2162258",CP="AEROGEN, INC.",DN="2",CHK=99632,FOLIO='30',FILE='DISK129:[05PAL3.05PAL1423]LO1423A.;5',USER='JKARRAS',CD='16-AUG-2005;01:54' -->
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<P><FONT SIZE=2>notice
(the "</FONT><FONT SIZE=2><I>Change of Recommendation Notice</I></FONT><FONT SIZE=2>") at least two business days prior to publicly effecting such Change of Recommendation (the "Matching
Period"), which notice shall state expressly (x)&nbsp;that the Company has received a Superior Proposal, (y)&nbsp;the material terms and conditions of the Superior Proposal and the identity of the
Person or group making the Superior Proposal (including any written summaries or draft agreements exchanged between the Company and such Person or group in connection with such Superior Proposal), and
(z)&nbsp;that the Company intends to effect a Change of Recommendation and the manner in which it intends to do so; (2)&nbsp;the Company shall have provided to Parent a copy of all written
information related to the Company delivered to the Person or group making the Superior Proposal in connection with such Superior Proposal (to the extent not previously provided to Parent) and shall
have made available to Parent all materials and information relating to the Company that was made available to the Person or group making the Superior Proposal in connection with such Superior
Proposal; (3)&nbsp;during the Matching Period, the Company shall provide Parent with a reasonable opportunity to make such adjustments in the terms and conditions of this Agreement, and negotiate in
good faith with respect to any such adjustments proposed by Parent to the Company, as would enable the Company to make the Company Board Recommendation and not make a Change of Recommendation;
(4)&nbsp;the Board of Directors of the Company shall have concluded in good faith, after receipt of advice of its outside legal counsel, that, in light of such Superior Proposal and after
considering any binding written offer made by Parent, the failure of the Board of Directors to effect a Change of Recommendation is reasonably likely to result in a breach of its fiduciary obligations
to the stockholders of the Company under applicable law; and (5)&nbsp;such Superior Proposal shall not have resulted, directly or indirectly, from the Company willfully and materially breaching any
of the provisions set forth in Section&nbsp;5.3(a). The Company further agrees that it will deliver to Parent a new Change of Recommendation Notice with respect to each material change in the terms,
including any increase in the consideration, contemplated by a Superior Proposal that was the subject of a previous Change of Recommendation Notice and that the delivery of such notice shall extend
the Matching Period by two business days from the date of such notice. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company shall not submit to the vote of its stockholders any Takeover Proposal, or publicly propose to do so unless this Agreement has been validly terminated in accordance with
Article&nbsp;7. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;For
purposes of this Agreement: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Takeover Proposal</I></FONT><FONT SIZE=2>" means any proposal or offer from any Person (or "group" as defined under Section&nbsp;13(d) of the
Exchange Act) (other than Parent and its Affiliates) providing for any: (A)&nbsp;acquisition (whether in a single transaction or a series of related transactions) of assets of the Company and its
Subsidiaries having a fair market value equal to 20% or more of the Company's consolidated assets; (B)&nbsp;direct or indirect acquisition (whether in a single transaction or a series of related
transactions) of 20% or more of the voting power of the Company; (C)&nbsp;tender offer or exchange offer that if consummated would result in any Person beneficially owning 20% or more of the voting
power of the Company; (D)&nbsp;merger, consolidation, share exchange, business combination, recapitalization or similar transaction involving the Company or involving any Subsidiary (or
Subsidiaries) (other than: (1)&nbsp;mergers, consolidations, business combinations or similar transactions involving solely the Company and/or one or more Subsidiaries of the Company; and
(2)&nbsp;mergers, consolidations, business combinations or similar transactions that if consummated would result in a Person beneficially owning not more than 20% of any class of equity securities
of the Company or any of its Subsidiaries); or (E)&nbsp;any liquidation or dissolution of the Company; in each case, other than the Transactions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Superior Proposal</I></FONT><FONT SIZE=2>" means a bona fide written offer to acquire, for consideration consisting of cash and/or securities,
all or substantially all of the assets of the Company or a majority of the total outstanding voting securities of the Company as a result of which the stockholders of the Company immediately preceding
such transaction would hold less than 50% of the equity interests in the surviving or resulting entity of such transaction and any direct or indirect </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>31</FONT></P>

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<UL>
<BR>

<P><FONT SIZE=2>parent
or subsidiary thereof, which is on terms and conditions which the Board of Directors of the Company determines in its good faith judgment (after consultation with its financial advisor), taking
into account, among other things, all legal, financial, regulatory and other aspects of the offer and the Third Party making the offer, to be more favorable, from a financial point of view, to the
Company's stockholders than the Merger and is reasonably capable of being consummated. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;Nothing
in this Section&nbsp;5.3 shall prohibit the Board of Directors of the Company (or any committee thereof) from complying with Rules&nbsp;14d-9 and
14e-2(a) or Item 1012(a) of Regulation&nbsp;M-A promulgated under the Exchange Act or from including in the Proxy Statement or any amendment or supplement thereto any
information that the Board of Directors of the Company shall have concluded in good faith, after receipt of advice of its outside legal counsel, is required to be disclosed pursuant to applicable
securities laws or by the Board of Directors' fiduciary duties, provided that, a Change of Recommendation shall not be effected except in accordance with Section&nbsp;5.3(c). </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.4</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Further Action; Efforts</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Upon
the terms and subject to the conditions set forth in this Agreement, each of the parties hereto shall, and shall cause their respective Subsidiaries to, use
commercially reasonable efforts to take, or cause to be taken, all actions, and to use commercially reasonable efforts to do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper and advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the other Transactions, including commercially reasonable
efforts to take such acts necessary to cause the conditions precedent set forth in Article&nbsp;6 to be satisfied. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;In
furtherance and not in limitation of the covenants of the parties contained in Section&nbsp;5.4(a), in the event that any legal, administrative, arbitral or other
proceeding is instituted (or threatened to be instituted) by a Governmental Authority or private party challenging any of the Transactions or in the event that any Governmental Authority shall
otherwise object to any of the Transactions, each of Parent, Merger Sub and the Company shall cooperate with each other and use its respective reasonable efforts: (i)&nbsp;to vigorously defend,
contest and resist any such proceeding; (ii)&nbsp;to have vacated, lifted, reversed or overturned any injunction, order, judgment, ruling or decree, whether temporary, preliminary or permanent, that
is in effect and that prohibits, prevents or restricts consummation of the Transactions; and (iii)&nbsp;to resolve objections. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;Notwithstanding
anything in this Agreement to the contrary, nothing contained in this Agreement shall be deemed to require Parent or the Company or any Subsidiary or
Affiliate thereof to agree to any Action of Divestiture. The Company shall not take or agree to take any Action of Divestiture without the prior written consent of Parent. For purposes of this
agreement, an "</FONT><FONT SIZE=2><I>Action of Divestiture</I></FONT><FONT SIZE=2>" shall mean (x)&nbsp;any license, sale or other disposition or holding separate (through establishment of a trust
or otherwise) of any shares of capital stock or of any business, assets or properties of Parent, its subsidiaries or Affiliates or of the Company or its Subsidiaries, (y)&nbsp;the imposition of any
limitation on the ability of Parent, its subsidiaries or Affiliates or the Company or its Subsidiaries to conduct their respective businesses or own any capital stock or assets or to acquire, hold or
exercise full rights of ownership of their respective businesses and, in the case of Parent, the businesses of the Company and its Subsidiaries, or (z)&nbsp;the imposition of any impediment on
Parent, its subsidiaries or Affiliates or the Company or its Subsidiaries under any statute, rule, regulation, executive order, decree, order or other legal restraint governing competition, monopolies
or restrictive trade practices. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.5</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Public Announcements</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The initial press release with respect to the execution of this Agreement
shall be a joint press release to be reasonably agreed upon by Parent and the Company. Thereafter, neither the Company nor Parent shall issue or cause the publication of any press release or other
public announcement (to the extent not previously issued or made in accordance with this Agreement) with respect to the Merger, this Agreement or the other Transactions without the prior consent of
the other party (which consent shall not be unreasonably withheld or delayed), except: (a)&nbsp;as </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>32</FONT></P>

