AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

EXECUTION COPY

A GREEMENT AND P LAN OF M ERGER

BY AND AMONG

A PPLERA C ORPORATION ,

B AROLO A CQUISITION , I NC .,

B ERKELEY H EART L AB , I NC .,

AND

J AMES C ACCAVO , AS THE S HAREHOLDER R EPRESENTATIVE

DATED AS OF

A UGUST  31, 2007

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THE FOLLOWING SCHEDULES AND EXHIBITS HAVE BEEN OMITTED FROM THIS EXHIBIT.

Schedules and exhibits are omitted in accordance with Item 601(b)(2) of Regulation S-K. Schedules and exhibits will be provided by the Registrant to the Securities and Exchange Commission upon request.

EXHIBITS

Company Disclosure Schedule

Schedules to Sections of the Agreement:

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A GREEMENT AND P LAN OF M ERGER

This A GREEMENT AND P LAN OF M ERGER (this “ Agreement ”) is made and entered into as of August 31, 2007 by and among Applera Corporation, a Delaware corporation (“ Parent ”), Barolo Acquisition, Inc., a California corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”), Berkeley HeartLab, Inc., a California corporation (the “ Company ”), and James Caccavo (the “ Shareholder Representative ”).

R ECITALS

WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the Company have approved and adopted this Agreement, and declared advisable the merger of Merger Sub with and into the Company with the Company continuing as the surviving corporation (the “ Merger ”) upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of California, as amended (“ California Law ”).

WHEREAS, the Boards of Directors of the Company and Merger Sub have recommended this Agreement for adoption and approval by their respective shareholders.

WHEREAS, concurrently with the execution of this Agreement, holders of (i) a majority of the outstanding shares of Company Common Stock and (ii) a majority of the outstanding shares of Company Preferred Stock (calculated on an as-converted to Company Common Stock basis) shall execute and deliver an Action by Written Consent (the “ Shareholder Written Consent ”), pursuant to which each such shareholder of the Company has irrevocably approved this Agreement, the Merger and the other transactions contemplated hereby for all purposes of and under applicable Law and the Company’s articles of incorporation and bylaws and such Shareholder Written Consents shall have been filed with the secretary of the Company as provided in Section 603 of California Law.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth in this Agreement, the Parties agree as follows:

Article 1

D EFINITIONS

1.1        Certain Definitions.   For purposes of this Agreement, the following terms shall have the following meanings:

  1.1.1        “ Action ” shall mean any complaint, petition, suit, arbitration, or proceeding, whether civil or criminal, judicial or administrative, at law or in equity.

  1.1.2         “Business Day” shall mean any day other than (i) a Saturday or Sunday or (ii) a day on which banks in San Francisco, California are required or authorized by Law or Order to be closed.

  1.1.3        “ Class A Voting Common Stock ” shall mean the Class A Voting Common Stock, without par value, of the Company.

  1.1.4        “ Class B Non-Voting Common Stock ” shall mean the Class B Non-Voting Common Stock, without par value, of the Company.

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  1.1.5        “ COBRA ” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

  1.1.6        “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

  1.1.7        “ Company Capital Stock ” shall mean the Company Common Stock and Company Preferred Stock.

  1.1.8        “ Company Common Stock ” shall mean the Class A Voting Common Stock.

  1.1.9        “ Company Debt ” shall mean the amount payable by the Company as debtor, borrower, issuer, guarantor, or surety pursuant to an agreement or instrument involving or evidencing money borrowed, the advance of credit, or pursuant to a lease that is required to be capitalized in accordance with GAAP; provided , however, that “Company Debt” shall not include accounts payable not evidenced by a promissory note or other debt contract.

  1.1.10        “ Company Employee Plan ” shall mean any material current or former plan, program, contract or agreement providing for compensation, severance, termination pay, performance awards, stock or stock-related awards, fringe benefits or other benefits or remuneration of any kind, whether written or unwritten, funded or unfunded, which is or has been maintained, contributed to, or required to be contributed to, by the Company for the benefit of any Employee or any relative or dependent of any Employee and under which the Company has or in the future may have any Liability with respect to such Employee, relative or dependent, including without limitation (i) each “employee benefit plan” within the meaning of Section 3(3) of ERISA, and (ii) any stock, stock option, bonus, deferred compensation, pension, profit-sharing, commission, retirement, severance, retention, change of control, or similar plan or contract.

  1.1.11        “ Company’s Knowledge ” shall mean the actual knowledge of Frank Ruderman, Andy Ambrose, Jonathan Wolin, Michael Mercer, Chris Hall, Cleland Landolt and Russ Warnick after due inquiry of those persons directly reporting to such persons.

  1.1.12        “ Company Material Adverse Change ” means a change which would have a Material Adverse Effect on the Company. A violation, circumstance, change, effect or other matter is deemed to have a “Material Adverse Effect” on the Company, if such violation, circumstance, change, effect or other matter, either individually or in the aggregate with all other violations, circumstances, changes, effects and other matters, has a material adverse effect on the condition (financial or otherwise) of the business, assets (including intangible assets) and Liabilities, financial condition or results of operations of the Company; provided , however , 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 a Material Adverse Effect: (i) any changes affecting general economic, political or financial market conditions, foreign or domestic, which changes do not disproportionately affect the Company, (ii) any changes generally affecting the industry in which the Company’s business is conducted, which changes do not disproportionately affect the Company, (iii) in and of itself, failure by the Company to meet internal or other estimates, predictions, projections or forecasts of revenue, net income or any other measure of financial performance, including any projections in that certain “Confidential Information Statement” dated November, 2006 or otherwise provided by Wachovia Securities or the Company, (iv) any changes (including any claim, litigation, cancellation of or delay in customer orders, reduction in revenues or income, disruption of business relationships (contractual or otherwise) or loss of employees) arising from or attributable or relating to (A) the announcement or pendency of any of the transactions contemplated by this Agreement or the identity or involvement of Parent, (B) any breach by Parent or Merger Sub of this Agreement or (C) the introduction or success of

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any product that competes with any product of the Company, (v) additions, amendments, changes or modifications to any Law or GAAP or the regulatory or interpretative guidance relating thereto (including, without limitation, the action of any regulatory agency), (vi) any action taken by the Company at Parent’s request or pursuant to this Agreement or as to which Parent has expressly consented in writing, or (vii) acts of war or terrorism or any escalation or material worsening of any such acts of war or terrorism existing as of the date hereof.

  1.1.13        “ Company Option ” shall mean each outstanding and unexercised option or right to purchase shares of Company Common Stock, whether or not vested or exercisable, granted under the Company Option Plan.

