8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 28, 2004

Lynx Therapeutics, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	000-22570	94-3161073
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

25861 Industrial Blvd., Hayward, California	94545
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (510) 670-9300

(Former Name or Former Address, if Changed Since Last Report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Section 1 — Registrant’s Business and Operations
	Item 1.01. Entry into a Material Definitive Agreement
	Section 9 — Financial Statements and Exhibits
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 2.2
EXHIBIT 99.1
EXHIBIT 99.2
EXHIBIT 99.3

Section 1 — Registrant’s Business and Operations

Item 1.01. Entry into a Material Definitive Agreement

     On September 28, 2004, Lynx Therapeutics, Inc., a Delaware corporation (“Lynx”), entered into an acquisition agreement (the “Acquisition Agreement”) with Solexa Limited, a company registered in England and Wales (“Solexa”), providing for the combination of the two companies. In the transaction, Lynx will issue up to 29.5 million shares in exchange for all of the outstanding share capital of Solexa and all options to purchase shares in Solexa’s share capital. The companies anticipate that the transaction will be completed in late 2004, subject to approval by the stockholders of Lynx and acceptance of the exchange by the shareholders of Solexa. A copy of the Acquisition Agreement is attached as Exhibit 2.2 and is incorporated herein by reference.

     In connection with the execution of the Acquisition Agreement, on September 28, 2004, the directors and the executive officers and major shareholders of Solexa who are registered holders of approximately 90% of the outstanding shares in Solexa’s share capital entered into support agreements with Lynx, pursuant to which they agreed to exchange their shares of Solexa capital stock for Lynx common stock in connection with the combination (the “Company Support Agreements”). Certain directors and executive officers of Lynx entered into support agreements with Solexa, pursuant to which they agreed to approve the combination and the issuance of shares of Lynx common stock in connection with the combination (the “Parent Support Agreements”). The forms of the Parent Support Agreement, the Company Support Agreement and the Company Support Agreement signed by Solexa’s Chief Executive Officer are attached as Exhibits 99.1, 99.2, and 99.3, respectively, and are incorporated herein by reference.

     Under a separate agreement, Lynx has received from Solexa loan advances totaling $1.25 million, and an additional $750,000 loan advance was triggered by the signing of the Acquisition Agreement. Lynx is expected to receive a further $500,000 loan advance in October. Earlier in 2004, the two companies jointly acquired intellectual property rights for DNA amplification on single molecule arrays.

Where to Find Additional Information about the Transaction

     Lynx plans to file a Registration Statement on SEC form S-4 in connection with the transaction, and Lynx expects to mail a Proxy Statement / Prospectus to stockholders of Lynx and shareholders of Solexa containing information about the transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT / PROSPECTUS CAREFULLY WHEN THEY ARE AVAILABLE. THE REGISTRATION STATEMENT AND THE PROXY STATEMENT / PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT LYNX, SOLEXA, THE TRANSACTION AND RELATED MATTERS. Investors and security holders will be able to obtain free copies of these documents through the Web site maintained by the U.S. Securities and Exchange Commission at http://www.sec.gov. Free copies of the Proxy Statement / Prospectus and these other documents may also be obtained from Lynx by directing a request through the Investor Resources section of Lynx’s site at www.lynxgen.com or by mail to Lynx Therapeutics, Inc., 25861 Industrial Blvd., Hayward, CA 94545, attention: Investor Relations, telephone: (510) 670-9300.

     In addition to the Registration statement and the Proxy Statement / Prospectus, Lynx files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information filed by Lynx at the SEC public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference room. Lynx’s filings with the Commission are also available to the public from commercial document retrieval services and at the Web site maintained by the Commission at http://www.sec.gov.

2

Interests of Certain Persons in the Transaction

     Lynx will be soliciting proxies from Lynx’s stockholders in favor of the issuance of shares of Lynx’s common stock in the transaction. The directors and executive officers of Lynx and the directors and executive officers of Solexa may be deemed to be participants in Lynx’s solicitation of proxies. Certain executive officers and directors of Lynx and certain executive officers and directors of Solexa have interests in the transaction that may differ from the interests of the Lynx stockholders and the Solexa shareholders generally. These interests will be described in the Proxy Statement / Prospectus when it becomes available.

Section 9 — Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits:

2.2	Acquisition Agreement, dated as of September 28, 2004, by and between Solexa Limited and Lynx Therapeutics, Inc.
99.1	Form of Parent Support Agreement
99.2	Form of Company Support Agreement
99.3	Form of Company Support Agreement signed by Chief Executive Officer of Solexa

3

SIGNATURES

     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 hereunto duly authorized.

	LYNX THERAPEUTICS, INC.
	By:	/s/ Kevin P. Corcoran
		Name:	Kevin P. Corcoran
Date: September 30, 2004		Title:	President and Chief Executive Officer

4

EXHIBIT INDEX

Exhibit
No.	Description
2.2	Acquisition Agreement, dated as of September 28, 2004, by and between Solexa Limited and Lynx Therapeutics, Inc.
99.1	Form of Parent Support Agreement
99.2	Form of Company Support Agreement
99.3	Form of Company Support Agreement signed by Chief Executive Officer of Solexa

5

EX-2.2

                                                                     EXHIBIT 2.2

                                                                  EXECUTION COPY

                              ACQUISITION AGREEMENT

                                   dated as of

                               September 28, 2004

                                 by and between

                                 SOLEXA LIMITED

                                       and

                             LYNX THERAPEUTICS, INC.



                                TABLE OF CONTENTS



                                                                                                                       PAGE
                                                                                                                       ----
                                                                                                                    
ARTICLE I THE OFFER...................................................................................................   2

       SECTION 1.1   The Offer........................................................................................   2

       SECTION 1.2   Company Actions With Respect to the Offer........................................................   6

       SECTION 1.3   Boards of Directors..............................................................................   6

       SECTION 1.4   Stock Options and Stock Plans....................................................................   7

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................................   8

       SECTION 2.1   Information and Executives; Organization and Qualification.......................................   8

       SECTION 2.2   Company Financial Statements.....................................................................   8

       SECTION 2.3   Events since the Company Balance Sheet Date......................................................   9

       SECTION 2.4   Taxes............................................................................................  10

       SECTION 2.5   Litigation.......................................................................................  11

       SECTION 2.6   Property and the Environment.....................................................................  12

       SECTION 2.7   Intellectual Property............................................................................  13

       SECTION 2.8   Assets, Debts and Stock..........................................................................  16

       SECTION 2.9   Contracts with Connected Persons.................................................................  16

       SECTION 2.10  Employment Arrangements; Employee Benefits.......................................................  17

       SECTION 2.11  Statutory and Legal Requirements.................................................................  18

       SECTION 2.12  Records and Registers; Memorandum of Association and Articles of Association.....................  19

       SECTION 2.13  Insurance........................................................................................  19

       SECTION 2.14  Group Structure..................................................................................  19

       SECTION 2.15  Agreements and Capital Commitments...............................................................  19

       SECTION 2.16  Borrowings and Facilities........................................................................  20

       SECTION 2.17  Government Grants................................................................................  20

       SECTION 2.18  Internal Accounting Controls.....................................................................  20

       SECTION 2.19  Authority and Enforceability; No Conflicts.......................................................  20

ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT..................................................................  21

       SECTION 3.1   Subsidiaries.....................................................................................  21

       SECTION 3.2   Organization and Qualification...................................................................  21

       SECTION 3.3   Authorization; Enforcement.......................................................................  21

       SECTION 3.4   No Conflicts.....................................................................................  21


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                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                       PAGE
                                                                                                                       ----
                                                                                                                    
       SECTION 3.5   Capitalization...................................................................................  22

       SECTION 3.6   SEC Reports; Financial Statements................................................................  22

       SECTION 3.7   Material Changes.................................................................................  23

       SECTION 3.8   Absence of Litigation............................................................................  23

       SECTION 3.9   Compliance.......................................................................................  23

       SECTION 3.10  Title to Assets..................................................................................  23

       SECTION 3.11  Form S-3 Eligibility.............................................................................  24

       SECTION 3.12  Listing and Maintenance Requirements.............................................................  24

       SECTION 3.13  Registration Rights..............................................................................  24

       SECTION 3.14  Disclosure.......................................................................................  24

       SECTION 3.15  Intellectual Property............................................................................  24

       SECTION 3.16  Insurance........................................................................................  26

       SECTION 3.17  Regulatory Permits...............................................................................  26