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<BR>

<P><FONT SIZE=2>may
be required by Law or by any applicable listing agreement with a national securities exchange or Nasdaq as determined in the good faith judgment of the party proposing to make such release, in
which case neither the Company nor Parent shall issue or cause the publication of such press release or other public announcement without prior consultation with the other party, to the extent
practicable; and (b)&nbsp;as may be consistent with actions taken by the Company or its Board of Directors pursuant to Section&nbsp;5.3(c). </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.6</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Access to Information; Confidentiality</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to applicable Laws relating to access to and the
exchange of information: (a)&nbsp;the Company shall, and shall cause each of its Subsidiaries to, afford to Parent and Parent's Representatives reasonable access during normal business hours and on
reasonable advance notice to the Company's and its Subsidiaries' properties, books, records and Representatives; and (b)&nbsp;the Company shall furnish (or otherwise make available, including
through the SEC EDGAR system) promptly to Parent: (i)&nbsp;a copy of each report, schedule and other document filed, furnished or received by it or any of its Subsidiaries pursuant to the
requirements of Federal or state securities Laws; and (ii)&nbsp;all other information concerning its and its Subsidiaries' business, properties and personnel as Parent may reasonably request. Except
for disclosures permitted by the terms of the Non-Disclosure Agreement, dated as of May&nbsp;9, 2005 between Parent and the Company (as it may be amended from time to time, the
"</FONT><FONT SIZE=2><I>Non-Disclosure Agreement</I></FONT><FONT SIZE=2>"), Parent shall hold information received from the Company pursuant to this Section&nbsp;5.6 in confidence in
accordance with the terms of the Non-Disclosure Agreement. No investigation, or information received, pursuant to this Section&nbsp;5.6 will affect or modify any of the representations
and warranties of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.7</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Notification of Certain Matters</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Company shall use reasonable efforts to give prompt notice to
Parent, and Parent shall use reasonable efforts to give prompt notice to the Company, of: (a)&nbsp;any notice or other communication received by such party from any Governmental Authority in
connection with the Transactions, if the subject matter of such communication would reasonably be expected to be material to the Company, the Surviving Corporation or Parent; (b)&nbsp;any
investigation or legal, administrative, arbitral or other proceeding, to such party's Knowledge, commenced or threatened against such party or any of its Subsidiaries which relate to the Transactions;
(c)&nbsp;the discovery of any fact or circumstance that, or the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would cause any
representation or warranty made by such party contained in this Agreement: (i)&nbsp;that is qualified as to materiality or Material Adverse Effect to be untrue; and (ii)&nbsp;that is not so
qualified to be untrue in any material respect; and (d)&nbsp;any material failure of such party to comply with or satisfy any covenant or agreement to be complied with or satisfied by it hereunder; </FONT> <FONT SIZE=2><I>provided</I></FONT><FONT
SIZE=2>, </FONT><FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>, that the delivery of any notice pursuant to this Section&nbsp;5.7 shall not (nor
shall any information provided pursuant to Section&nbsp;5.6)): (A)&nbsp;be considered in determining whether any representation or warranty is true for purposes of Article&nbsp;6 or
Article&nbsp;7; (B)&nbsp;cure any breach or non-compliance with any other provision of this Agreement; or
(C)&nbsp;limit the remedies available to the party receiving such notice; </FONT><FONT SIZE=2><I>provided, further,</I></FONT><FONT SIZE=2> that the failure to deliver any notice pursuant to this
Section&nbsp;5.7 shall not be considered in determining whether the condition set forth in Section&nbsp;6.2(b) or Section&nbsp;6.3(b) has been satisfied or the related termination right in
Article&nbsp;7 is available. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.8</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Indemnification and Insurance</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;From
and after the Effective Time, Parent and the Surviving Corporation shall (and Parent shall cause the Surviving Corporation to) indemnify, defend and hold harmless,
and advance expenses to, the individuals who at or prior to the Effective Time were directors or officers of the Company or any of its Subsidiaries (collectively, the
"</FONT><FONT SIZE=2><I>Indemnitees</I></FONT><FONT SIZE=2>") with respect to all acts or omissions by them in their capacities as such at any time prior to the Effective Time, to the fullest extent
required by: (i)&nbsp;the Company Charter Documents as in effect on the date of this Agreement; and (ii)&nbsp;any applicable indemnification contract as in effect on the date of this Agreement
(provided that the Company has provided an accurate and complete copy of such indemnification contract to Parent or its representatives prior to the date of this Agreement). </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>33</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<P><FONT SIZE=2><A
NAME="page_lq1423_1_34"> </A> </FONT> <FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Parent will provide, or cause the Surviving Corporation to provide, for a period of not less than six years after the Effective Time, the Indemnitees who are insured
under the Company's directors' and officers' insurance and indemnification policy with an insurance and indemnification policy that provides coverage for events occurring at or prior to the Effective
Time (the "</FONT><FONT SIZE=2><I>D&amp;O Insurance</I></FONT><FONT SIZE=2>") that is no less favorable than the existing policy of the Company or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; </FONT><FONT SIZE=2><I>provided, however,</I></FONT><FONT SIZE=2> that Parent and the Surviving Corporation shall not be required to pay an annual premium
for the D&amp;O Insurance in excess of 250% of the annual premium currently paid by the Company for such insurance; </FONT><FONT SIZE=2><I>provided, further,</I></FONT><FONT SIZE=2> that if the annual
premiums of such insurance coverage exceed such amount, Parent or the Surviving Corporation shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such
amount; and </FONT><FONT SIZE=2><I>provided, further, howeve</I></FONT><FONT SIZE=2>r, that, notwithstanding anything to the contrary in this Agreement, the Company may obtain a prepaid tail policy
(the "Tail Policy") prior to the Effective Time, which policy provides the Indemnitees with directors' and officers' liability insurance for a period ending no earlier than the sixth anniversary of
the Effective Time, provided that the aggregate premium for the Tail Policy shall not exceed 250% of the annual premium currently paid by the Company for such insurance. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;The
Indemnitees to whom this Section&nbsp;5.8 applies shall be third party beneficiaries of this Section&nbsp;5.8. The provisions of this Section&nbsp;5.8 are
intended to be for the benefit of each Indemnitee, his or her heirs and his or her representatives. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;In
the event that the Surviving Corporation or any of its successors or assigns consolidates with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or transfers or conveys all or a majority of its properties and assets to any Person, then, and in each such case, proper provision
shall be made so that the successors and assigns of the Surviving Corporation shall succeed to the obligations set forth in this Section&nbsp;5.8. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.9</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Securityholder Litigation</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Company shall give Parent the opportunity to participate in the
defense or settlement of any securityholder litigation against the Company and/or its directors relating to the Transactions, and no settlement of any such litigation shall be agreed to without
Parent's prior consent (which consent shall not be unreasonably withheld or delayed). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.10</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Fees and Expenses</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Whether or not the Merger is consummated, subject to Section&nbsp;7.3, all
fees and expenses incurred in connection with this Agreement, the Merger and the Transactions shall be paid by the party incurring such fees or expenses. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
5.11</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Third Party Consents</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;As soon as practicable following the date of this Agreement, the Company will
use commercially reasonable efforts to obtain any material consents, waivers and approvals under any of its or its Subsidiaries' respective Contracts required to be obtained in connection with the
consummation of the transactions contemplated hereby. In connection with seeking such consents, waivers and approvals, the Company shall keep Parent informed of all material developments and shall, at
Parent's request, include Parent in any discussions or communications with any parties whose consent, waiver or approval is sought hereunder. Such consents, waivers and approvals shall be in a form
reasonably acceptable to Parent. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>ARTICLE&nbsp;6  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><I>Conditions Precedent</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
6.1</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conditions to Each Party's Obligation to Effect the Merger</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The respective obligations of each party
hereto to effect the Merger shall be subject to the satisfaction (or waiver, if permissible under applicable Law) on or prior to the Closing Date of the following conditions: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stockholder Approval</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Company Stockholder Approval shall have been obtained in accordance with
applicable Law and the Company Charter Documents. </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>34</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_lq1423_1_35"> </A>
<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;No Injunctions or Restraints</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;No Law, injunction, judgment or ruling enacted, promulgated, issued, entered,
amended or enforced by any Governmental Authority (collectively, "</FONT><FONT SIZE=2><I>Restraints</I></FONT><FONT SIZE=2>") shall be in effect enjoining, restraining, preventing or prohibiting
consummation of the Merger or making the consummation of the Merger illegal. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;S-4 Registration Statement Effective; Proxy Statement</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;If Parent has not made the Parent
Election, the SEC shall have declared the S-4 Registration Statement effective and no stop order suspending the effectiveness of the S-4 Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened in writing by the SEC. No similar proceeding in respect of the Proxy Statement shall have been
initiated or threatened in writing by the SEC. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
6.2</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conditions to Obligations of Parent and Merger Sub</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The obligations of Parent and Merger Sub to
effect the Merger are further subject to the satisfaction (or waiver exclusively by Parent and Merger Sub, if permissible under applicable Law) on or prior to the Closing Date of the following
conditions: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Representations and Warranties</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;The
representations and warranties of the Company contained in this Agreement (A)&nbsp;shall be true and correct as of the date of this Agreement (except to the extent
such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date) and (B)&nbsp;shall be true and
correct as of the Closing Date as though made on the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date), except, in the case of both clauses "(A)" and "(B)" of this sentence, as would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;the
representations and warranties of the Company contained in the first, second and sixth sentences of Section&nbsp;3.2(a) shall be true and correct in all material
respects as of the Closing Date as though made on the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date), except to the extent the failure to be so true and correct does not result in an increase of at least 5% of the number of shares of
Company Common Stock, determined on a fully-diluted, treasury-stock basis, or of the number of shares of Company Preferred Stock; </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Performance of Obligations of the Company</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement on or prior to the Closing Date; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Officer's Certificate</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Parent shall have received a certificate, signed on behalf of the Company by the
chief executive officer or chief financial officer of the Company, certifying as to the matters set forth in Sections 6.2(a) and 6.2(b); </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Company Material Adverse Effect</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Since the date of this Agreement through the Closing Date, there shall have
been no change, event, occurrence or circumstance that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect; and </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;No Governmental Litigation</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;There shall not be any legal, administrative, arbitral or other proceeding
pending before any Governmental Authority in which a Governmental Authority is a party that would or would reasonably be expected to: (i)&nbsp;restrain, enjoin, prevent, prohibit or make illegal the
consummation of the Merger or the other Transactions; or (ii)&nbsp;impose material </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>35</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_lq1423_1_36"> </A>
<UL>
<BR>