  1.1.14        “ Company Option Plan ” shall mean the Company’s 1996 Stock Option Plan, as amended.

  1.1.15        “ Company Preferred Stock ” shall mean the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock.

  1.1.16        “ Company Shareholders ” shall mean the holders of the Company Capital Stock.

  1.1.17        “ Company Vested Option ” shall mean each Company Option that is vested and exercisable as of immediately prior to the Effective Time (after giving effect to any accelerated vesting in connection with the Merger).

  1.1.18        “ Company Warrant ” shall mean each outstanding unexercised warrant to purchase shares of Company Capital Stock.

  1.1.19         “Controlled Group Liability” shall mean any and all liabilities (i) under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, or (iv) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code.

  1.1.20        “ Employee ” shall mean any current or former employee, officer or director of the Company.

  1.1.21        “ Employee Agreement ” shall mean each material employment, retention, severance, change-of-control, consulting and indemnification agreement or contract between the Company and any Employee or consultant.

  1.1.22        “ Encumbrance ” shall mean any lien, pledge, charge, mortgage, security interest, encumbrance or restriction on the transfer of an asset.

  1.1.23        “ Environmental Claim ” shall mean any written notice alleging potential Liability arising out of, based on or resulting from (i) the presence, or release of any Environmental Material at any location, whether or not owned by that Party or any of its affiliates or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

  1.1.24        “ Environmental Law ” shall mean any Law relating to the protection of the environment.

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  1.1.25        “ Environmental Material ” shall mean any substance that has been designated by any Governmental Entity or by applicable Law to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, and all other substances or constituents that are regulated by, or form the basis of Liability under, any Environmental Law.

  1.1.26        “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

  1.1.27        “ ERISA Affiliate ” shall mean any other Person under common control with the Company within the meaning of Sections 414(b), (c), (m) or (o) of the Code and the regulations issued thereunder.

  1.1.28        “ FMLA ” shall mean the Family Medical Leave Act of 1993, as amended.

  1.1.29        “ GAAP ” shall mean United States generally accepted accounting principles.

  1.1.30        “ Governmental Entity ” shall mean any domestic court, administrative agency or commission or other governmental or regulatory authority or instrumentality.

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

  1.1.32        “ Individual Claim ” shall mean a single and isolated occurrence of an event which gives rise to an indemnification claim, and specifically does not include a series of related events or a repeated occurrence of the same event.

  1.1.33        “ Intellectual Property ” means (i) patents, patent applications and statutory invention registrations, developments, technology, methodology, inventions, apparatuses, materials, composition of matter, and all related improvements thereto, (ii) trademarks, service marks, trade dress, logos, trade names, corporate names, domain names and other source identifiers registrations and applications for registration thereof, (iii) copyrightable works, copyrights, computer applications, programs, hardware, algorithm, software (in source code and object code), systems, databases, specifications, web sites, user interfaces, and related items and registrations and applications for registration thereof, (iv) trade secrets under applicable Law, including confidential and proprietary information and know-how, and (v) all proprietary rights in any of the foregoing.

  1.1.34        “ IRS ” shall mean the Internal Revenue Service.

  1.1.35        “ Law ” shall mean any federal or applicable state statute, constitution, ordinance, code, rule, regulation, or requirement issued, enacted, adopted or promulgated by or under the authority of any Governmental Entity.

  1.1.36        “ Liability ” shall mean, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether direct or indirect, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined or determinable of such Person.

  1.1.37         “Material Contract” has the meaning set forth in Section 3.16.3 hereof.

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  1.1.38        “ Merger Sub Common Stock ” shall mean the common stock, without par value, of Merger Sub.

  1.1.39        “ Multiemployer Plan ” shall mean any “Pension Plan” (as defined below) which is a “multiemployer plan,” as defined in Section 3(37) of ERISA.

  1.1.40        “ Order ” shall mean any binding decree, injunction, judgment, order, ruling, assessment or writ issued by a Governmental Entity.

  1.1.41        “ Parent Material Adverse Change ” means any material adverse change in the ability of Parent or Merger Sub to perform their respective obligations under this Agreement or on the ability of Parent and Merger Sub to consummate any of the transactions contemplated by this Agreement.

  1.1.42        “ Parties ” shall mean Parent, Merger Sub, the Company and the Shareholder Representative.

  1.1.43        “ Pension Plan ” shall mean each Company Employee Plan which is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

  1.1.44        “ Permitted Encumbrance ” shall mean (i) mechanics’, carriers’, workers’ or repairmen’s liens arising in the ordinary course of business and securing payments or obligations that are not delinquent, (ii) Encumbrances for Taxes, assessments and other governmental charges which are not due and payable, and (iii) Encumbrances that arise under zoning, land use and other similar Laws.

  1.1.45        “ Person ” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Entity.

  1.1.46        “ Required Shareholder Vote ” shall mean (A) the affirmative vote or written consent of the holders of a majority of the outstanding shares of Company Common Stock and (B) the affirmative vote or written consent of the holders of a majority of the outstanding shares of the Company Preferred Stock (voting together as a single class on an as-converted to Company Common Stock basis).

  1.1.47        “ Series A Preferred Stock ” shall mean the Series A Preferred Stock, without par value, of the Company.

  1.1.48        “ Series B Preferred Stock ” shall mean the Series B Preferred Stock, without par value, of the Company.

  1.1.49        “ Series C Preferred Stock ” shall mean the Series C Preferred Stock, without par value, of the Company.

  1.1.50        “ Series D Preferred Stock ” shall mean the Series D Preferred Stock, without par value, of the Company.

  1.1.51        “ Subsidiary ” of a specified entity shall mean any corporation, partnership, limited liability company, joint stock company, joint venture or other legal entity of which the specified entity (either alone or through or together with any other Subsidiary) owns, directly or indirectly, at least a majority of the stock or other equity or partnership interests and the holders of which are generally

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entitled to vote for the election of the Board of Directors or other governing body of such corporation or other legal entity.

  1.1.52        “ Tax ” or “ Taxes ” shall mean (i) any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, stamp duty, stamp duty land tax, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, (ii) any interest, penalties, fines, additions to tax or additional amounts imposed by any Governmental Entity in connection with any item described in clause (i), (iii) any successor or transferee liability in respect of any items described in clauses (i) and/or (ii) and (iv) any amounts payable under any tax sharing agreement or contract or addition thereto.

  1.1.53        “ Tax Return ” shall mean any return, declaration, report, claim for refund, notice, accounting computations, assessment, election or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

  1.1.54        “ Transaction Documents ” shall mean, collectively, this Agreement and each other agreement, document or certificate and instrument required to be executed in connection with the signing of this Agreement and referred to herein.