       SECTION 3.18  Transactions With Affiliates and Employees.......................................................  26

       SECTION 3.19  Internal Accounting Controls.....................................................................  26

       SECTION 3.20  Employee Benefit Plans; Employee Benefits........................................................  26

       SECTION 3.21  Taxes............................................................................................  28

       SECTION 3.22  Material Contracts...............................................................................  28

       SECTION 3.23  Financial Advisor................................................................................  30

       SECTION 3.24  Opinion of Financial Advisor.....................................................................  30

       SECTION 3.25  No Restrictions on the Offer; Takeover Statutes..................................................  30

ARTICLE IV COVENANTS OF THE COMPANY...................................................................................  30

       SECTION 4.1   Conduct of Business..............................................................................  30

       SECTION 4.2   Access to Information............................................................................  32

       SECTION 4.3   Waiver of Change of Control and Acceleration Benefits............................................  32

       SECTION 4.4   No Solicitation..................................................................................  32

ARTICLE V COVENANTS OF PARENT.........................................................................................  34

       SECTION 5.1   Conduct of Business..............................................................................  34

       SECTION 5.2   Access to Information............................................................................  36

       SECTION 5.3   No Solicitation..................................................................................  36

       SECTION 5.4   Listing of Additional Shares.....................................................................  37


                                       ii


                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                       PAGE
                                                                                                                       ----
                                                                                                                    
       SECTION 5.5   Director and Officer Liability...................................................................  37

       SECTION 5.6   Section 16 Matters...............................................................................  38

       SECTION 5.7   Compulsory Acquisition...........................................................................  38

       SECTION 5.8   Waiver of Change of Control and Acceleration Benefits............................................  38

ARTICLE VI COVENANTS OF PARENT AND THE COMPANY........................................................................  38

       SECTION 6.1   Reasonable Efforts; Notification.................................................................  38

       SECTION 6.2   Public Announcements.............................................................................  39

       SECTION 6.3   Modified Agreements..............................................................................  39

       SECTION 6.4   Joint Remuneration Planning Committee............................................................  39

       SECTION 6.5   Certain Tax Matters..............................................................................  40

ARTICLE VII TERMINATION...............................................................................................  40

       SECTION 7.1   Termination......................................................................................  40

       SECTION 7.2   Effect of Termination............................................................................  42

ARTICLE VIII MISCELLANEOUS............................................................................................  42

       SECTION 8.1   Notices..........................................................................................  42

       SECTION 8.2   Survival of Representations and Warranties.......................................................  43

       SECTION 8.3   Amendments; No Waivers...........................................................................  43

       SECTION 8.4   Fees and Expenses................................................................................  43

       SECTION 8.5   Successors and Assigns; Parties in Interest......................................................  43

       SECTION 8.6   Governing Law; Enforcement.......................................................................  44

       SECTION 8.7   Counterparts; Effectiveness; Interpretation......................................................  44

       SECTION 8.8   Entire Agreement.................................................................................  44

       SECTION 8.9   Definitions......................................................................................  44

ANNEXES

Annex A - Conditions of the Offer

SCHEDULES

Schedule 1 - Company Shareholders and Optionholders Executing a Company Support Agreement

Schedule 2 - Parent Stockholders and Optionholders Executing a Parent Support Agreement


                                      iii


                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                       PAGE
                                                                                                                       ----
                                                                                                                    
EXHIBITS

Exhibit A - Form of Company Support Agreement

Exhibit B - Form of Parent Support Agreement


                                       iv


                              ACQUISITION AGREEMENT

      ACQUISITION AGREEMENT (this "AGREEMENT"), dated as of September 28, 2004,
by and between Solexa Limited, a company registered in England and Wales having
its principal place of business at Chesterford Research Park, Little
Chesterford, Nr Saffron Walden, Essex, Great Britain CB10 1XL (the "COMPANY")
and Lynx Therapeutics, Inc., a Delaware corporation having its principal place
of business at 25861 Industrial Boulevard, Hayward, California 94545 ("PARENT").

      WHEREAS, the Board of Directors of the Company or a duly authorized
sub-committee appointed by the Board of Directors of the Company (the "COMPANY
BOARD") has unanimously (i) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Option Offer (each as defined
below) are in the best interests of the Company, (ii) approved this Agreement
and the transactions contemplated hereby, and (iii) resolved to recommend that
the shareholders of the Company accept the Offer;

      WHEREAS, the Board of Directors of Parent (the "PARENT BOARD") has
unanimously resolved (i) that this Agreement and the transactions contemplated
hereby, including the issuance of shares of Parent common stock, par value $0.01
per share ("PARENT COMMON STOCK"), in connection with the Offer and the Option
Offer, are fair to and in the best interest of the stockholders of Parent, (ii)
to approve this Agreement and the transactions contemplated hereby, and (iii) to
recommend that the stockholders of Parent approve the issuance of the shares of
Parent Common Stock in connection with the Offer and the Option Offer and
approve the other matters referred to in Section 1.1(f) of this Agreement;

      WHEREAS, in furtherance thereof, it is proposed that Parent shall, as
promptly as practicable following the Effective Date (as defined below),
commence (i) an exchange offer (the "OFFER") to acquire all of the outstanding
`B' preferred shares of (pound)0.0025 each in the capital of the Company (the "B
PREFERRED SHARES"), to acquire all of the outstanding `A' ordinary shares of
(pound)0.0025 each in the capital of the Company (the "A ORDINARY SHARES"), and
to acquire all of the outstanding ordinary shares of (pound)0.0025 each in the
capital of the Company (the "ORDINARY SHARES" and, together with the B Preferred
Shares and the A Ordinary Shares, the "SHARES"), in exchange for shares of
Parent Common Stock, and (ii) the Option Offer (as defined below), each in
accordance with the terms and subject to the conditions provided herein;

      WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
the Company shareholders and optionholders identified on Schedule 1 to this
Agreement are entering into Company Support Agreements in substantially the form
attached hereto as Exhibit A (the "COMPANY SUPPORT AGREEMENTS");

      WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to the Company's willingness to enter into this
Agreement, the Parent stockholders and optionholders identified on Schedule 2 to
this Agreement are entering into Parent Support Agreements in substantially the
form attached hereto as Exhibit B (the "PARENT SUPPORT AGREEMENTS");

      WHEREAS, Parent and the Company have previously entered into a Loan
Agreement, dated as of August 12, 2004 (the "LOAN AGREEMENT"), which provides
for the terms and conditions on which the Company has made certain loans to, and
would make certain loans to Parent following the date hereof, and further
provides for certain rights and remedies of the parties in the event that this
Agreement shall be terminated prior to the consummation of the Offer;

                                       1



      WHEREAS, concurrently with the execution of this Agreement, Parent and the
Company have entered into a letter agreement setting forth the parties'
agreement as to the interpretation of certain of the terms of the Loan Agreement
as they relate to the provisions of this Agreement (the "LOAN AGREEMENT SIDE
LETTER");

      WHEREAS, the parties intend that the exchange of shares contemplated by
the Offer will qualify as a tax-free rollover of shares under Sections 126-138A
of the United Kingdom Taxation of Chargeable Gains Act of 1992 (the "TCGA") and
as a "reorganization" for United States federal income tax purposes within the
meaning of Section 368(a) of the United States Internal Revenue Code of 1986
(the "CODE"); and

      WHEREAS, Parent and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Option
Offer and also to prescribe various conditions to consummation of the Offer and
the Option Offer.

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

                                    ARTICLE I
                                    THE OFFER

      SECTION 1.1 The Offer.