<P><FONT SIZE=2>limitations
on the ability of Parent effectively to exercise full rights of ownership of all shares of the Surviving Corporation. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
6.3</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conditions to Obligation of the Company</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The obligation of the Company to effect the Merger is
further subject to the satisfaction (or waiver exclusively by the Company, if permissible under applicable Law) on or prior to the Closing Date of the following conditions: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Representations and Warranties</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The representations and warranties of Parent and Merger Sub contained in
this Agreement shall be true and correct as of the date of this Agreement (except to the extent such representations and warranties relate to an earlier date, in which case as of such earlier date)
and shall be true and correct as of the Closing Date as though made on the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case as of such
earlier date), except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Performance of Obligations of Parent and Merger Sub</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Parent and Merger Sub shall have performed in all
material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date; and </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Officer's Certificate</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Company shall have received a certificate, signed on behalf of Parent by the
chief executive officer or chief financial officer of Parent, certifying as to the matters set forth in Sections 6.3(a) and 6.3(b). </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2><B>ARTICLE&nbsp;7  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><I>Termination</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
7.1</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Termination</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be terminated and the Transactions abandoned at any time prior to
the Effective Time: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;by
the mutual written consent of the Company and Parent duly authorized by each of their respective Boards of Directors; or </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;by
either of the Company or Parent if: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the
Merger shall not have been consummated on or before February&nbsp;12, 2005 (the "</FONT><FONT SIZE=2><I>Outside Date</I></FONT><FONT SIZE=2>"); </FONT> <FONT SIZE=2><I>provided, however,</I></FONT><FONT SIZE=2> that the right to terminate this
Agreement under this Section&nbsp;7.1(b)(i)&nbsp;shall not be available to a party if the
failure of the Merger to have been consummated on or before the Outside Date was primarily due to the failure of such party or any Affiliate of such party to perform any of its obligations under this
Agreement; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;any
Restraint having the effect set forth in Section&nbsp;6.1(b) shall be in effect and shall have become final and nonappealable; or </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;the
Company Stockholder Approval shall not have been obtained at the Company Stockholders Meeting duly convened therefor or at any adjournment or postponement thereof;
or </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;by
Parent if: (i)&nbsp;there is an inaccuracy in any of the representations or warranties of the Company in this Agreement such that the condition set forth in
Section&nbsp;6.2(a) would not be satisfied; or (ii)&nbsp;there has been a breach by the Company of any of its covenants in this Agreement such that the condition set forth in Section&nbsp;6.2(b)
would not be satisfied (the events described in clauses "(i)" and "(ii)" of this Section&nbsp;7.1(c) being referred to as a "</FONT><FONT SIZE=2><I>Terminating Company
Breach</I></FONT><FONT SIZE=2>"); </FONT><FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2>, </FONT><FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>, that if such Terminating Company Breach is curable
and can reasonably be expected to be cured by the Company by the Outside Date through the exercise of reasonable efforts, then Parent may not terminate this Agreement under this Section&nbsp;7.1(c)
prior to 30&nbsp;days following delivery of written notice from Parent to the Company of such Terminating </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>36</FONT></P>