Article 2

T HE M ERGER

2.1        The Merger.   Upon the terms and subject to the conditions of this Agreement and the applicable provisions of California Law, at the Effective Time, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation in the Merger (the “ Surviving Corporation ”).

2.2        Closing; Effective Time.   Unless otherwise mutually agreed in writing by the Company and Parent, the closing of the Merger (the “ Closing ”) shall take place at the offices of O’Melveny & Myers LLP, 2765 Sand Hill Road, Menlo Park, CA 94025, at 1:00 p.m. local time, (the “ Closing Date ”) promptly following the satisfaction or waiver of the conditions set forth in Article 8 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions). Subject to the provisions of this Agreement, as soon as possible following the Closing, the Parties shall cause an agreement of merger consistent with this Agreement, together with an officer’s certificate of each constituent corporation, in each case in a form reasonably satisfactory to the Parties and in accordance with the relevant provisions of the California Law (collectively, the “ Merger Documents ”), to be executed and filed with the Secretary of State of the State of California. The Merger will become effective at such time as the Merger Documents have been duly filed with the Secretary of State of the State of California or at such other time as expressly specified in the Merger Documents (the “ Effective Time ”).

2.3        Effect of the Merger.   At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Merger Documents and the applicable provisions of California Law. Without limiting the generality of the foregoing, at the Effective Time, all the property, 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.

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2.4        Articles of Incorporation; Bylaws.

  2.4.1        The Merger Documents shall provide that, at the Effective Time, the Articles of Incorporation of the Surviving Corporation shall be amended and restated to read the same as the Articles of Incorporation of Merger Sub.

  2.4.2        At the Effective Time, the Bylaws of the Surviving Corporation shall be amended and restated to read the same as the Bylaws of Merger Sub, until thereafter amended.

2.5        Directors and Officers.   The initial directors and officers of the Surviving Corporation shall be the directors and officers of Merger Sub.

2.6        Merger Consideration.   For purposes of this Agreement, the following terms shall have the following meanings:

  2.6.1        “ Total Merger Consideration ” shall mean $195,000,000, minus (i) the amount of all Transaction Costs, and minus (ii) the excess, if any, of the Company Debt on the Closing Date over the Company Debt on the date of this Agreement.

  2.6.2        “ Total Closing Consideration ” shall mean the Total Merger Consideration minus the Escrow Amount.

  2.6.3        “ Escrow Amount ” shall mean $20,000,000.

  2.6.4        “ Fully Diluted Common Stock ” shall mean the sum of (i) the aggregate number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time, including each share of Company Common Stock issued upon the conversion of the Company Preferred Stock immediately prior to the Effective Time, (ii) the aggregate number of shares of Company Common Stock issuable upon the exercise of Company Warrants issued and outstanding immediately prior to the Effective Time and (iii) the aggregate number of shares of Company Common Stock issuable upon the exercise or conversion of Company Options as of the Effective Time.

  2.6.5        “ Per Share Escrow Consideration ” shall mean a cash amount determined by dividing (i) the Escrow Amount by (ii) the Fully Diluted Common Stock.

  2.6.6        “ Per Share Closing Consideration ” shall mean a cash amount determined by dividing (i) the Total Closing Consideration by (ii) the Fully Diluted Common Stock.

  2.6.7        “ Transaction Costs ” shall mean (i) all fees, costs and expenses in excess of the amounts, if any, accrued on the Company Balance Sheet payable to any brokers, financial advisors, consultants, accountants, attorneys or other professionals engaged by the Company in connection with the process conducted by the Company leading to and including the structuring, negotiation or consummation of the transactions contemplated by this Agreement and the other Transaction Documents, (ii) deal or transaction bonuses or similar compensation (including “sales upside bonuses”) payable by the Company in connection with the Closing and (iii) $100,000 for fees payable to the Shareholder Representative for the performance of his duties and responsibilities under this Agreement and the Escrow Agreement.

2.7         [Reserved].

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2.8        Effect on Securities.   Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of Company Capital Stock:

  2.8.1        Each share of Company Common Stock issued and outstanding as of the Effective Time, including each share of Company Common Stock issued upon the conversion of the Company Preferred Stock immediately prior to the Effective Time and upon exercise of Company Warrants immediately prior to the Effective Time (including each share of Company Common Stock issued upon the conversion of Company Preferred Stock issued upon the exercise of Company Warrants immediately prior to the Effective Time), other than any shares of Company Common Stock to be canceled pursuant to Section 2.8.5 and any Dissenting Shares (as defined, and to the extent provided in, Section 2.12.1), will be automatically converted into the right to receive, (i) at the Effective Time, the Per Share Closing Consideration, in cash to the holder thereof, without interest thereon and (ii) the Per Share Escrow Consideration, pursuant to the terms of this Agreement and the Escrow Agreement.

  2.8.2        Prior to the Closing, the Company shall give notice in writing to each holder of an outstanding Company Option immediately prior to the Effective Time that the vesting of all Company Options shall be accelerated immediately prior to the Effective Time (such acceleration to be subject to the closing of the Merger). Each Company Option outstanding and unexercised immediately prior to the Effective Time will be cancelled and the holder thereof shall have the right to receive in exchange therefor an amount (subject to withholding for all applicable Taxes) equal to (i)(A) the excess, if any, of (1) the Per Share Closing Consideration, minus (2) the per share exercise price under such Company Option, multiplied by (B) the total number of shares of Company Common Stock that are issuable upon the exercise of such Company Option and (ii) the Per Share Escrow Consideration multiplied by the total number of shares of Company Common Stock that are issuable upon the exercise of such Company Option, pursuant to the terms of this Agreement and the Escrow Agreement. Payment of such amounts shall be made in accordance with and subject to the terms of this Agreement and the Escrow Agreement. As of the Effective Time, the Company Option Plan and any other Company plan, program or arrangement that provides for compensation in the form of equity-based grants shall terminate.

  2.8.3        Immediately prior to the Effective Time, any Company Warrant then outstanding and not expired shall, at the Effective Time and in accordance with the terms of such Warrant, be converted into the right to receive, subject to Section 2.8.4 and upon compliance with the requirements of Section 2.9, an amount (subject to withholding for all applicable Taxes) equal to (i)(A) the excess, if any, of (1) the Per Share Closing Consideration, minus (2) the per share exercise price under such Company Warrant, multiplied by (B) the total number of shares of Company Common Stock that are issuable upon the exercise of such Company Warrant (assuming that any shares of Company Preferred Stock issuable upon the exercise of such Company Warrants were converted into shares of Company Common Stock immediately prior to the Effective Time) and (ii) the Per Share Escrow Consideration multiplied by the total number of shares of Company Common Stock that are issuable upon the exercise of such Company Warrant (assuming that any shares of Company Preferred Stock issuable upon the exercise of such Company Warrants were converted into shares of Company Common Stock immediately prior to the Effective Time), pursuant to the terms of this Agreement and the Escrow Agreement (collectively, the “ Warrant Consideration ”). Payment of such amounts shall be made in accordance with and subject to the terms of this Agreement and the Escrow Agreement. If any Company Warrant is exercised prior to the Effective Time, the holder of such Warrant shall have no rights under this Section 2.8.3.