      (a) Provided that (i) this Agreement shall not have been terminated in
accordance with Section 7.1 and (ii) no event set forth in Annex A hereto shall
have occurred and be continuing (unless such event shall have been waived by
Parent or the Company, as applicable), as promptly as practicable following the
effective date of the Registration Statement referred to in Section 1.1(d) below
(the "EFFECTIVE DATE"), Parent shall commence the Offer for any and all of the
Shares at the various Exchange Ratios contemplated by Section 1.1(b) below. The
obligation of Parent to first issue shares of Parent Common Stock in exchange
for Shares pursuant to the Offer (the "FIRST CLOSING") shall be subject only to
(i) the valid acceptances of the Offer (and not, where permitted, withdrawn) by
holders of at least ninety percent (90%) in nominal value of each of the issued
B Preferred Shares, the issued A Ordinary Shares and the issued Ordinary Shares
to which the Offer relates (the "MINIMUM CONDITION") (and the expression "Offer"
shall be construed in accordance with section 428 of the United Kingdom
Companies Act 1985 (the "COMPANIES ACT")), and (ii) the satisfaction or waiver
(in accordance with the terms of this Section 1.1 (a)) of the other conditions
set forth in Annex A. Parent shall not make any changes in the terms and
conditions of the Offer without the prior written approval of the Company. It is
agreed that the conditions set forth in Section 1 of Annex A are for the sole
benefit of Parent and may be waived by Parent (and only by Parent), in whole or
in part at any time and from time to time, in its sole discretion. It is agreed
that the conditions set forth in Section 2 of Annex A are for the sole benefit
of the Company and may be waived by the Company (and only by the Company), in
whole or in part at any time and from time to time, in its sole discretion. To
evidence the satisfaction of the conditions set forth in Section 2 of Annex A,
the Company shall deliver to Parent on the First Closing Date (as defined below)
a certificate, executed by the Chief Executive Officer of the Company,
indicating the Company's concurrence that the conditions set forth in Section 2
of Annex A shall have been satisfied. Parent shall not be permitted to issue
Parent Common Stock in exchange for Shares pursuant to the Offer until after it
has received the certificate described in the preceding sentence from the
Company. The failure by Parent or the Company, as the case may be, at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, and each such right shall be deemed an ongoing right that may be asserted
at any time and from time to time.

                                       2



      (b) The consideration to be offered by Parent to the holders of Ordinary
Shares, A Ordinary Shares and B Preferred Shares in the Offer shall be as
follows:

            (i) Each holder of Ordinary Share(s) shall be entitled to receive
0.88637 of a share of Parent Common Stock for each Ordinary Share held (the
"ORDINARY SHARE EXCHANGE RATIO").

            (ii) Each holder of A Ordinary Share(s) shall be entitled to receive
2.75326 shares of Parent Common Stock for each A Ordinary Share held (the "A
ORDINARY SHARE EXCHANGE RATIO").

            (iii) Each holder of B Preferred Share(s) shall be entitled to
receive 2.61560 shares of Parent Common Stock for each B Preferred Share held
(the "B PREFERRED EXCHANGE RATIO" and, together with the Ordinary Share Exchange
Ratio and the A Ordinary Share Exchange Ratio, the "EXCHANGE RATIOS");

provided, however, that the maximum number of shares of Parent Common Stock to
be issued by Parent (x) pursuant to the Offers and (y) in connection with the
Compulsory Acquisition contemplated by Section 5.7 hereof, to the extent
applicable, and (z) upon exercise (whenever exercised) of the options to acquire
Parent Common Stock received in exchange for Company Options (as defined below)
pursuant to the Option Offer (as defined below), is 29,500,000 (the "TOTAL SHARE
CONSIDERATION"). Section 1.1(b) of the Company Disclosure Letter sets forth the
proposed allocation of the Total Share Consideration among the holders of Shares
and/or Company Options as of the date hereof; provided, however, that the
Company may, prior to the commencement of the Offer by Parent pursuant to
Section 1.1(a) above, provide a written update of such allocation to Parent, and
Parent shall be entitled to rely exclusively on such written update in
allocating the Total Share Consideration among the holders of Shares and/or
Company Options, as appropriate. In the event that the total number of shares of
Parent Common Stock issued, or to be issued, pursuant to the transactions
identified in (x), (y) and (z) of this Section 1.1(b) above following
application of the Exchange Ratios set forth in Section 1.1(b)(i)-(iii) above
shall be less than the Total Share Consideration, then an additional number of
shares of Parent Common Stock shall be issued on a pro rata basis to the holders
of Shares and Company Options so that the total number of shares of Parent
Common Stock issued, or to be issued, pursuant to the transactions identified in
(x), (y) and (z) of this Section 1.1(b) shall be equal to the Total Share
Consideration. Each holder's "pro rata" amount shall be a fraction, the
numerator of which is the number of shares of Parent Common Stock issued, or to
be issued, to such holder of Shares in the Offer or Company Options under the
Option Offer and the denominator of which is the number of shares of Parent
Common Stock issued, or to be issued, to all holders of Shares in the Offer and
all holders of Company Options in the Option Offer.

      (c) Subject to the terms and conditions thereof, the Offer shall expire at
midnight, New York City time, on the date that is the later of (i) twenty (20)
Business Days after the date the Offer is commenced and (ii) five (5) Business
Days following the date on which the Parent Stockholder Approvals (as defined in
Section 1.1(f) hereof) shall have been received; provided, however, that (i)
Parent shall (A) from time to time, extend the Offer, if at the scheduled
expiration date of the Offer any of the conditions to the Offer shall not have
been satisfied or waived, until such time as such conditions are satisfied or
waived, but not beyond the Final Date (as defined in Section 7.1(b)(ii)), (B)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the United States Securities and Exchange Commission (the "SEC")
applicable to the Offer, and (C) extend the Offer or the Option Offer for any
period required by the rules of any Company Share Option Scheme. Subject to the
terms and conditions of the Offer and this Agreement, on the First Closing Date
(as defined below) and each Subsequent Closing Date (as defined below) Parent
shall issue shares of Parent Common Stock in exchange for all Shares in respect
of which valid acceptances have been received by such date (and not, where
permitted, withdrawn) pursuant to the Offer or pursuant to the compulsory
acquisition procedures set forth in Section 5.7. The "FIRST CLOSING DATE" shall
be the second Business Day following

                                       3



satisfaction of the Minimum Condition and the satisfaction or waiver of the
conditions set forth in Annex A. Should less than all of the Shares (including
for purposes of this Section 1.1(c) Ordinary Shares issued or to be issued by
the Company upon exercise of Company Options pursuant to the Option Offer), be
exchanged for Parent Common Stock on the First Closing Date, Parent shall, at
one or more subsequent closings (the date of each subsequent closing being a
"SUBSEQUENT CLOSING DATE") accept for exchange, and issue shares of Parent
Common Stock for, all Shares in respect of which valid acceptances have been
received (and not, where permitted, withdrawn) on or before such Subsequent
Closing Date. No fraction of a share of Parent Common Stock will be issued upon
consummation of the Offer, but in lieu thereof each accepting shareholder or
optionholder, in the case of optionholders exercising Company Options pursuant
to the Option Offer as set forth in Section 1.4 below, and who would otherwise
be entitled to receive 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) in the Offer or Option Offer, as appropriate, shall
receive from Parent an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product obtained by multiplying such fraction by
the closing price of one (1) share of Parent Common Stock, as reported on the
Nasdaq SmallCap Market ("NASDAQ"), for the last trading day immediately prior to
the First Closing Date. A "BUSINESS DAY" means any day of the year on which
banking institutions in San Francisco and London are open to the public for
conducting business and are not required or authorized to close.

      (d) Parent shall use its reasonable best efforts to, within twenty (20)
Business Days of the date of this Agreement, prepare and file with the SEC a
registration statement on Form S-4 to register the offer and sale of Parent
Common Stock pursuant to the Offer (the "REGISTRATION STATEMENT"). The Company
shall cooperate in good faith with, and provide reasonable assistance to, Parent
in the preparation of the Registration Statement. The Registration Statement
will include (i) a prospectus with respect to the Parent Common Stock to be
issued in the Offer and (ii) proxy materials which shall constitute the proxy
statement for the Parent Stockholders Meeting (as defined in Section 1.1(f))
(such proxy statement/prospectus, and any amendments or supplements thereto, the
"PROXY STATEMENT/PROSPECTUS"). On the date the Offer is commenced, Parent shall
cause to be disseminated to holders of Shares the Proxy Statement/Prospectus and
any other documents and Offer documentation required in connection with the
Offer pursuant to all relevant United Kingdom regulatory requirements, including
those of the United Kingdom Financial Services Authority (the "FSA") (together,
the "OFFER DOCUMENTS"). Parent agrees that it shall cause the Offer Documents to
comply in all material respects with all applicable United States and United
Kingdom federal, state, local or foreign statutes, laws and regulations ("LAW").
Parent further agrees that the Offer Documents, on the date first published,
sent or given to the Company's shareholders, shall 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 were made, not misleading, except that no
representation or warranty is made by Parent with respect to information
supplied by the Company or any of its shareholders in writing specifically for
inclusion or incorporation by reference in the Offer Documents. The Company
agrees that the information provided by the Company in writing specifically for
inclusion or incorporation by reference in the Offer Documents shall 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 were made, not
misleading. Each of Parent and the Company agrees promptly to correct any
information provided by it for use in the Registration Statement or the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and Parent further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be disseminated to the
Company's shareholders, in each case as and to the extent required by applicable
Law. The Company and its counsel shall be given reasonable opportunity to review
and comment on the Registration Statement and the Offer Documents prior to the
filing thereof with the SEC (but except as set forth above, shall not accept
responsibility or liability for such filings). Parent agrees to provide in
writing to the Company and its counsel with any comments Parent or its counsel
may receive

                                       4



from the SEC or its staff with respect to the Offer Documents promptly after
receipt of such comments and shall provide the Company and its counsel with a
reasonable opportunity to participate in the response of Parent to such
comments. Parent shall provide the Company with copies of any written responses
to the SEC or its staff and shall notify the Company with respect to any oral
responses to the SEC or its staff. Parent shall use all reasonable best efforts
to have the Registration Statement declared effective under the Securities Act
as promptly as practicable after its filing and to maintain such effectiveness
for so long as shall be required for the issuance of Parent Common Stock
pursuant to the Offer. Following the Effective Date, Parent shall file the final
prospectus included therein under Rule 424(b) promulgated pursuant to the
Securities Act.