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<UL>

<P><FONT SIZE=2>Company
Breach provided that the Company continues to exercise commercially reasonable efforts to cure such Terminating Company Breach through such 30&nbsp;day period (it being understood that
Parent may not terminate this Agreement pursuant to this paragraph if it shall have materially breached this Agreement or if such Terminating Company Breach by the Company is cured within such
30&nbsp;day period); </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;by
Parent if, at any time prior to the adoption of this Agreement by the Company Stockholder Approval: (i)&nbsp;the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent, the Company Board Recommendation; (ii)&nbsp;the Board of Directors of the Company shall have failed to include the Company
Board Recommendation in the Proxy Statement; (iii)&nbsp;the Company's Board of Directors shall have failed to reconfirm (publicly if so requested) the Company Board Recommendation within ten
business days after the Company receives a written request from Parent to do so following the public announcement by a Third Party of an Takeover Proposal (provided that (x)&nbsp;Parent may not make
such a request on more than three occasions with respect to any particular Takeover Proposal where the price and other material terms of such Takeover Proposal remain unchanged and (y)&nbsp;any
reconfirmation of the Company Board Recommendation by the Company's Board of Directors following the public announcement by a Third Party of a Takeover Proposal shall not limit the rights of the
Company's Board of Directors under Section&nbsp;5.3 with respect to Takeover Proposals, or amended versions of Takeover Proposals); (iv)&nbsp;the Board of Directors of the Company or any committee
thereof shall have adopted resolutions approving or recommending any Takeover Proposal; (v)&nbsp;the Company has entered into any letter of intent, agreement in principle, memorandum of
understanding, merger, acquisition or purchase agreement related to any Takeover Proposal (except for confidentiality agreements in accordance with Section&nbsp;5.3(a)); (vi)&nbsp;the Company's
Board of Directors shall have failed to recommend against acceptance of a publicly announced tender offer that constitutes a Takeover Proposal (and that remains pending) within ten business days after
such tender offer is "commenced" (as defined in Rule 14d-2 of the Exchange Act) (provided that any recommendation by the Company's Board of Directors against acceptance of such tender
offer shall not limit the rights of the Company's Board of Directors under Section&nbsp;5.3 with respect to subsequent Takeover Proposals, or amended versions of Takeover Proposals); and
(vii)&nbsp;the Company's Board of Directors shall have failed to reconfirm (publicly if so requested) the Company Board Recommendation within ten business days after the Company receives a written
request from Parent to do so following any event that causes uncertainty among the Company's stockholders regarding the Company's intent to consummate the Merger; or </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;by
the Company if: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;subject
to clause&nbsp;(ii) below, there is an inaccuracy in any of the representations or warranties of Parent or Merger Sub in this Agreement such that the condition
set forth in Section&nbsp;6.3(a) would not be satisfied; or </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;there
has been a breach by Parent or Merger Sub of any of their respective covenants in this Agreement such that the condition set forth in Section&nbsp;6.3(b) would
not be satisfied (the events described in clauses "(i)" and "(ii)" of this paragraph being referred to as a "</FONT><FONT SIZE=2><I>Terminating Parent Breach</I></FONT><FONT SIZE=2>"); </FONT> <FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2>,
</FONT><FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>, that if such Terminating Parent Breach is curable and can reasonably be expected to
be cured by Parent or Merger Sub by the Outside Date through the exercise of reasonable efforts, then the Company may not terminate this Agreement under this Section&nbsp;7.1(e)(ii)&nbsp;prior to
30&nbsp;days following receipt of written notice from the Company to Parent of such Terminating Parent Breach; </FONT><FONT SIZE=2><I>provided, further,</I></FONT><FONT SIZE=2> that Parent and
Merger Sub continue to exercise commercially reasonable efforts to cure such Terminating Parent Breach through such 30&nbsp;day period (it being understood that the Company may not terminate this
Agreement pursuant to this paragraph if it shall have materially breached this </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>37</FONT></P>

<HR NOSHADE>
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<A NAME="page_lq1423_1_38"> </A>
<UL>
<UL>
<BR>

<P><FONT SIZE=2>Agreement
or if such Terminating Parent Breach by Parent or Merger Sub is cured within such 30&nbsp;day period); or </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;following
the determination of the Company's Board of Directors to accept, or enter into a definitive agreement with respect to, a Superior Proposal, </FONT> <FONT SIZE=2><I>provided, however</I></FONT><FONT SIZE=2>, that: (A)&nbsp;prior to such termination,
the Company has complied with its obligations contained in Section&nbsp;5.3(c) and
(B)&nbsp;contemporaneously with such termination, the Company pays Parent the fee required by Section&nbsp;7.3(a)(i). </FONT></P>

</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
7.2</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Effect of Termination</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;In the event of the termination of this Agreement as provided in
Section&nbsp;7.1, written notice thereof shall be given to the other party or parties, specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith
become null and void (other than the provisions of the penultimate sentence of Section&nbsp;5.6, Sections&nbsp;5.10, 7.2 and 7.3 and Article&nbsp;8, all of which shall survive termination of
this Agreement), and there shall be no liability on the part of Parent, Merger Sub or the Company or their respective directors, officers and Affiliates, except: (a)&nbsp;the Company may have
liability as provided in Section&nbsp;7.3; and (b)&nbsp;nothing shall relieve any party hereto from liability for any willful, material breach of this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
7.3</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Termination Fee</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;In
the event that this Agreement is terminated by: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the
Company pursuant to Section&nbsp;7.1(e)(iii), or by Parent pursuant to Section&nbsp;7.1(d); </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;by
Parent or the Company pursuant to Section&nbsp;7.1(b)(iii)&nbsp;and at the time of the Company Stockholders Meeting, a Takeover Proposal (for purposes of this
Section&nbsp;7.3(a)(ii), all references to "20%" in the definition of "Takeover Proposal" shall be deemed to refer to "50%" instead) has been publicly announced (and not withdrawn) and within twelve
months after the date of the termination of this Agreement, an Acquisition Transaction is consummated with the Third Party making such Takeover Proposal; or </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;by
the Company pursuant to Section&nbsp;7.1(b)(i)&nbsp;and at the Outside Date, a Takeover Proposal (for purposes of this Section&nbsp;7.3(a)(iii), all
references to "20%" in the definition of "Takeover Proposal" shall be deemed to refer to "50%" instead) has been publicly announced (and not withdrawn) and within twelve months after the date of the
termination of this Agreement, an Acquisition Transaction is consummated with the Third Party making such Takeover Proposal; </FONT></P>