  2.8.4        Each holder of Company Warrants that, pursuant to their terms, terminate at the Effective Time, shall receive in respect of its Company Warrants pursuant to this Section 2.8.4, the

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Warrant Consideration paid by the Payment Agent on behalf of the Surviving Corporation by check or wire transfer in accordance with the terms of this Agreement and the Escrow Agreement. Each holder of Company Warrants that do not, pursuant to their terms, terminate at the Effective Time, shall receive its Warrant Consideration only upon exchange of such Company Warrants in accordance with this Agreement.

  2.8.5        Each share of Company Capital Stock held by the Company or by Parent or Merger Sub immediately prior to the Effective Time, shall be canceled and extinguished without any conversion thereof.

  2.8.6        Each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of common stock, no par value per share, of the Surviving Corporation. Following the Effective Time, each certificate evidencing ownership of shares of Merger Sub Common Stock shall evidence ownership of such shares of capital stock of the Surviving Corporation.

2.9        Exchange of Certificates.

  2.9.1        At the Effective Time, Parent shall deliver to LaSalle Bank, N.A. or such other bank, trust company or other institution reasonably acceptable to Parent and the Company (the “ Payment Agent ”), for payment in accordance with this Article 2, an amount in cash equal to the sum of all amounts payable at Closing to the holders of all shares of Company Common Stock, all Company Options and all Company Warrants, pursuant to Section 2.8 (such aggregate amount of cash, less the amount deposited into the Escrow Fund pursuant to Section 7.1 hereof, constituting the “ Payment Fund ”).

  2.9.2        Promptly following the Effective Time, the Payment Agent shall mail to each holder of record of shares of Company Common Stock, Company Options and Company Warrants: (i) a notice of the effectiveness of the Merger, (ii) a letter of transmittal in the form attached hereto as Exhibit A (the “ Letter of Transmittal ”), and (iii) instructions for use in surrendering the certificates representing the former shares of Company Common Stock and/or the agreements representing the former Company Options and Company Warrants (collectively, the “ Certificates ”), and for receiving the applicable merger consideration in respect thereof. Upon surrender to the Payment Agent of a Certificate, together with such Letter of Transmittal duly executed and completed in accordance with the instructions thereto (i) the holder of such Certificate shall be entitled to receive in exchange therefor the merger consideration payable to such holder of Company Common Stock, Company Option or Company Warrant, as applicable, pursuant to Section 2.8 and less any amounts due to the Company in respect of shareholder and employee loans and (ii) the Certificate so surrendered shall forthwith be canceled. The Payment Agent shall, promptly following receipt of each properly surrendered Certificate, cause the payment described in the preceding sentence to be made to the holder of such Certificate by check or wire transfer to the account designated by such holder in the Letter of Transmittal delivered with such Certificate.

  2.9.3        Until surrendered in accordance with the provisions of this Section 2.9, each outstanding Certificate (other than Certificates representing Dissenting Shares or shares of Company Capital Stock to be canceled pursuant to Section 2.8.5) will be deemed from and after the Effective Time, for all corporate purposes, to evidence only the right to receive the applicable portion of the Total Merger Consideration. No interest will be paid or accrued on any portion of the Total Merger Consideration.

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  2.9.4        If any Certificate shall have been lost, stolen or destroyed, the Person who is the record owner of such Certificate shall deliver to the Surviving Corporation an affidavit with respect to such loss, theft or destruction. The Surviving Corporation may, in its discretion and as a condition precedent to the delivery of any merger consideration to such owner, require such Person to indemnify Parent and the Surviving Corporation against any claim that may be made against Parent or the Surviving Corporation with respect to the Certificate alleged to have been lost, stolen or destroyed. The Payment Agent shall not deliver to such Person any merger consideration attributable to any such lost, stolen or destroyed Certificate until such Person shall have complied with this Section 2.9.4.

  2.9.5        Any portion of the Payment Fund which remains undistributed on the date that is 180 days after the Effective Time will be delivered to Parent, if requested; provided that such delivery shall not in any way relieve Parent of its obligation to pay the merger consideration as set forth in Section 2.6 and Section 2.8 hereof to any Company Shareholders that tender their Company Capital Stock, Company Warrants or Company Options for payment thereafter.

  2.9.6        Notwithstanding anything to the contrary in this Section 2.9, neither the Payment Agent, Parent nor the Surviving Corporation shall be liable to a holder of Company Capital Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.

2.10        No Further Ownership Rights.   The applicable portion of the Total Merger Consideration paid upon the surrender of Certificates or payable thereafter in accordance with this Agreement and the Escrow Agreement, shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock, Company Options and Company Warrants formerly represented thereby or issuable upon exercise thereof. After the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of any shares of Company Capital Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article 2.

2.11        Taking of Necessary Action; Further Action.   If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, the officers and directors of the Surviving Corporation are authorized in the name and on behalf of the Company to take all such lawful and necessary action. Parent shall cause Merger Sub to perform all of its obligations relating to this Agreement and the transactions contemplated hereby.

2.12        Dissenters’ Rights.

  2.12.1        Notwithstanding any provision of this Agreement to the contrary other than Section 2.12.2, any shares of Company Capital Stock held by a holder who duly and validly demands appraisal of such shares in accordance with the provisions of Chapter 13 of the California Law and is in compliance with all the provisions of Chapter 13 of the California Law concerning the right of such holder to demand appraisal of such shares in connection with the Merger and who, as of the Effective Time, has not effectively withdrawn or lost such dissenters’ rights (“ Dissenting Shares ”), shall not be converted into or represent a right to receive any merger consideration pursuant to Section 2.8, but instead shall be converted into the right to receive only such consideration as may be determined to be due with respect to such Dissenting Shares under Chapter 13 of the California Law. From and after the Effective Time, a holder of Dissenting Shares shall not be entitled to exercise any of the voting rights or other rights of a shareholder of the Surviving Corporation.