      (e) Parent hereby approves of and consents to the transactions
contemplated by this Agreement, including the Offer and the Option Offer, and
represents that the Parent Board, at a meeting duly called and held on September
28, 2004, subject to the terms and conditions set forth herein, has unanimously:
(i) determined that this Agreement and the transactions contemplated hereby,
including the issuance of shares of Parent Common Stock in connection with the
Offer and the Option Offer, are fair to and in the best interest of the
stockholders of Parent, (ii) approved this Agreement and the transactions
contemplated hereby, and (iii) resolved to recommend that the stockholders of
Parent approve the issuance of the shares of Parent Common Stock in connection
with the Offer and approve the other matters referred to in Section 1.1(f)
hereof.

      (f) Promptly after the date hereof, Parent shall take all action necessary
in accordance with applicable Law and its certificate of incorporation and
bylaws to call, give notice of, convene and hold a meeting of its stockholders
(the "PARENT STOCKHOLDERS MEETING") to be held as promptly as practicable, and
in any event within 45 days after the Effective Date, for the purpose of (i)
approving the issuance of shares of Parent Common Stock in connection with the
Offer, (ii) approving the change-of-control of Parent in connection with the
transactions contemplated by this Agreement, (iii) approving an amendment to
Parent's 1992 Stock Option Plan to increase the number of shares reserved for
issuance thereunder by 2,000,000 shares; and (iv) approving each of the other
proposals that Parent and the Company shall deem reasonably necessary for the
purposes of effecting the transactions contemplated hereby (clauses (i), (ii)
and (iii) above being referred to together herein as the "PARENT STOCKHOLDER
APPROVALS"). Parent will use its reasonable best efforts to solicit from its
stockholders proxies in favor of the Parent Stockholder Approvals and will take
all other action necessary to secure the vote or consent of its stockholders
required by the rules of Nasdaq and applicable Law. To facilitate the foregoing,
Parent agrees that promptly following the date of this Agreement it shall retain
a nationally recognized proxy solicitor to assist Parent in its stockholder
solicitation efforts and Parent shall make arrangements with such solicitor such
that the solicitor shall give to Parent and the Company periodic updates (at
least once every other week) regarding the status of the solicitation efforts.
Notwithstanding anything to the contrary contained in this Agreement, Parent may
adjourn or postpone the Parent Stockholders Meeting to the extent necessary to
ensure that any necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to Parent's stockholders in advance of a vote
on the Parent Stockholder Approvals or, if as of the time for which the Parent
Stockholders Meeting is originally scheduled (as set forth in the Proxy
Statement/Prospectus) there are insufficient shares of Parent Common Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the Parent Stockholders Meeting. Parent shall ensure
that the Parent Stockholders Meeting is called, noticed, convened, held and
conducted, and that all proxies solicited by Parent in connection with the
Parent Stockholders Meeting are solicited, in compliance with applicable Law,
its certificate of incorporation and bylaws and the rules of Nasdaq.

      (g) As soon as reasonably practicable following the date of this Agreement
and if required by any applicable law, Parent shall engage a person authorized
by the Financial Services Authority for the purposes of approving the Offer
Documents and any documents to be delivered to the holders of

                                       5



Company Options pursuant to the Option Offer, each of which constitutes
"financial promotion" under Section 21 of the Financial Services and Markets Act
2000.

           (h) Parent agrees to use its commercially reasonable efforts to: (i)
within 30 days of the First Closing Date, file a post-effective amendment to the
Registration Statement on Form S-3 registering the resale by those Company
shareholders who; (A) have executed Company Support Agreements, and (B) may be
deemed to be an "affiliate" of the Company, as the term "affiliate" is defined
for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations,
of the Parent Common Stock issuable to such shareholders in the Offer, and (ii)
cause such post-effective amendment on Form S-3 to be declared effective under
the Securities Act as promptly as practicable after its filing, and in any event
within one hundred eighty (180) days following the First Closing Date. The
various terms and procedures associated with resale under such registration
statement are set forth in the Company Support Agreements between Parent and
certain Company shareholders.

      SECTION 1.2 Company Actions With Respect to the Offer.

      (a) The Company hereby approves of and consents to the transactions
contemplated by this Agreement, including the terms of the Offer and the Option
Offer set out in this Agreement, and represents that the Company Board or a duly
authorized sub-committee appointed by the Company Board, at a meeting duly
called and held on September 23, 2004, subject to the terms and conditions set
forth herein, has unanimously: (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer, are in the best interests
of the Company; (ii) approved this Agreement and the transactions contemplated
hereby; and (iii) resolved to recommend that the shareholders of the Company
accept the Offer.

      (b) In connection with the Offer, the Company shall, promptly following a
request by Parent, furnish Parent with such information, including updated lists
of the shareholders and optionholders of the Company and updated lists of Shares
and options held by such shareholders and optionholders, and such assistance as
Parent or its agents may reasonably request in communicating (i) the Offer to
the record holders of the Shares and (ii) the Option Offer to the holders of
Company Options. Subject to any applicable Laws, and except for such steps as
are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Offer and the Option Offer, Parent and its agents
shall hold in confidence the information contained in any such listings and
files, will use such information only in connection with the Offer and the
Option Offer and, if this Agreement shall be terminated prior to the
consummation of the Offer and the Option Offer, will deliver, and will use its
reasonable best efforts to cause its agents to deliver, to the Company all
copies and any extracts or summaries from such information then in their
possession or control.

      (c) Solely in connection with the execution by certain of the shareholders
of the Company of the Company Support Agreements and in connection with the
exchange of Shares pursuant to the Offer, the Company hereby waives any and all
rights of first refusal it may have with respect to Shares owned by, or issuable
to, any person, other than rights to repurchase unvested shares, if any, that
may be held by persons pursuant to the grant of restricted stock purchase rights
or following exercise of employee stock options.

      SECTION 1.3 Boards of Directors.

      (a) The Parent Board will take all actions necessary such that, on the
First Closing Date, the Parent Board shall consist of Craig C. Taylor, Genghis
Lloyd-Harris, Thomas Daniel, Hermann Hauser, Mark Carthy and John West. In
addition, on the First Closing Date, one or more other directors who shall be
mutually acceptable to the Parent Board and the Company Board shall be appointed
to the Parent

                                       6



Board. The parties shall ensure that the composition of the Parent Board upon
such appointments shall comply with the rules and regulations of Nasdaq and the
SEC. John West shall be appointed as Chief Executive Officer of Parent,
effective on the First Closing Date and contingent upon the occurrence of the
First Closing Date.

      (b) Parent's obligation to reconstitute the Parent Board shall be subject
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
accordingly Parent shall promptly take all action required pursuant to such
Section and Rule in order to fulfill its obligations under this Section 1.3 and
shall include in the Proxy Statement/Prospectus such information with respect to
the Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.3. The Company
shall promptly supply to Parent in writing and be solely responsible for any
information with respect to itself and its officers, directors and affiliates
required by such Section and Rule.

      (c) The Company Board will take all actions necessary such that, on the
First Closing Date, the Company Board shall consist of one or more of the
following individuals who shall be mutually acceptable to the Parent Board and
the Company Board: John West, Dr. Tony Smith, Dr. Shankar Balasubramanian and
Dr. Steve Allen.

      SECTION 1.4 Stock Options and Stock Plans.