</UL>

<P><FONT SIZE=2>then
the Company shall pay to Parent a fee of $1,120,000 in cash. Such payment shall be made, in the case of a fee to be paid pursuant to Section&nbsp;7.3(a)(i), within two business days following
the termination of this Agreement by Parent or concurrently with the termination of this Agreement by the Company, or, in the case of a fee to be paid pursuant to Section&nbsp;7.3(a)(ii)&nbsp;or
Section&nbsp;7.3(a)(iii), within two business days following the consummation of such Acquisition Transaction, by wire transfer of immediately available funds to an account to be designated by
Parent. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;For
purposes of this Agreement, an "</FONT><FONT SIZE=2><I>Acquisition Transaction</I></FONT><FONT SIZE=2>" means any proposal or offer from any Person (other than
Parent and its Affiliates) providing for any: (A)&nbsp;acquisition (whether in a single transaction or a series of related transactions) of assets of the Company and its Subsidiaries having a fair
market value equal to 50% or more of the consolidated assets of the Company and its Subsidiaries, taken as a whole; (B)&nbsp;direct or indirect acquisition (whether in a single transaction or a
series of related transactions) of 50% or more of the voting power of the Company; (C)&nbsp;tender offer or exchange offer that if consummated would result in any Person beneficially owning 50% or
more of the voting power of the Company; or (D)&nbsp;merger, consolidation, share exchange, business combination, recapitalization or similar transaction involving the Company or involving any
Subsidiary (or Subsidiaries) (other than: (1)&nbsp;mergers, consolidations, business combinations or similar transactions </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>38</FONT></P>

<HR NOSHADE>
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<P><FONT SIZE=2>involving
solely the Company and/or one or more Subsidiaries of the Company; and (2)&nbsp;mergers, consolidations, business combinations or similar transactions that if consummated would result in a
Person beneficially owning not more than 50% of any class of equity securities of the Company or any of its Subsidiaries); in each case, other than the Transactions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;The
Company and Parent acknowledge that the fee and the other provisions of this Section&nbsp;7.3 are an integral part of the Transactions and that, without these
agreements, Parent and the Company would not enter into this Agreement. Accordingly, if the Company fails to pay in a timely manner the amounts due pursuant to this Section&nbsp;7.3, and, in order
to obtain such payment, Parent makes a claim that results in a judgment against the Company for the amounts set forth in this Section&nbsp;7.3, the Company shall pay to Parent the reasonable costs
and expenses of Parent (including reasonable attorneys' fees and expenses) in connection with such suit, together with interest on the amounts set forth in this Section&nbsp;7.3 at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made. Payment of the fees described in this Section&nbsp;7.3 shall not be in lieu of damages incurred in the event of breach of
this Agreement. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>ARTICLE&nbsp;8  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><I>Miscellaneous</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.1</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Nonsurvival of Representations and Warranties</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or, except as otherwise provided in Section&nbsp;7.2, upon the termination of this Agreement pursuant to Section&nbsp;7.1, as the case may be,
except that the agreements set forth in Article&nbsp;2 and Sections 5.8, 5.9, and 5.10 and any other agreement in this Agreement which contemplates performance after the Effective Time shall survive
the Effective Time indefinitely and those set forth in Sections 5.10, 7.2 and 7.3 and this Article&nbsp;8 shall survive termination indefinitely. The Non-Disclosure Agreement shall:
(a)&nbsp;survive termination of this Agreement in accordance with its terms; and (b)&nbsp;terminate as of the Effective Time. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.2</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Amendment or Supplement</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;At any time prior to the Effective Time, this Agreement may be amended or
supplemented in any and all respects, whether before or after receipt of the Company Stockholder Approval, by written agreement of the parties hereto, by action taken by their respective Boards of
Directors; </FONT><FONT SIZE=2><I>provided</I></FONT><FONT SIZE=2>, </FONT><FONT SIZE=2><I>however</I></FONT><FONT SIZE=2>, that following approval of the Transactions by the stockholders of the
Company and Merger Sub, there shall be no amendment or change to the provisions hereof which by Law would require further approval by the stockholders of the Company or Merger Sub without such
approval. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.3</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Extension of Time, Waiver, Etc</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;At any time prior to the Effective Time, any party hereto may,
subject to applicable Law: (a)&nbsp;waive any inaccuracies in the representations and warranties of any other party hereto; (b)&nbsp;extend the time for the performance of any of the obligations
or acts of any other party hereto; or (c)&nbsp;waive compliance by the other party with any of the agreements contained herein or, except as otherwise provided herein, waive any of such party's
conditions. Notwithstanding the foregoing, no failure or delay by the Company, Parent or Merger Sub in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.4</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Assignment</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Neither this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned or delegated, in whole or in part, by operation of Law or otherwise, by any of the parties without the prior written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by, the parties hereto and their respective successors and permitted assigns. Any purported assignment or delegation not
permitted under this Section shall be null and void. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>39</FONT></P>

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<P><FONT SIZE=2><A
NAME="page_ls1423_1_40"> </A> </FONT> <FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION 8.5</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Counterparts; Facsimile; Electronic Transmission</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be executed in counterparts
(each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement) and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties. The exchange of copies of this Agreement and of signature pages by facsimile or electronic transmission shall constitute effective execution
and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or electronic transmission shall
be deemed to be their original signatures for all purposes. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.6</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement; No Third-Party Beneficiaries</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;This Agreement, the Voting Agreements, the Company
Disclosure Schedule and the Non-Disclosure Agreement: (a)&nbsp;constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof and thereof; and (b)&nbsp;except for the provisions of Section&nbsp;5.8, are not intended to and shall not confer upon any
Person other than the parties hereto any rights or remedies hereunder. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.7</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Governing Law; Waiver of Jury Trial</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;This
Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of laws thereof. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.8</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Specific Enforcement</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, without bond or other security being required, this being in addition to any
other remedy to which they are entitled at law or in equity. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.9</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Consent to Jurisdiction</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Each of the parties hereto: (a)&nbsp;consents to submit itself to the
personal jurisdiction of the Court of Chancery of the State of Delaware, in the event any dispute arises out of this Agreement or any of the Transactions; (b)&nbsp;agrees that it will not attempt to
deny or defeat
such personal jurisdiction by motion or other request for leave from any such court; and (c)&nbsp;agrees that it will not bring any action relating to this Agreement or any of the Transactions in
any court other than the Court of Chancery of the State of Delaware. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.10</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Notices</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;All notices, requests and other communications to any party hereunder shall be in writing
and shall be deemed properly delivered, given and received: (a)&nbsp;when delivered by hand; (b)&nbsp;on the day sent by facsimile provided that the sender has received confirmation of
transmission as of or prior to 5:00&nbsp;p.m. local time of the recipient on such day; (c)&nbsp;the first business day after sent by facsimile (to the extent that the sender has received
confirmation of transmission after 5:00&nbsp;p.m. local time of the recipient on the day sent by facsimile); or (d)&nbsp;the third business day after sent by registered mail or by courier or
express delivery service, in any case to the address or facsimile telephone number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto): </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
to Parent or Merger Sub, to: </FONT></P>