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  2.12.2        Notwithstanding the provisions of Section 2.8.1, if any holder of shares of Company Capital Stock who demands appraisal or purchase of such shares under Chapter 13 of the California Law shall effectively withdraw or lose (through failure to perfect or otherwise) the right to appraisal or purchase, then, as of the later of the Effective Time and the occurrence of such event, such holder’s shares shall no longer be Dissenting Shares and shall automatically be converted into and represent only the right to receive the applicable merger consideration, as provided in Section 2.8, without interest thereon, upon surrender of the certificate representing such shares in accordance with Section 2.9.

  2.12.3        The Company shall give Parent (i) prompt notice of any written demands for appraisal or purchase of any shares of Company Capital Stock, withdrawals of such demands, and any other instruments served pursuant to Chapter 13 of the California Law and received by the Company which relate to any such demand for appraisal or purchase and (ii) the opportunity to participate in all negotiations and proceedings which take place prior to the Effective Time with respect to demands for appraisal or purchase under Chapter 13 of the California Law. The Company shall not, except with the prior written consent of Parent, either (y) voluntarily make any payment with respect to any demands for appraisal or purchase of Company Capital Stock or offer to settle or settle any such demands or (z) make any offer to buy, or accept any offer to sell, any shares of Company Capital Stock.

Article 3

R EPRESENTATIONS AND W ARRANTIES OF THE C OMPANY

As of the date hereof, the Company represents and warrants to Parent and Merger Sub as set forth in this Article 3, subject to any exceptions set forth in the disclosure schedule delivered by the Company to Parent dated as of the date hereof (the “Company Disclosure Schedule ”).

3.1        Organization; Subsidiaries.  

  3.1.1        The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of California; (ii) has the corporate or other power and authority to own, lease and operate its assets and property and to carry on its business as now being conducted; and (iii) is duly qualified to do business in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification necessary. Section 3.1.1 of the Company Disclosure Schedule sets forth a true and complete list of the jurisdictions in which the Company currently conducts business.

  3.1.2        The Company has no Subsidiaries. Except as set forth in Section 3.1.2 of the Company Disclosure Schedule, the Company does not own directly or indirectly any capital stock of, or any equity interest of any nature in, any Person. The Company has not agreed nor is it obligated to make, nor is bound by any written agreement or contract as in effect as of the date hereof to make any future investment in or capital contribution to any other Person. The Company has not guaranteed any obligation of any of the Persons in which it owns or has owned any equity or other financial interest.

  3.1.3        The Company has delivered to Parent true and complete copies of the Articles of Incorporation and Bylaws of the Company, in each case as amended to date (collectively, the “ Company Charter Documents ”). Each Company Charter Document is in full force and effect. The Company is not in material violation of any of the provisions of the Company Charter Documents.

  3.1.4        Section 3.1.4 of the Company Disclosure Schedule lists all of the current directors and officers of the Company as of the date hereof.

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3.2        Company Capitalization.

  3.2.1        The authorized capital stock of the Company consists solely of (i) 49,300,000 shares of Class A Voting Common Stock, of which 4,784,616 shares are issued and outstanding, (ii) 700,000 shares of Class B Non-Voting Common Stock, none of which are issued and outstanding, (iii) 6,000,000 shares of Series A Preferred Stock, of which 5,139,989 are issued and outstanding, (iv) 4,400,000 shares of Series B Preferred Stock, of which 3,460,703 shares are issued and outstanding, (v) 8,000,000 shares of Series C Preferred Stock, of which 5,930,949 shares are issued and outstanding, and (vi) 9,500,000 shares of Series D Preferred Stock, of which 8,557,714 shares are issued and outstanding. Each share of Company Preferred Stock is convertible into one share of Company Common Stock. Except as aforesaid, there are no authorized, issued or outstanding shares of capital stock of the Company. The outstanding shares of Company Capital Stock are held of record by the holders of the Company Capital Stock in the amounts set forth opposite their respective names in Section 3.2.1 of the Company Disclosure Schedule. All outstanding shares of Company Capital Stock are, and all shares of Company Capital Stock that may be issued upon exercise of Company Options or Company Warrants will be (upon issuance in accordance with their terms), duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute or the Company Charter Documents.

  3.2.2        The Company Option Plan is the only equity plan of the Company. As of the date hereof, options to purchase 10,000,000 shares of Company Common Stock have been reserved under the Company Option Plan of which 3,135,004 shares of Company Common Stock are subject to outstanding and unexercised Company Options, 5,418,730 shares of Company Common Stock have been issued upon the exercise of Vested Company Options and 1,446,266 shares are available for future grants. Section 3.2.2 of the Company Disclosure Schedule sets forth the following information with respect to each Company Option outstanding on the date of this Agreement: (i) the name of the optionee; (ii) the number of shares of Company Common Stock subject to such Company Option; (iii) the exercise price per share under such Company Option; (iv) the date on which such Company Option was granted and (v) the vesting schedule of each such Company Option. The Company has delivered to Parent true and complete copies of the Company Option Plan and each form of award agreement thereunder. Except as set forth in Section 3.2.2 of the Company Disclosure Schedule, there are no commitments or agreements to which the Company is bound obligating the Company to accelerate the vesting of any Company Option as a result of any of the transactions contemplated hereby.

  3.2.3        Section 3.2.3 of the Company Disclosure Schedule sets forth the following information with respect to each Company Warrant outstanding on the date of this Agreement: (i) the name of the holder; (ii) the number and type of shares of Company Capital Stock subject to such Company Warrant; (iii) the exercise price per share under such Company Warrant; (iv) the date on which such Company Warrant was issued; and (v) the date on which such Company Warrant expires. The Company has delivered or made available to Parent true and complete copies of all Company Warrants.

  3.2.4        All securities of the Company have been issued and granted in compliance with all applicable California and federal securities laws except, in each case, that would not result in a Company Material Adverse Change.

  3.2.5        Except as set forth in Section 3.2.2 or Section 3.2.3 of the Company Disclosure Schedule, there are no outstanding or authorized options, warrants, equity securities, stock appreciation, phantom stock, convertible debt, rights, commitments or other agreements to which the Company is a party or by which it is bound obligating the Company to issue, sell, repurchase or redeem any equity securities of the Company (collectively, “ Company Rights ”). There are no agreements to

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which the Company is a party or by which it is bound with respect to the voting (including, without limitation, voting trusts or proxies), registration under the Securities Act of 1993, as amended, and all rules and regulations promulgated thereunder, or under any foreign securities laws, or sale or transfer (including, without limitation, agreements relating to preemptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of the Company.