      (a) Provided that (i) this Agreement shall not have been terminated in
accordance with Section 7.1 and (ii) none of the events set forth in Annex A
hereto that would entitle Parent to fail to consummate the Offer shall have
occurred and be continuing (and shall not have been waived by Parent or the
Company, as applicable), either concurrently with the commencement of the Offer
or as soon thereafter as reasonably practicable but in no event later than four
weeks following the commencement of the Offer, Parent shall commence an exchange
offer (the "OPTION OFFER") for each outstanding option to acquire Ordinary
Shares (each, a "COMPANY OPTION" and together, the "COMPANY OPTIONS") under the
Solexa Share Option Plan for Consultants (the "CONSULTANT SHARE OPTION SCHEME"),
the Solexa Unapproved Company Share Option Plan (the "UNAPPROVED SHARE OPTION
SCHEME") and the Solexa Limited Enterprise Management Incentive Plan (the
"MANAGEMENT SHARE OPTION SCHEME" and, together with the Consultant Share Option
Scheme and the Unapproved Share Option Scheme, the "COMPANY SHARE OPTION
SCHEMES") on the terms contemplated by Section 1.4(b) below.

      (b) Under the Option Offer, each outstanding Company Option under the
Company Share Option Schemes, to the extent vested or, in the event that the
Company Acquisition procedure is invoked, whether vested or unvested, shall, (i)
at the election of the holder of each Company Option either, (A) be exercised in
accordance with rules of the relevant Company Share Option Scheme and such
Ordinary Shares received upon the exercise be exchanged for shares of Parent
Common Stock on the same terms as those offered under the Offer (the "OPTION
EXERCISE"); or (B) become an option to acquire, on the same terms and conditions
as were applicable under the relevant Company Share Option Scheme immediately
prior to the First Closing Date, including the same vesting schedule, a number
of shares of Parent Common Stock equal to the number of Ordinary Shares issuable
upon the exercise of each such Company Option prior to the First Closing Date
multiplied by the Ordinary Share Exchange Ratio ("OPTION ROLL OVER"); or (ii) in
the event that neither the Option Exercise nor the Option Roll Over are chosen,
lapse. Upon an Option Roll Over, the exercise price for each such share of
Parent Common Stock shall (i) be converted into United States dollars based on
the Exchange Rate (as defined below) and, (ii) shall equal the per share
exercise price of the applicable Company Option (as converted to United States
dollars) divided by the Ordinary Share Exchange Ratio. The number of shares of
Parent Common Stock issuable upon the exercise of any Company Option after the
First Closing Date shall be rounded down to the nearest whole share. For
purposes of this Agreement, the term "EXCHANGE RATE" shall be deemed to refer

                                       7



to the British pounds to United States dollars currency exchange rate quoted in
the Wall Street Journal, West Coast Edition, on the Business Day immediately
prior to the relevant date of exercise. Any election by a holder of Company
Options pursuant to the Option Offer will be conditional upon the exchange by
Parent of Shares pursuant to the Offer on the First Closing Date.

      (c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of the Company Options converted in accordance with this Section 1.4.
As promptly as practicable after the First Closing Date, Parent shall file a
registration statement on Form S-8 (or any successor form) or another
appropriate form with respect to the Parent Common Stock subject to such options
and shall use its commercially reasonable efforts to maintain the effectiveness
of such registration statement or registration statements for so long as such
options remain outstanding.

                                   ARTICLE II
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      The Company represents and warrants to Parent, except as set forth in the
disclosure letter supplied by the Company to Parent dated as of the date hereof
(the "COMPANY DISCLOSURE LETTER"), as follows:

      SECTION 2.1 Information and Executives; Organization and Qualification.

      (a) The registered owners of the B Preferred Shares, A Ordinary Shares and
Ordinary Shares, and the number of Shares held by such owners, are set forth on
Schedule 2.1 of the Company Disclosure Letter and all of such Shares are fully
paid and comprise the entire issued share capital of the Company. None of the
share capital of the Company (whether issued or unissued) is under any option or
other right to acquire by the Company or subject to any mortgage, charge (fixed
or floating), pledge, lien, security, interest or other third party right
(including rights of pre-emption) created by the Company and no dividends or
other rights or benefits have been declared, made or paid or agreed to be
declared, made or paid thereon.

      (b) The Company is an entity duly organized and validly existing under the
laws of the jurisdiction of its incorporation or organization, with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. No receiver has been appointed in
respect of the Company or in respect of any of its assets nor has any
administration order been made nor any notice issued for convening a meeting at
which a resolution is to be proposed for the winding up of the Company, and nor
has any such resolution been passed.

      SECTION 2.2 Company Financial Statements.

      (a) The Company has made available to Parent a copy of the Company's
audited balance sheet as of December 31, 2003 and the related statements of
income for the fiscal year then ended, accompanied by the report of the
Company's independent public accountants and the directors' report(s) thereon
(the "COMPANY FINANCIAL STATEMENTS"). The Company Financial Statements have been
prepared in accordance with accounting principles, standards and practices which
are generally accepted in the United Kingdom ("UK GAAP") and on the same basis
and in accordance with the same accounting policies as the corresponding
accounts for the preceding financial year, comply with the requirements of the
Companies Act 1985 and give a true and fair view of the state of affairs of the
Company on the date of such financial statements and of the profits and losses
for the period concerned. The Company's audited

                                       8



balance sheet as of December 31, 2003 is referred to in this Agreement as the
"COMPANY BALANCE SHEET."

      (b) The Company Balance Sheet makes adequate provision for or, in the case
of actual liabilities, properly discloses, notes or takes into account as at the
date of the Company Balance Sheet (the "COMPANY BALANCE SHEET DATE"): (i) all
liabilities whether actual contingent or disputed; (ii) all capital commitments
whether actual or contingent; (iii) all bad and doubtful debts; and (iv) all
accrued Taxes (as defined in Section 2.4 below).

      (c) The Company Balance Sheet adequately provides or reserves for all
Taxes for which the Company was liable at the Company Balance Sheet Date.

      (d) The profits (or losses) shown in the Company Balance Sheet have not to
a material extent been affected (except as disclosed therein) by any
extraordinary or exceptional event or circumstance or by any other factor
rendering such profits unusually high or low.

      (e) The management accounts for July 2004 ("MANAGEMENT ACCOUNTS") have
been prepared in accordance with accounting policies on a basis consistent with
the management accounts prepared in the preceding twelve months. To the
Knowledge (as defined below) of the Company, the Management Accounts have been
prepared in accordance with UK GAAP; provided that the Management Accounts do
not contain all of the footnote disclosure that would otherwise be required by
UK GAAP and such Management Accounts are subject to normal year-end adjustments
which are not anticipated to be material.

      (f) The Management Accounts reflect the financial affairs of the Company
(at the date to which they have been prepared), reflect the Company's results
for the period covered thereby and are not inaccurate or misleading in any
material respect.

      SECTION 2.3 Events since the Company Balance Sheet Date. Since the Company
Balance Sheet Date:

      (a) the business of the Company has been carried on in the ordinary course
and so as to maintain the same as a going concern;

      (b) the Company has not acquired or disposed of or agreed to acquire or
dispose of any business or any material asset (other than trading stock in the
ordinary course of the business carried on by it) or assumed or acquired any
material liability (including a contingent liability);

      (c) no dividend or other distribution (as defined by the Income and
Corporation Taxes Act of 1988 ("ICTA")) has been declared, made or paid to the
Company's members nor has it repaid any loan capital or other debenture;

      (d) no change has been made (or agreed to be made) in the emoluments or
other terms of employment of any of the Company's employees who are in receipt
of remuneration in excess of (pound)50,000 per annum or of any of the directors
of the Company nor has the Company paid any bonus or special remuneration to any
such employee or any of its directors;

      (e) the Company has not borrowed monies (except in the ordinary course of
the business carried on by it or from its bankers under agreed loan facilities);

                                       9



      (f) to the Company's Knowledge, there has not been any deterioration in
the financial position or prospects of the business of the Company (whether in
consequence of normal trading or otherwise);

      (g) no part of the business of the Company has been effected to a material
extent by the loss of any important customer, or of any source of supply or by
the cancellation or loss of any order or contract or by any other abnormal
factor or event nor, to the Company's Knowledge, are there any circumstances
likely to lead thereto;

      (h) no employee has been dismissed or made redundant nor has the Company
taken or omitted to take any action which would entitle any employee to claim
that he has been constructively dismissed; and

      (i) there are no liabilities (including contingent liabilities)
outstanding on the part of the Company other than those liabilities disclosed in
the Company Balance Sheet or incurred in the ordinary and proper course of
business since the Company Balance Sheet Date which are similarly disclosed in
the books and records of the Company.