<UL>
<UL>

<P><FONT SIZE=2>Nektar
Therapeutics<BR>
150 Industrial Road<BR>
San Carlos, CA 94070<BR>
Attention: Nevan Elam<BR>
Facsimile: (650)&nbsp;631-3150 </FONT></P>

</UL>
</UL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>40</FONT></P>

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<UL>
<UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;with
a copy (which shall not constitute notice) to: </FONT></P>

<UL>
<UL>

<P><FONT SIZE=2>Wilson
Sonsini Goodrich&nbsp;&amp; Rosati<BR>
Professional Corporation<BR>
650 Page Mill Road<BR>
Palo Alto, CA 94304-1050<BR>
Attention: Martin W. Korman<BR>
Facsimile: (650)&nbsp;493-6811 </FONT></P>

</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
to the Company, to: </FONT></P>

<UL>
<UL>

<P><FONT SIZE=2>Aerogen,&nbsp;Inc.<BR>
2071 Stierlin Court, Suite 100<BR>
Mountain View, CA 94043<BR>
Attention: Chief Financial Officer<BR>
Facsimile: (650)&nbsp;864-7433 </FONT></P>

</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;with
a copy (which shall not constitute notice) to: </FONT></P>

<UL>
<UL>

<P><FONT SIZE=2>Cooley
Godward LLP<BR>
Five Palo Alto Square<BR>
3000 El Camino Real<BR>
Palo Alto, CA 94306<BR>
Attention: Robert J. Brigham, Esq.<BR>
Facsimile: (650)&nbsp;849-7400 </FONT></P>

</UL>
</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.11</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Severability</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;If any term or other provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain
in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the Transactions are
fulfilled to the extent possible. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.12</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Definitions</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;As
used in this Agreement, the following terms have the meanings ascribed thereto below: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Affiliate</I></FONT><FONT SIZE=2>" shall mean, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common
control with, such Person. For this purpose, "</FONT><FONT SIZE=2><I>control</I></FONT><FONT SIZE=2>" (including, with its correlative meanings, "</FONT><FONT SIZE=2><I>controlled
by</I></FONT><FONT SIZE=2>" and "</FONT><FONT SIZE=2><I>under common control with</I></FONT><FONT SIZE=2>") shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>business day</I></FONT><FONT SIZE=2>" shall mean a day except a Saturday, a Sunday or other day on which the SEC or banks in the City of New York are authorized
or required by Law to be closed. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Charter Amendment</I></FONT><FONT SIZE=2>" shall mean the amendment to the Company's Certificate of the Powers, Designations, Preferences and Rights of the
Company Series&nbsp;A-1 Preferred Stock in substantially the form attached hereto as </FONT><FONT SIZE=2><I>Exhibit&nbsp;C</I></FONT><FONT SIZE=2>. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Code</I></FONT><FONT SIZE=2>" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Common Stock Per Share Cash Amount</I></FONT><FONT SIZE=2>" shall mean $0.1875. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>41</FONT></P>

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<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Common Stock Per Share Stock Amount</I></FONT><FONT SIZE=2>" shall mean the quotient obtained by </FONT><FONT SIZE=2><I>dividing</I></FONT><FONT SIZE=2> $0.5625
by the Parent Trading Price. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Company Capital Stock</I></FONT><FONT SIZE=2>" shall mean the Company Common Stock and the Company Preferred Stock. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Company Common Stock</I></FONT><FONT SIZE=2>" shall mean the common stock, par value $0.001 per share, of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Company Preferred Stock</I></FONT><FONT SIZE=2>" shall mean the Preferred Stock, par value $0.001 per share, of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Company Series&nbsp;A-1 Preferred Stock</I></FONT><FONT SIZE=2>" shall mean the Series&nbsp;A-1 Preferred Stock, par value $0.001 per
share, of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Company Stock Plans</I></FONT><FONT SIZE=2>" shall mean the Aerogen 2000 Equity Incentive Plan, the Aerogen 2000 Non-Employee Directors' Stock Option
Plan and the ESPP. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>ESPP</I></FONT><FONT SIZE=2>" shall mean the Aerogen 2000 Employee Stock Purchase Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>GAAP</I></FONT><FONT SIZE=2>" shall mean generally accepted accounting principles in the United States. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Governmental Authority</I></FONT><FONT SIZE=2>" shall mean any government, court, arbitrator, regulatory or administrative agency, commission or authority or
other governmental instrumentality, federal, state or local, domestic, foreign or multinational. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Intellectual Property</I></FONT><FONT SIZE=2>" of any Person shall mean all intellectual property rights throughout the world arising from or in respect of the
following: (i)&nbsp;all patents and applications therefor, including continuations, divisionals, continuations-in-part, renewals, extensions, provisionals, or reissues of
patent applications and patents issuing thereon; (ii)&nbsp;trademarks, service marks, trade names, common law trademarks and service marks, service names, brand names, trade dress rights, logos,
Internet domain names and corporate names, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof; (iii)&nbsp;all copyrights and
registrations and applications therefor, works of authorship and mask work rights; (iv)&nbsp;all proprietary discoveries, concepts, ideas, research and development, know-how, formulae,
algorithms, subroutines, inventions, compositions, manufacturing and production processes and techniques, technical data, industrial designs, procedures, designs, drawings, specifications, moral and
economic rights of authors and inventors (however denominated), databases and other proprietary and confidential information, including customer lists, supplier lists, pricing and cost information,
and business and marketing plans and proposals, and with respect to the foregoing, all registrations, applications, and rights therein, throughout the world; and (v)&nbsp;all Software. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Knowledge</I></FONT><FONT SIZE=2>" of any Person that is not an individual shall mean, with respect to any matter in question, the actual knowledge of such
Person's executive officers and directors. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Parent Common Stock</I></FONT><FONT SIZE=2>" shall mean shares of the common stock, par value $0.0001 per share, of Parent. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Parent Trading Price</I></FONT><FONT SIZE=2>" shall mean the volume weighted average price per share of Parent Common Stock, as reported by the Nasdaq National
Market, for the 20 trading day period ending on the second trading day preceding the Effective Date. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Person</I></FONT><FONT SIZE=2>" shall mean an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity,
including a Governmental Authority. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Preferred Stock Per Share Cash Amount</I></FONT><FONT SIZE=2>" shall mean $7.2563. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>42</FONT></P>