3.3        Authority; Non-Contravention.

  3.3.1        The Company has all requisite corporate power and authority to enter into this Agreement and the other Transaction Documents to which it is or will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company, subject only to obtaining the Required Shareholder Vote for the approval and adoption of this Agreement and the approval of the Merger, and the filing of the Merger Documents pursuant to California Law. The Board of Directors of the Company has approved this Agreement and declared the advisability of this Agreement and the Merger and recommended that the shareholders of the Company adopt this Agreement and approve the Merger. The Required Shareholder Vote is sufficient for the Company’s Shareholders to approve this Agreement and the Merger, and no other vote of the Company’s Shareholders is required in connection with the consummation of the transactions contemplated hereby. This Agreement and each of the other Transaction Documents to which the Company is or will be a party has been, or upon execution and delivery thereof will be, duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement and the other Transaction Documents to which the Company is or will be a party by the other Parties, constitute, or upon execution and delivery will constitute, the valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the rights of creditors generally and general principles of equity regardless of whether asserted in a proceeding in equity or at law.

  3.3.2        The execution and delivery by the Company of this Agreement and the other Transaction Documents to which it is or will be a party do not, and the performance by the Company of the transactions contemplated herein and therein will not, result in a termination, breach or violation by the Company of, or under (i) the Company Charter Documents, (ii) any Material Contract, or (iii) any Order or Law applicable to the Company or any of its properties or assets, except in the case of clause (iii) where such termination, breach or violation would not reasonably be expected to result in a Company Material Adverse Change. Except as set forth in Section 3.3.2 of the Company Disclosure Schedule, no consent, waiver or approval of any Person, nor any notice to any Person, is required to be obtained or made under any Material Contract or Company Permit, the breach of which would cause the Company to lose any rights under such Material Contract or Company Permit, to which the Company is a party in connection with the execution and delivery by the Company of this Agreement or the other Transaction Documents to which it is a party, or the performance by the Company of this Agreement or the other Transaction Documents to which it is a party.

  3.3.3        Except as provided on Schedule 3.3.3, no consent, approval, or authorization of, or registration or filing with any Governmental Entity is required to be obtained or made by the Company in connection with the execution and delivery of this Agreement or the other Transaction Documents to which the Company is a party or the consummation of the transactions contemplated hereby or thereby, except for the filing of (i) the Merger Documents with the Secretary of State of the State of California, (ii) any required filing under the HSR Act and clearance thereunder and (iii) appropriate documents with Governmental Entities with regard to the Company’s qualification to do

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business, to participate in Governmental Programs, and under the Company Permits (as hereinafter defined).

3.4         Financial Statements. Section 3.4 of the Company Disclosure Schedule sets forth true and complete copies of (a) the audited balance sheet and statements of operations and cash flows of the Company as of and for each of the fiscal years ended December 31, 2006, 2005 and 2004, and (b) the unaudited balance sheet and statements of operations and cash flows of the Company as of and for the five months ended May 31, 2007. Collectively, the financial statements referred to in the immediately preceding sentence are referred to herein as the “ Company Financial Statements ,” and the unaudited consolidated balance sheet of the Company as of May 31, 2007 is referred to herein as the “ Company Balance Sheet .” The Company Financial Statements (i) are true and complete in all material respects, (ii) are consistent with the books and records of the Company, (iii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), and (iv) fairly present the financial position of the Company as at the respective dates thereof and the consolidated results of the Company operations and cash flows for the periods indicated, except that the unaudited Company Financial Statements referred to in clause (b) above do not contain any of the footnotes required by GAAP, and were or are subject to normal and recurring year-end adjustments, including without limitation, expenses for stock options, stock valuation and imputed warrant interest expense. No financial statements of any Person other than the Company are required by GAAP to be included in the financial statements of the Company. The Company has no liabilities of the nature required to be disclosed in the liabilities section of a balance sheet prepared in accordance with GAAP, including the notes thereto (“ Balance Sheet Liabilities ”), except for Balance Sheet Liabilities reflected on the Company Balance Sheet or Balance Sheet Liabilities incurred after the date of the Company Balance Sheet in the ordinary course of business or as set forth on Section 3.4 or Section 3.7.2 of the Company Disclosure Schedule. Section 3.4 of the Company Disclosure Schedule lists any arrangement where the Company has extended or maintained credit, arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any consultants, independent contractors, employee, director or executive officer (or equivalent thereof) of the Company. The Company is not a party to any off-balance sheet arrangements that could have a current or future effect upon the Company’s consolidated financial condition or results of operations. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (a) all transactions are executed in accordance with management’s general or specific authorizations, (b) all transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP and to maintain proper accountability for assets, (c) access to assets is permitted only in accordance with management’s general or specific authorization and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Section 3.4 of the Company Disclosure Schedule lists the amount of all Company Debt as of the date of this Agreement.

3.5        Absence of Certain Changes or Events. Except as set forth on Section 3.5 of the Company Disclosure Schedule, since the date of the Company Balance Sheet, the Company has conducted its business in the ordinary course consistent with past practice and there has not been any Company Material Adverse Change nor has the Company taken any of the actions set forth in paragraphs (i) through (xxvi) of Section 5.2 hereof.

3.6        Taxes.

  3.6.1        The Company has filed all Tax Returns that it was required to file. All such Tax Returns are true and complete. Section 3.6.1 of the Company Disclosure Schedule contains a list of all jurisdictions (whether foreign or domestic) in which the Company files Tax Returns. No claim has

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ever been made by a Governmental Entity in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation or to a requirement to file Tax Returns in that jurisdiction.

  3.6.2        All Taxes due and owing by the Company (whether or not shown on any Tax Return) have been paid. The Company has established adequate reserves in accordance with GAAP (excluding reserves for deferred Taxes established to reflect timing differences between book and Tax income) for all liabilities for Taxes accrued by the Company but not yet paid.

  3.6.3        Except as set forth on Section 3.6.3 of the Company Disclosure Schedule, the Company is not currently the beneficiary of any extension of time within which to file any Tax Return. There are no liens for any amount of Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company.

  3.6.4        The Company has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, creditor or other third party.

  3.6.5        No foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are pending or, to the Company’s Knowledge, being conducted with respect to the Company. The Company has made available to Parent copies of all Tax Returns filed by and on behalf of the Company since January 1, 2004.

  3.6.6        The Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

  3.6.7        The Company has not been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). The Company is not a party to or bound by any Tax allocation or sharing agreement (other than, in each case, standard commercial agreements with third parties entered into in the ordinary course of business). The Company (i) has not been a member of an affiliated group filing a consolidated federal income Tax Return or (ii) has no Liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of any Law), as a transferee or successor, by contract, or otherwise.