      For purposes of this Agreement, "KNOWLEDGE" shall mean, with respect to
Parent or the Company, as the case may be, with respect to any matter in
question, the actual knowledge of the executive officers and members of the
Parent Board or the Company Board, as the case may be, after inquiry of his or
her direct reports.

      SECTION 2.4 Taxes.

      (a) Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, the Company has duly made all Tax Returns and
given or delivered all notices, accounts and information which ought to have
been made to and is not involved in any dispute with the Inland Revenue or other
authority concerning any matter likely to affect in any way the liability
(whether accrued, contingent or future) of it to Taxes of any nature whatsoever
or other sums imposed, charged, assessed, levied or payable under the provisions
of the taxation statutes and the Company is not aware of any matter which may
lead to such dispute.

      (b) Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, the Company has duly paid or fully provided for
all Taxes for which it is liable and there are no circumstances in which
interest or penalties in respect of Tax not duly paid could be charged against
it in respect of any period prior to the Company Balance Sheet Date.

      (c) Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, no liability of the Company for Taxes has arisen
or will arise prior to the First Closing Date save for corporation Tax payable
in respect of normal trading profits earned by it or income Tax deducted under
PAYE regulations or national insurance contributions or Value Added Tax or
sickness pay for which it is accountable to the Inland Revenue, Customs and
Excise or other relevant authority and which has where appropriate been deducted
or charged and where due paid to the Inland Revenue or such other relevant
authority.

      (d) The Company has not entered into or been a party to any schemes or
arrangements designed partly or wholly for the purpose of it or (so far as each
of the Company is aware) any other person avoiding the payment or levy of Taxes.

      (e) All documents in the possession of the Company and to which the
Company is a party or to the production of which it is entitled and which
attract stamp or transfer duty in the United Kingdom or elsewhere have been
properly stamped.

                                       10



      (f) The Company is not involved in and has not in the last six years been
involved in any dispute with or investigation by the Inland Revenue or other
Taxing Authority concerning any matter likely to affect in any way the liability
(whether accrued, contingent or future) of it to Taxes of any nature whatsoever
or other sums imposed, charges, assessed, levied or payable under the provisions
of the tax statutes and the Company and, to the Knowledge of the Company, there
is no matter that exists would lead to such a dispute or investigation.

      (g) The Company is, and has been since incorporation, resident for tax
purposes only in the United Kingdom. The Company is duly registered in the
United Kingdom for the purposes of value added tax.

      (h) As used in this Agreement, (i) the term "TAX" or "TAXES" shall mean,
with respect to any person, (a) all taxes, domestic or foreign, including
without limitation any income (net, gross or other, including recapture of any
tax items such as investment tax credits), alternative or add-on minimum tax,
gross income, gross receipts, gains, sales, use, leasing, lease, user, ad
valorem, transfer, recording, franchise, profits, property (real or personal,
tangible or intangible), fuel, license, withholding on amounts paid to or by
such Person, payroll, employment, unemployment, social security, excise,
severance, stamp, occupation, premium, environmental or windfall profit tax,
custom, duty, value added or other tax (but excluding stamp duty), or other like
assessment or charge of any kind whatsoever, together with any interest, levies,
assessments, charges, penalties, additions to tax or additional amounts imposed
by any Taxing Authority, (b) any joint or several liability of such person with
any other person for the payment of any amounts of the type described in (a) of
this definition, including without limitation any liability under U.S. Treasury
Regulations Section 1.1502-6 promulgated under the Code and any similar
provisions of applicable U.S. state Tax Law, and (c) any liability of such
person for the payment of any amounts of the type described in (a) as a result
of any express or implied obligation to indemnify any other person; (ii) the
term "TAX RETURN(S)" shall mean all returns, consolidated or otherwise, report
or statement (including without limitation informational returns), required to
be filed with any Taxing Authority; and (iii) the term "TAXING AUTHORITY" shall
mean any authority of competent jurisdiction responsible for the imposition of
any Tax including, without limitation, the United States Internal Revenue
Service, the Inland Revenue, HM Customs and Excise and any other governmental,
state, federal or other fiscal, revenue, customs or excise authority,
department, agency, body or office whether in the United Kingdom or elsewhere in
the world. For purposes of this Agreement, "MATERIAL ADVERSE EFFECT" with
respect to Parent or the Company, as the case may be, means any change, effect,
event, occurrence, state of facts or development (i) that is, or is reasonably
likely to be, materially adverse to the value, condition (financial or
otherwise), business or results of operations of the Company or Parent (and in
the case of Parent, taken together with the Subsidiaries of Parent), as the case
may be, or (ii) that will, or is reasonably likely to, impair the ability of any
party hereto to perform its obligations under this Agreement or prevent or
materially delay consummation of any of the transactions contemplated by this
Agreement; provided, however, that in the case of clause (i), no adverse change,
effect, event, occurrence, state of facts or development attributable to
conditions affecting the United States or the United Kingdom economy as a whole
that is not unique to Parent or the Company, as the case may be, and that does
not disproportionately affect Parent or the Company, as the case may be, shall
be deemed in itself to constitute, or shall be taken into account in
determining, whether there has been or will be a Material Adverse Effect.

      SECTION 2.5 Litigation.

      (a) Neither the Company nor, to the Company's Knowledge, any person for
whose acts and defaults it may be vicariously liable, is at present engaged
whether as claimant, defendant or otherwise in any legal action, proceeding,
mediation or arbitration (or any similar proceedings) which is either in
progress or, to the Company's Knowledge, is threatened or is pending or is being
prosecuted for any

                                       11



criminal offence and no governmental or official investigation or inquiry
concerning the Company is in progress or, to the Company's Knowledge, pending
that could, individually or in the aggregate, have a Material Adverse Effect on
the Company.

      (b) There are no circumstances known to the Company likely to lead to any
claim or legal action, proceeding or arbitration (other than as aforesaid)
prosecution, investigation or enquiry described in Section 2.5(a) above.

      SECTION 2.6 Property and the Environment.

      (a) The Company has a good and marketable title to and is legal and
beneficial owner of the property set forth in Schedule 2.6(a) (the "COMPANY
PROPERTY"). With the exception of the Company Property, the Company does not
own, use or occupy any other land or building whether under a license or
otherwise.

      (b) The Company Property is free from all material pledges, claims, liens,
charges, encumbrances, leases, tenancies, options, licenses, mortgages and
security interests of any kind or nature whatsoever, other than liens for Taxes
not yet due and payable and restrictions imposed by applicable securities laws
(collectively, "ENCUMBRANCES") and any agreement to create any of them.

      (c) The Company has received no indication that the Company Property is
not in a good and substantial state of repair. The Company is not aware of any
structural problems in respect thereof and no deleterious substances not
approved by any relevant Code of Practice have been used in the construction of
the Company Property.

      (d) All covenants, obligations (including without limitation statutory
obligations), restrictions and conditions affecting any of the Company Property
or the Company as owner or lessee thereof have been observed and performed and
all outgoings (including rates) have been duly paid and the Company Property is
insured to its full reinstatement value.

      (e) There are no covenants, obligations, restrictions, conditions,
easements or encumbrances or statutory consents or authorizations which are of
an unusual or onerous nature or which would affect the continued use of any of
the Company Property for the purposes of the Company's business as currently
conducted or the value of the Company Property.

      (f) There are no compulsory purchase orders or resolutions affecting the
Company Property or, to the Company's Knowledge, any proposal for such an order
or resolution.

      (g) All deeds and documents necessary to prove title to the Company
Property are in the possession of the Company and have been or will be duly
stamped.

      (h) There is no actual or contingent liability on the part of the Company
in relation to any real property other than the Company Property, including any
actual or contingent liability as previous lessee or underlessee or guarantor or
surety or covenantor in relation to any lease or underlease.

      (i) The Company has obtained and is and has been in compliance with the
terms and conditions of all consents required under Environmental Laws required
in respect of the Company's activities and, to the Company's Knowledge, is and
has been in compliance with and has no material actual or contingent liability
under Environmental Law and there are no facts or circumstances which so far as
the Company is aware are likely to lead to the revocation, suspension or
variation of any consent required under

                                       12



Environmental Laws, except in each case as could not, individually or in the
aggregate, have or result in a Material Adverse Effect on the Company.