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<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Preferred Stock Per Share Stock Amount</I></FONT><FONT SIZE=2>" shall mean the quotient obtained by </FONT><FONT SIZE=2><I>dividing</I></FONT><FONT SIZE=2>
$21.7688 by the Parent Trading Price. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Representatives</I></FONT><FONT SIZE=2>" of any Person shall mean its directors, officers, employees, financial advisors, attorneys, accountants, agents and
other representatives. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Software</I></FONT><FONT SIZE=2>" means all: (i)&nbsp;computer programs, including all software implementations of algorithms, models and methodologies,
whether in source code or object code; (ii)&nbsp;databases and compilations, including all data and collections of data, whether machine readable or otherwise; (iii)&nbsp;descriptions,
flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus,
buttons and icons; and (iv)&nbsp;documentation including user manuals and other training documentation related to any of the foregoing. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Subsidiary</I></FONT><FONT SIZE=2>" when used with respect to any party hereto, shall mean any corporation, limited liability company, partnership, association,
trust or other entity the accounts of which would be consolidated with those of such party in such party's consolidated financial statements if such financial statements were prepared in accordance
with GAAP, as well as any other corporation, limited liability company, partnership, association, trust or other entity of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) are, as of such date, owned by such party or one or more
Subsidiaries of such party or by such party and one or more Subsidiaries of such party. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Transactions</I></FONT><FONT SIZE=2>" refers to the transactions contemplated hereby, including the Merger and the Charter Amendment. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECTION
8.13</FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Interpretation</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;When
a reference is made in this Agreement to an Article, a Section, Exhibit or Schedule, such reference shall be to an Article of, a Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "</FONT><FONT SIZE=2><I>include</I></FONT><FONT SIZE=2>," "</FONT><FONT SIZE=2><I>includes</I></FONT><FONT SIZE=2>" or
"</FONT><FONT SIZE=2><I>including</I></FONT><FONT SIZE=2>" are used in this Agreement, they shall be deemed to be followed by the words "</FONT><FONT SIZE=2><I>without
limitation</I></FONT><FONT SIZE=2>." The words "</FONT><FONT SIZE=2><I>hereof</I></FONT><FONT SIZE=2>," "</FONT><FONT SIZE=2><I>herein</I></FONT><FONT SIZE=2>" and
"</FONT><FONT SIZE=2><I>hereunder</I></FONT><FONT SIZE=2>" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;The
parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of
any provision of this Agreement. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>[s</FONT><FONT
SIZE=2><I>ignature page follows</I></FONT><FONT SIZE=2>] </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>43</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. </FONT></P>

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<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2>NEKTAR THERAPEUTICS</FONT></TD>
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<TD WIDTH="39%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>NEVAN ELAM</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Name: Nevan Elam<BR>
Title: Senior VP Corporate Operations</FONT></TD>
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<TD WIDTH="39%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=2><BR><FONT SIZE=2>OSKI ACQUISITION CORPORATION</FONT></TD>
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<TD WIDTH="39%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
By:</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>NEVAN ELAM</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Name: Nevan Elam<BR>
Title: Senior Vice President</FONT></TD>
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<TD COLSPAN=2><BR><FONT SIZE=2>AEROGEN,&nbsp;INC.</FONT></TD>
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&nbsp;</FONT></TD>
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By:</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>JOHN C HODGEMAN</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Name: John C. Hodgeman<BR>
Title: President&nbsp;&amp; CEO</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2>44</FONT></P>

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<P><br><A NAME="05PAL1424_2">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_le1423_1">AGREEMENT AND PLAN OF MERGER</A></FONT><BR>
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<FONT SIZE=2><A HREF="#toc_lm1423_1">ARTICLE 4 Representations and Warranties of Parent and Merger Sub</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_lm1423_2">ARTICLE 5 Covenants and Agreements</A></FONT><BR>
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<TYPE>EX-99.2
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<FILENAME>a2162258zex-99_2.htm
<DESCRIPTION>EXHIBIT 99.2
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<P ALIGN="RIGHT"><FONT SIZE=2><B>Exhibit 99.1  </B></FONT></P>

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<TD WIDTH="11%"><FONT SIZE=2><B>Contacts:</B></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="87%"><FONT SIZE=2>Nektar&#151;Joyce Strand (650)&nbsp;631-3138<BR>
Aerogen&#151;Robert Breuil (650)&nbsp;864-7431</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2><B>Nektar to Acquire Aerogen to Broaden Pulmonary Technology Base&reg; and Strengthen Capabilities for Treatment in the Acute Care Setting  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>San Carlos, Calif.&nbsp;&amp; Mountain View, Calif., August&nbsp;15, 2005</B></FONT><FONT SIZE=2>&#151;Nektar Therapeutics (Nasdaq:NKTR) and
Aerogen,&nbsp;Inc. (Pink Sheets:AEGN.PK) announced today that they have signed a definitive merger agreement whereby Nektar will acquire Aerogen in a transaction valued at approximately
$32&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"The
acquisition of Aerogen broadens Nektar's pulmonary delivery capabilities by adding advanced inhaleable liquid drug technology to Nektar's base of leading inhaleable powdered drug
technology," said Ajit S. Gill, Nektar president and chief executive officer. "Over the last ten years, Aerogen has built the capabilities for treatment of acute care pulmonary conditions, an area of
interest for us for proprietary products. The addition of Aerogen's technology, people, products, programs, and intellectual property with a patent portfolio of more than 35 patents will extend the
range of inhaleable proprietary opportunities for Nektar. We plan to provide greater detail on the Aerogen acquisition and how it fits with our proprietary products program at our investor meeting on
September&nbsp;29, 2005." </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aerogen
develops products based on its OnQ&reg; Aerosol Generator technology to improve the treatment of respiratory disorders in the acute care setting. Nektar enables
high-value, differentiated therapeutics with its industry-leading drug delivery technologies, including inhaleable powdered drugs for treating systemic and local lung indications. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"We
believe this transaction is in the best interests of our stockholders, customers and patients," said John C. Hodgman, Aerogen president and chief executive officer. "As a leader in
advanced inhaleable powdered drug products, Nektar has an understanding of the value and potential of Aerogen's advanced inhaleable liquid capabilities. Aerogen technology and expertise will
facilitate the development of certain product opportunities that best lend themselves to an inhaleable liquid delivery system." </FONT></P>