  3.6.8        Within the two-year period ending on the date of this Agreement, the Company has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code Section 355.

  3.6.9        The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:

  3.6.9.1        change in method of accounting for a taxable period ending on or prior to the Closing Date;

  3.6.9.2        “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date;

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  3.6.9.3        intercompany transactions or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law);

  3.6.9.4         installment sale or open transaction disposition made on or prior to the Closing Date; or

  3.6.9.5        prepaid amount received on or prior to the Closing Date.

  3.6.10        The Company is not a party to any “listed transaction” within the meaning of Section 1.6011-4 of the Treasury Regulations.

3.7        Real and Personal Property.

  3.7.1        The Company owns no real property and has never owned any real property.

  3.7.2        Section 3.7.2 of the Company Disclosure Schedule lists all real property leases to which the Company is a party, and each amendment thereto (the “ Leased Real Property ”). All such current leases are in full force and effect, are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default) that would result in a Company Material Adverse Change. The Company has made available to Parent true and complete copies of all such leases, which leases (i) permit the current occupation and use of such real property by the Company, and (ii) will continue to be legal, valid and binding in accordance with their respective terms immediately following the Effective Time. Except as set forth in Schedule 3.7.2, the Leased Real Property comprises all the real property occupied or otherwise used by the Company. Section 3.7.2 of the Company Disclosure Schedule lists all real property used by Company where there is no written lease agreement.

  3.7.3        Except as set forth in Section 3.7.3 of the Company Disclosure Schedule, the Company has good and marketable title to or holds under valid and enforceable leases all material tangible personal property, free and clear of any Encumbrances except for Permitted Encumbrances, necessary for the conduct of the business as currently conducted. Such tangible property of the Company is in sufficiently good operating condition (except for ordinary wear and tear) to allow the business of the Company to be operating in the ordinary course of business and consistent with past practices of the Company.

3.8        Intellectual Property.

  3.8.1        To the Company’s Knowledge, the conduct of the business of the Company, as currently conducted, has not infringed upon, misappropriated, or otherwise violated, and does not infringe upon or misappropriate or otherwise violate the Intellectual Property of any third party and no claim has been made in writing to the Company that the conduct of its business infringes upon or may infringe upon or misappropriates or otherwise violates the Intellectual Property of any third party. Except as set forth on Section 3.8.1 of the Company Disclosure Schedule, the Company is not obligated to indemnify any Person, other than customers, for infringement, misappropriation or violation of Intellectual Property of any third party.

  3.8.2        To the Company’s Knowledge, it owns or is licensed to use or otherwise has the right to use all Intellectual Property (other than third party patents of which the Company has no Knowledge) used in or necessary for the operation of its business as currently conducted in accordance

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with the terms of any license agreement governing such Intellectual Property. The Company has exclusive or co-exclusive licenses to all Intellectual Property created or developed pursuant to the research agreement dated February 15, 1996 entered into with the Regents of the University of California as Management and Operations Contractor for the Lawrence Berkeley National Laboratory that is material to the business of the Company.

  3.8.3        None of the Intellectual Property owned by or exclusively or co-exclusively licensed to the Company (the “ Owned Intellectual Property ”) has been adjudged invalid or unenforceable in whole or in part and, to the Company’s Knowledge, the Owned Intellectual Property is valid, enforceable and in effect. The Company exclusively owns all right, title, and interest in the Owned Intellectual Property (other than those exclusively or co-exclusively licensed to the Company) free and clear of all Encumbrances (exclusive of nonexclusive licenses granted to third parties). Section 3.8.3 of the Company Disclosure Schedule contains a true and complete list of all Owned Intellectual Property that is registered with or applied for registration with any Governmental Entity and all other Owned Intellectual Property that is material to the business of the Company.

  3.8.4        To the Company’s Knowledge, no Person is engaging in any activity that infringes upon or misappropriates the Owned Intellectual Property.

  3.8.5        Each license of the Intellectual Property of a third party licensed to the Company (the “ Licensed Intellectual Property ”) is valid and enforceable, is binding on all parties to such license, and is in full force and effect. The Company is not, and to the Company’s Knowledge, no other party to any license of the Licensed Intellectual Property is, in breach thereof or default thereunder. Section 3.8.5 of the Company Disclosure Schedule lists all contracts for licensing Licensed Intellectual Property (other than end user licenses for object code of software generally available on standard terms for less than ten thousand dollars ($10,000) and non-disclosure agreements entered into in the ordinary course of business).

  3.8.6        The Company has taken commercially reasonable measures to protect, preserve, police, safeguard and maintain (including through the use of non-disclosure and intellectual property assignment agreements) the proprietary nature of each item of Owned Intellectual Property. All employees and contractors of the Company involved in the creation or development of any Intellectual Property for the Company have assigned all of their right, title, and interest in and to such Intellectual Property to the Company and are bound by confidentiality obligations through signed agreements containing intellectual property assignments and confidentiality provisions.

  3.8.7        Section 3.8.7 of the Company Disclosure Schedule lists all contracts pursuant to which Owned Intellectual Property is licensed to any third party, other than nonexclusive licenses granted to customers in the ordinary course of business or pursuant to non-disclosure agreements.

  3.8.8        Neither the execution, delivery, or performance of this Agreement nor the consummation of any of the transactions contemplated by this Agreement will result in or give any other Person the right or option to cause or declare (i) a loss of, or Encumbrance, or restriction on any Owned Intellectual Property or Licensed Intellectual Property; (ii) a breach of any license agreement listed or required to be listed under Company Disclosure Schedule Section 3.8.3 or 3.8.5; (iii) the release or delivery of any Owned Intellectual Property to any other Person; or (iv) the grant, assignment, or transfer to any other Person of any license or other rights or interest under any Owned Intellectual Property.

  3.8.9        The Company has provided to Parent or its counsel copies of all standard form agreements used by the Company that contain assignment or licenses of Intellectual Property or

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otherwise relate to the Owned Intellectual Property, including license agreements, development agreements, employee agreements, and contractor agreements.

  3.8.10        To the Company’s Knowledge, none of the software developed by or for the Company or otherwise owned by the Company (“ Company Software ”) that is material to the business of the Company contains any bugs, defects, or errors that have a material adverse effect on the use, functionality, or performance of such software. To the Company’s Knowledge, no Company software contains any virus, worm, or code designed to (i) disrupt, disable, or impede the operation of or provide unauthorized access to a computer system or network or other device on which such software is stored or installed or (ii) damage or destroy any data without the user’s consent. No source code for the Company Software has been disclosed or licensed to any Person who is not an employee or contractor for the Company under a duty of confidentiality, and the Company has no obligation to disclose or license the source code of the Company Software to any Person who is not an employee or contractor for the Company under a duty of confidentiality. No Company Software is subject to any “copyleft” or other obligation or condition (including any obligation or condition under any “open source” license, such as the GNU Public License, Lesser GNU Public License, or Mozilla Public License) that would require, or condition the use or distribution of such software on, the disclosure, licensing, or distribution of any source code for any portion of the Company Software.