      (j) No conditions exist in respect of or connected with the Company
Property in respect of which the Company is or is likely to be responsible under
Environmental Law for all or any part of the costs or expenses associated with
investigation, treatment, remediation or other works in respect of any Hazardous
Substance and no conditions exist in respect of or in connection with any
properties previously owned or occupied by the Company whereby the Company is
likely to be responsible under Environmental law for all or any part of such
costs or expenses.

      (k) Since the Company's occupation of the Company Property, there are and
have been no Hazardous Substances beyond an allowable or permissible quota or
limit prescribed or specified under any Environmental Law disposed of, spilled
or discharged by the Company in or under the Company Property nor in water or
groundwater on or under the Company Property and the Company is not aware of any
Hazardous Substances which are or have been present in water or groundwater on
or under the Company Property.

      (l) The Company has received no indication of any actual, pending or
threatened actions against it by regulatory authorities or third parties in
respect of any alleged non-compliance with or liability under Environmental Law.

      (m) As used herein, the term "ENVIRONMENTAL LAW" means any law,
regulation, treaty, directive, decision, code, notice or judgment relating to:
(i) the protection, investigation or restoration of the environment, health and
safety, or natural resources, (ii) the handling, use, presence, disposal,
release or threatened release of any Hazardous Substance, or (iii) noise, odor,
wetlands, pollution or contamination to persons or property. As used herein, the
term "HAZARDOUS SUBSTANCE" means any substance that is: (i) listed, classified
or regulated pursuant to any Environmental Law; (ii) any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (iii) any other
substance which may be the subject of regulatory action by any Government
Authority pursuant to any Environmental Law.

      SECTION 2.7 Intellectual Property.

      (a) Section 2.7(a) of the Company Disclosure Letter lists (i) all patents
and patent applications, all applications for trademarks, trade names and
service marks, and all registered trademarks, trade names, service marks, and
copyrights that are owned or purported to be owned by the Company, and such list
specifies, as applicable, the jurisdictions by or in which each such patent,
trademark, trade name, service mark or copyright has been issued or registered
or in which any application for such issuance and registration has been filed,
(ii) all material licenses, sub-licenses and other agreements as to which the
Company is a party and pursuant to which any person is authorized to use any
Company Intellectual Property (as defined below) ("COMPANY LICENSES"), and (iii)
all material licenses, sub-licenses and other agreements to which the Company is
a party and pursuant to which the Company is authorized to use any third-party
Intellectual Property that is included in the Company Intellectual Property
(third-party Intellectual Property included in the Company Intellectual Property
being referred to in this Agreement as "COMPANY THIRD-PARTY INTELLECTUAL
PROPERTY RIGHTS"). All agreements described in Section 2.7 of the Company
Disclosure Letter as they relate to Sections 2.7(a)(ii) and (iii) are valid,
enforceable and legally binding, subject to the effect or availability of rules
of law governing specific performance, injunctive relief or other equitable
remedies (regardless of whether any such remedy is considered in a proceeding at
law or in equity), and to the Company's Knowledge, neither the Company nor any
third party is in material breach of any such agreement described in Section 2.7
of the Company Disclosure Letter. "INTELLECTUAL PROPERTY" means all United
States, state and foreign intellectual property, including, but not

                                       13



limited to all (1) patents, inventions, discoveries, processes, design rights
and unregistered designs; copyrights and works of authorship in any media;
trademarks, service marks, domain names, trade names, trade dress and other
source indicators; trade secrets, ideas, algorithms, samples, media and/or cell
lines, formulae, processes, data, database rights (and rights in databases),
computer software applications (in both source code and object code form) and
other confidential or proprietary information; (2) registrations, applications
and recordings related thereto; (3) rights to obtain renewals, extensions,
continuations, continuations-in-part, supplementary protection certificates or
similar legal protections related thereto; and (4) rights to bring an action at
law or in equity for the infringement or other impairment thereof. "COMPANY
INTELLECTUAL PROPERTY" means all the Intellectual Property which is used by the
Company in its business including all Intellectual Property in the products and
services supplied and/or developed by the Company and any licenses to the
Company of Company Third-Party Intellectual Property Rights.

      (b) The Company is the sole legal and beneficial owner of, or is licensed
to use, the Company Intellectual Property.

      (c) All Company Intellectual Property owned by the Company is unencumbered
and subsisting and, to the Company's Knowledge, is valid and enforceable, and
nothing has been done or so far as the Company is aware omitted to be done which
may cause any of it to cease to be so.

      (d) The Company has (i) made all applications for registration for such
Company Intellectual Property owned by the Company, all of the Company's rights
in the Company Third-Party Intellectual Property Rights and that the Company
considered prudent to be registered in any jurisdiction in which the Company
conducts its business; and (ii) taken such other steps as the Company considered
prudent for the protection of the Company Intellectual Property owned by the
Company and all of the Company's rights in the Company Third-Party Intellectual
Property Rights, including without limitation carrying out all relevant searches
in all jurisdictions where the Company conducts its business before registering
or using the Company Intellectual Property and repeating such searches on a
regular basis.

      (e) Such renewal and extension fees in respect of any registered Company
Intellectual Property owned by the Company as the Company considered prudent to
be maintained have been duly paid, and all other steps as the Company considered
prudent to be taken for the maintenance and protection of any registered Company
Intellectual Property owned by the Company have been taken, in any jurisdiction
in which they are registered.

      (f) So far as the Company is aware all documents and materials (i)
material to the right, title and interest of the Company to the Company
Intellectual Property, including without limitation any licenses of the Company
Third-Party Intellectual Property Rights; and (ii) necessary for the prosecution
or maintenance (as applicable) of all registrations and applications for
registrations in relation to the Company Intellectual Property owned by the
Company form part of the records or materials in the possession or ownership of
the Company.

      (g) None of the Company Intellectual Property is subject, in whole or in
part, to any charge or license other than as set out in the Company Licenses and
Company Third-Party Intellectual Property Rights. None of the Company
Intellectual Property (excluding for the purposes of this warranty Company
Third-Party Intellectual Property Rights) is subject, in whole or in part, to
any charge other than as set out in the Company Licenses. None of the Company
Intellectual Property (excluding for the purposes of this warranty Company
Third-Party Intellectual Property Rights) is subject to any license (or other
agreement) on terms that provide any third party to use such Company
Intellectual Property, in whole or in part, on an exclusive or royalty-free
basis.

                                       14



      (h) The Company has not (i) authorized or otherwise expressly or impliedly
permitted any use whatsoever of the Company Intellectual Property owned by the
Company; or (ii) granted to any third party any right or interest in respect of
such Company Intellectual Property, other than under a Company License.

      (i) To the Company's Knowledge, all Company Intellectual Property,
including without limitation all Company Third-Party Intellectual Property
Rights, will be available for use by the Company on substantially identical
terms and conditions immediately following the First Closing Date.

      (j) The Company Intellectual Property comprises all the Intellectual
Property reasonably necessary to carry on the business as conducted by the
Company as at the date of this Agreement.

      (k) No activities, documents, materials (whether in tangible or intangible
form), software, the Company websites, products, services or processes of the
Company (or any licensee under any Company Third-Party Intellectual Property
Rights in relation to the Company Intellectual Property) involve or have
involved the unlicensed use of a third party's confidential information or give
or have given rise to liability to pay compensation or, to the Company's
Knowledge, infringe or have infringed, any Intellectual Property of a third
party.

      (l) No third party or competent authority has made any claim, challenge or
opposition, to the Company against the Company in relation to the Company
Intellectual Property, and. to the Company's Knowledge, no third party has made
or is making any unauthorized use of, or has infringed or is infringing, any
Company Intellectual Property.

      (m) To the Company's Knowledge, no third party has registered or applied
to register in any country any Intellectual Property made, or claimed to be
owned, by the Company.

      (n) No Company License or license comprising Company Third-Party
Intellectual Property Rights, or other agreement in relation to the Company
Intellectual Property, has been the subject of any material breach by the
Company and the Company has not formally waived any material breach of any other
party, and no notice or knowledge of breach of or termination of any license
comprising Company Third-Party Intellectual Property Rights has been received by
the Company.

      (o) The Company is not subject to any order or injunction or other
restrictive measure or undertaking imposed by any court or other body of
competent jurisdiction in relation to the Company Intellectual Property
(including, without limitation, any prohibition or restriction on use).

      (p) The Company has at all times taken all such steps as it considered
prudent to keep confidential all know-how used in the business and the Company
has not disclosed (except in the ordinary course of business and in the case of
a material disclosure, subject to a binding confidentiality obligation) any of
its know-how other than to its employees and professional advisors.