<P><FONT SIZE=2><B>Terms of the Agreement  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The transaction is structured as a cash and stock transaction, with Nektar providing approximately $8&nbsp;million in cash and approximately $24&nbsp;million
in stock with the option of paying all in cash as described below. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the terms of the agreement, and upon completion of the acquisition, each share of common stock will be exchanged for a total of approximately $0.75 per common share, comprising
either $0.1875 in cash, and approximately $0.5625 per common share in Nektar common stock (valued based on the volume-weighted average price of Nektar common stock during the twenty trading days ended
two days prior to the completion of the acquisition) or all cash as discussed below. Also upon completion of the acquisition, each share of Aerogen A-1 preferred stock will be exchanged
for a total of approximately $29.0251 per A-1 Preferred share, comprising either $7.2563 in cash, and approximately $21.7688 in Nektar common stock (valued as described above), or all
cash. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
any time prior to September&nbsp;15, 2005, Nektar may, at its sole discretion, elect to pay the entire consideration in cash, resulting in payments to Aerogen stockholders of
approximately $0.75 in cash per common share and approximately $29.0251 in cash per A-1 Preferred share. It is anticipated that the merger will be treated as a taxable transaction. The
premium over the average closing price per common share over the last 30 trading days is 50%. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
boards of directors of Nektar and Aerogen have approved the transaction, which is subject to Aerogen shareholders' approval and other customary closing conditions. The transaction is
anticipated </FONT></P>

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<P><FONT SIZE=2>to
be consummated sometime in the fourth quarter of this year. The transaction does not affect Nektar's previous guidance for year-end 2005 cash balance of greater than
$270&nbsp;million. </FONT></P>

<P><FONT SIZE=2><B>About Aerogen  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aerogen,&nbsp;Inc. develops products based on its OnQ Aerosol Generator technology to improve the treatment of respiratory disorders in the acute care setting.
Aerogen has commercialized its Aeroneb&reg; Micropump Nebulizer products for hospital, home and pre-clinical use through a network of world-class respiratory distribution partners
that includes Puritan-Bennett, Respironics, Maquet, Cardinal Health, Evo Medical Solutions, and Buxco. Aerogen also has development collaborations with pharmaceutical and biotechnology companies for
use of its technology in the delivery of novel compounds that treat respiratory and other disorders. Founded in 1990, Aerogen has its headquarters in Mountain View, Calif. with a facility in Galway,
Ireland. In 2004, Aerogen reported revenue of $6.2&nbsp;million and net loss of $10.1&nbsp;million. For more information, visit www.aerogen.com. </FONT></P>

<P><FONT SIZE=2><B>About Nektar  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nektar Therapeutics enables high-value, differentiated therapeutics with its industry-leading drug delivery technologies, expertise and manufacturing
capabilities. The world's top biotechnology and pharmaceutical companies are developing new and better therapeutics using Nektar's advanced technologies and know-how. Nektar also develops
its own products by applying its drug delivery technologies and its expertise to existing medicines to enhance performance, such as improving efficacy, safety and compliance. For more information,
visit www.nektar.com. </FONT></P>

<P><FONT SIZE=2><B>Additional Information about the Merger and Where to Find It  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with Nektar Therapeutics' proposed acquisition of Aerogen,&nbsp;Inc. (the "Acquisition"), Aerogen intends to file&nbsp;a proxy statement and
other relevant materials and Nektar intends to file&nbsp;a registration statement/prospectus and other relevant materials, with the Securities and Exchange Commission (the "SEC"), in the event that
Nektar does not make the election to pay all cash in the transaction. INVESTORS AND SECURITY HOLDERS OF AEROGEN ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND THE OTHER RELEVANT MATERIALS WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NEKTAR, AEROGEN AND THE ACQUISITION. The proxy statement/prospectus and other relevant materials (when they become
available), and any other documents filed by Nektar or Aerogen with the SEC, may be obtained free of charge at the SEC's WEB site at </FONT><FONT SIZE=2><I>www.sec.gov.</I></FONT><FONT SIZE=2> In
addition, investors and security holders may obtain free copies of the documents filed with the SEC by Nektar by directing a written request to: Nektar Therapeutics, 150 Industrial Road, San Carlos,
CA 94070, ATTN: Investor Relations. Investors and security holders may obtain free copies of the documents filed with the SEC by Aerogen by contacting Aerogen,&nbsp;Inc., 2071 Stierlin Court, Suite
100, Mountain View, CA 94043, ATTN: Investor Relations. Investors and security holders are urged to read the proxy statement, prospectus and the other relevant materials when they become available
before making any voting or investment decision with respect to the Acquisition. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nektar,
Aerogen and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Aerogen in favor of the
Acquisition. Information about those executive officers and directors of Nektar and their ownership of Nektar common stock is set forth in the proxy statement for Nektar's 2005 Annual Meeting of
Stockholders, which was filed with the SEC on April&nbsp;14, 2005. Information about the executive officers and directors of Aerogen and their ownership of Aerogen common stock is set forth in the
proxy statement for Aerogen's Form&nbsp;10-K, which was filed with the SEC on April&nbsp;15, 2005, as amended by Amendment No.&nbsp;1 on Form&nbsp;10-K/A, which was
filed with the SEC on April&nbsp;19, 2005. Investors and security holders may obtain more detailed information regarding the direct and indirect interests of Nektar, Aerogen and their respective
executive officers and directors in the Acquisition by reading the proxy statement/prospectus regarding the Acquisition when it becomes available. </FONT></P>

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<P><FONT SIZE=2><B>Aerogen Safe Harbor  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent any statements made in this release relate to information that is not historical, these statements are necessarily forward-looking. As such, they
are subject to the occurrence of many events outside of Aerogen's control and other uncertainties, and are subject to various risk factors that could cause Aerogen's actual results to differ
materially from those expressed in any forward-looking statement. The risk factors include, without limitation, the risk that the conditions to the Acquisition are not satisfied, that the Acquisition
does not close, the need for additional funding, the inherent risks of product development, clinical outcomes, regulatory risks and risks related to proprietary rights, market acceptance and
competition, and are described in Aerogen's reports and other filings with the SEC, including Aerogen's Annual Report on Form&nbsp;10-K/A for the year ended December&nbsp;31, 2004,
filed with the SEC on April&nbsp;19, 2005, and Aerogen's Quarterly Report filed on Form&nbsp;10-Q for the quarter ended June&nbsp;30, 2005, filed with the SEC on July&nbsp;27,
2005. Aerogen does not undertake any obligation to update forward-looking statements. </FONT></P>

<P><FONT SIZE=2><B>Nektar Safe Harbor  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This release contains forward-looking statements that reflect management's current views as to Nektar's business strategy, product and technology development
plans and funding, collaborative arrangements, clinical trials, and other future events and operations. These forward-looking statements involve uncertainties and other risks that are detailed in
Nektar's reports and other filings with the SEC, including its Annual Report on Form&nbsp;10-K, as amended, for the year ended December&nbsp;2004 and its Quarterly Report on
10-Q for the quarter ended June&nbsp;30, 2005. Actual results could differ materially from these forward-looking statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>#
# # </FONT></P>

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