  3.8.11        The Company has taken all reasonable steps in accordance with industry standards for companies of comparable size and resources to the Company and any contracts with customers for the provision of services to secure the Company information technology systems from unauthorized access or use by any Person, and to ensure the continued, uninterrupted, and error-free operation of the Company information technology systems, including employing adequate security, maintenance, disaster recovery, redundancy, backup, archiving, and virus or malicious device scanning and protection measures.

  3.8.12        The Company’s operation of its businesses, and its collection, processing, storage, and use of any data, including any personal data in connection therewith, do not violate any applicable Laws relating to privacy, data protection, and/or security or any contracts or agreements with customers for the provision of services, including but not limited to, the Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”), any Person’s right of privacy, or the Company’s policy on privacy, data protection and/or security. The Company has taken all reasonable steps in accordance with standard industry practices to secure such data from unauthorized access or use thereof by any Person. To the Company’s Knowledge, no security measures implemented by the Company have been penetrated by any Person and no unauthorized access to such data by any Person has taken place.

3.9        Compliance with Laws and Orders; Permits. Except as set forth on Section 3.9 of the Company Disclosure Schedule:

  3.9.1        The Company is not in conflict with, nor in default or violation of any Order or Law applicable to the business of the Company in any material respect. No investigation or review by any Governmental Entity is, to the Company’s Knowledge, pending or threatened in writing against the Company, except for regular inspections in the ordinary course of business. There is no Order binding upon the Company which has or could reasonably be expected to result in a Company Material Adverse Change.

  3.9.2         The Company holds all permits, licenses, approvals, registrations, certificates, exemptions and orders from Governmental Entities that are necessary for the operation of the business of the Company as currently conducted (collectively, the “ Company Permits ”). The Company is and has been in material compliance with the terms of all Company Permits and all such

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Company Permits are valid and in good standing. To the Company’s Knowledge, Section 3.9.2 of the Company Disclosure Schedule contains a true and complete list of all Company Permits.

3.10        Litigation. Except as set forth in Section 3.10 of the Company Disclosure Schedule, there are no Actions pending against the Company or, to the Company’s Knowledge, threatened in writing against the Company by any Person. To the Company’s Knowledge, no event has occurred that is reasonably likely to give rise to or serve as a basis for the commencement of any Action.

3.11        Regulatory Matters. Except as set forth on Section 3.11 of the Company Disclosure Schedule:

  3.11.1        The Company is in compliance in all material respects with all federal and state Laws applicable to the products and services developed, marketed, distributed and sold by or on behalf of the Company, including without limitation the federal and any applicable state anti-kickback or anti-referral laws and regulations and the patient information and privacy and security standards of HIPAA.

  3.11.2        The Company is not in receipt of notice of, and to the Company’s Knowledge, is not subject to, any 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, in each case relating to any of its products or services, business, operations or properties, or to the facilities in which its services are provided or handled or business and operations are conducted, by any Governmental Entities, that remains uncleared, uncured or unresolved.

  3.11.3        To the Company’s Knowledge, there are no pending or threatened in writing Actions by the FDA or other Governmental Entities which would prohibit or impede the conduct of the business of the Company as it is currently conducted.

  3.11.4        The Company has not made any material false statements on, or material omissions from, the applications, approvals, reports and other submissions to the FDA or other Governmental Entities prepared or maintained to comply with the requirements of the FDA or such other Governmental Entities relating to the Company, its products, services, business, operations or properties.

  3.11.5        No product or service of the Company has been recalled, suspended or discontinued as a result of any action by the FDA or any other Governmental Entity.

  3.11.6        The Company has properly registered with the FDA all of the Company’s products or services which, to the Company’s Knowledge, are required to be registered.

3.12        Reimbursement. Except as set forth on Section 3.12 of the Company Disclosure Schedule:

  3.12.1        The Company has been issued a CMS Certification number and is qualified to participate in and receive reimbursement under Title XVIII of the Social Security Act (“ Medicare ”), CHAMPUS and TRICARE (collectively, the “ Governmental Programs ”). The Company currently participates in the Governmental Programs pursuant to current and valid provider agreements (the “ Provider Agreements ”). The Company provides services to patients of private, non-governmental programs (including any private insurance program) under which the Company is, directly or indirectly, receiving payments for its products and services (such private, non-governmental programs are referred to collectively as “ Private Programs ”).

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  3.12.2        Section 3.12.2 of the Company Disclosure Schedule contains a true and complete list of all provider numbers and Provider Agreements under all Governmental Programs, and all Private Programs with whom the Company has a written agreement or a material out-of-network arrangement. A material out-of-network arrangement is one where the Company has receipts from a payor in excess of $100,000 in the 12-month period ending on May 31, 2007. True and complete copies of all Provider Agreements, and all material surveys, reviews and audits of the Company or its business conducted in connection with any Governmental Program or Private Program by any licensing or accrediting authority since December 31, 2005, that are in the possession of the Company, have been delivered or made available to Parent.

  3.12.3        To the Company’s Knowledge, there is no pending or threatened in writing Action or Order with respect to any Governmental Program or Private Program. The Company has not received any notice of any Action pending or recommended by any Governmental Program or Private Program. To the Company’s Knowledge, no event has occurred that, with or without notice or the passage of time, (i) would constitute a breach or violation of, or would constitute grounds for an Action or Order with respect to, any Governmental Program or Private Program, or (ii) would constitute grounds to modify the participation of the Company in any Governmental Program or Private Program.

  3.12.4        The Company has timely filed all claims and reports required to be filed by the Company prior to the date hereof with respect to the Governmental Programs, all fiscal intermediaries and/or carriers, and other insurance carriers, and all such claims and reports are true and complete in all material respects and, to the Company’s Knowledge, have been prepared in compliance with all applicable Laws relating to reimbursement and payment claims. The Company has paid or caused to be paid all known and undisputed refunds, overpayments, discounts or adjustments which have become due pursuant to such claims and reports, and owes no money under any Governmental Program or Private Program outside of the ordinary course of business. There are no pending appeals, litigation, notices of intent to audit, and no audits, or to the Company’s Knowledge, challenges or inquiries, with respect to such prior claims or reports. The Company has not been audited in connection with any Governmental Program or