      (q) The Company is entitled to use all know-how in its possession and, to
the Company's Knowledge, there are no restrictions on the use of that know-how.

      (r) No claims, disputes or proceedings in respect of Company Intellectual
Property have been settled by the Company in the three years immediately
preceding the date hereof.

      (s) There are and have been no claims, formal disputes or proceedings
which have a material adverse effect on (i) the Company Intellectual Property
owned by the Company or its ownership of the Company Intellectual Property owned
by the Company; (ii) the Company's use of the Company Third-

                                       15



Party Intellectual Property Rights; or (iii) the right of the Company (and any
licensee of the Company) to use anywhere in the world any of the Company
Intellectual Property.

      (t) No party (whether individual, partnership, or company) retained,
commissioned, employed or otherwise engaged by the Company from time to time and
who, in the course of such engagement created, discovered or developed work in
which Company Intellectual Property subsists has made any claim to the Company,
in the three years immediately preceding the date of this Agreement, relating to
(i) any right, title or interest in such Intellectual Property; or (ii) any
compensation or remuneration in relation to such Intellectual Property whether
under section 40 of the United Kingdom Patents Act 1977 or equivalent
legislation in the world or otherwise.

      (u) In respect of any personal data processed by the Company, the Company
(i) has made all necessary registrations and notifications of its particulars in
accordance with the Data Protection Legislation and has listed all notifications
and registrations in Section 2.7(u) of the Company Disclosure Letter; (ii) are
aware all details supplied to the Information Commissioner in relation to each
application for registration or notification are accurate and complete; (iii)
comply and will continue to comply with the Data Protection Legislation
(including but not limited to the Data Protection Principles) and any guidance
notes or guidelines issued by the Information Commissioner; (iv) will co-operate
fully in complying with any subject access requests made pursuant to the Data
Protection Legislation; and (v) no notice of any kind has been served on the
Company under any provision under any part of the Data Protection Legislation or
any analogous legislation in any part of the world.

      (v) To the Company's Knowledge, the contents of the Company websites
comply with all laws and regulations and codes of practice in any applicable
jurisdiction and the website does not contain any hypertext links to other
websites.

      SECTION 2.8 Assets, Debts and Stock.

      (a) None of the book debts included in the Company Financial Statements or
which have subsequently arisen have been outstanding for more than two months
from their due dates for payment and all such debts have realised or will
realise in the normal course of collection their full value save as provided in
the Company Financial Statements or in the books of the Company.

      (b) The Company has not granted any security over any part of its
undertaking or assets.

      (c) All assets used by and all debts due to the Company or which have
otherwise been represented as being its property or due to it or used or held
for the purposes of its business are its absolute property to which the Company
has good and marketable title and none is the subject of any encumbrance (save
in respect of liens arising in the normal course of trading) or the subject of
any factoring arrangement, hire-purchase, retention of title, conditional sale
or credit sale agreement.

      (d) Each asset needed for the proper conduct of the business of the
Company is in good repair and working order (fair wear and tear excepted).

      SECTION 2.9 Contracts with Connected Persons.

      (a) There are no loans made by the Company to any of its directors or
shareholders and/or any person connected with any of them and no debts or
liabilities owing by the Company to any of its directors or shareholders and/or
any person connected with them as aforesaid.

                                       16



      (b) There are no existing contracts or arrangements to which the Company
is a party and in which any of its directors or shareholders and/or any person
connected with any of them is interested.

      SECTION 2.10 Employment Arrangements; Employee Benefits.

      (a) Full details of all contracts of service or for services and other
arrangements (including, without limitation, details of notice periods and all
remuneration) of all officers, employees and consultants of the Company are set
out in Section 2.10(a) of the Company Disclosure Letter.

      (b) There are no agreements or other arrangements (binding or otherwise)
or outstanding or anticipated claims or disputes between the Company and any
trade union or other body representing all or any of the employees of the
Company.

      (c) The Company does not owe any amount to, nor does it have any
outstanding obligations in respect of, any of its present or former directors,
employees or shareholders other than remuneration accrued during the month in
which this Agreement has been entered into.

      (d) No gratuitous payment has been made or promised in connection with the
actual or proposed termination or suspension of employment or variation of any
contract of employment of any present or former director or employee of the
Company.

      (e) There are no agreements or arrangements (whether legally enforceable
or not) for the payment of any pensions, allowances, lump sums or other like
benefits on redundancy, retirement or on death or during periods of sickness or
disablement for the benefit of any director or former director or employee or
former employee of the Company or for the benefit of the dependants of any such
person.

      (f) There have been no "relevant transfers" to the Company pursuant to the
Transfer of Undertakings (Protection of Employment) Regulations 1981.

      (g) All officers, employees and consultants of the Company have assigned
past and have agreed to assign future Intellectual Property and know-how
relating to the business of the Company to the Company pursuant to agreements in
the form previously delivered to Parent.

      (h) The Company has complied in all respects with its obligations in
respect of the group personal pension scheme provided by Scottish Amicable
(the"GPP SCHEME") to the employees and directors of the Company. The Company's
sole obligations in connection with the GPP Scheme are limited to providing
access to the employees and directors of the Company to the GPP Scheme, paying
employer's contributions to the GPP Scheme and deducting contributions of the
members of the GPP Scheme.

      (i) The Company has complied in all material respects with its obligations
(including its obligations as trustee and administrator) in respect of the group
life assurance scheme (the "LIFE ASSURANCE SCHEME").

      (j) The Life Assurance Scheme only provides lump sum benefits on the death
of employees and directors while in service. All benefits which may become
payable to or in respect of employees or directors under the Life Assurance
Scheme are fully insured and all related insurance premiums have been paid at
the insurance company's normal rates..

      (k) The Company does not sponsor, participate in, or contribute and has
not since its incorporation sponsored, participated in or contributed to any
defined benefit scheme.

                                       17



      (l) To the Company's Knowledge, the GPP Scheme is approved under Chapter
IV, Part XIV of the Income and Corporation Taxes Act 1988, and the Life
Assurance Scheme is approved under Chapter I, Part XIV of the Income and
Corporation Taxes Act 1988, and there is no matter which might give the Inland
Revenue reason to withdraw such approval in respect of other arrangements.

      (m) The Company has complied with its duty to facilitate access to a
stakeholder pension scheme under Section 3 of the Welfare Reform and Pensions
Act 1999.

      (n) No claim concerning the GPP Scheme or the Life Assurance Scheme
(including, without limitation, contact with the Occupational Pensions
Regulatory Authority, the Pensions Advisory Service or the Pensions Ombudsman or
an application under any internal dispute resolution procedure) has been made by
or in respect of any employee or director, and none is pending or threatened.
The Company is not aware of any matter which might give rise to such a claim.

      (o) All officers, employees and consultants of the Company have entered
into non-disclosure agreements and all officers and employees have executed
restrictive covenants preventing competition with the Company in the form
previously delivered to Parent.

      (p) Section 2.10(p) of the Company Disclosure Letter sets forth, as of the
date hereof, the total outstanding Company Options and (i) the name of the
holder of each Company Option, (ii) the exercise price per share of such Company
Option, (iii) the number of shares covered by such Company Option, (iv) the
vesting schedule for such Company Option, (v) the term of each option and (vi)
whether the exerciseability of such Company Option shall be accelerated in any
manner by any of the transactions contemplated by this Agreement or upon any
other event or condition and the extent of acceleration, if any; provided,
however, that the Company may, prior to commencement of the Option Offer by
Parent pursuant to Section 1.4(a), provide a written update of Schedule 2.10(p)
to Parent. All outstanding Company Options have been duly authorized by the
Company Board or a committee thereof, are validly issued, and were issued in
compliance with all applicable securities Laws. Except as set forth on Section
2.10(p) of the Company Disclosure Letter, there are no outstanding options,
warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any person any right to subscribe for
or acquire, any shares in the capital of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares in the capital of the Company, or securities or rights
convertible or exchangeable into shares in the capital of the Company.

      (q) The Company has not taken any action that would result in the
accelerated vesting, exercisability or payment of any Company Options as a
consequence of the execution of, or consummation of, the transactions
contemplated by, this Agreement.

      SECTION 2.11 Statutory and Legal Requirements.

      (a) All statutory, municipal, governmental, court and other requirements
applicable to the carrying on of the business of the Company, the formation,
continuance in existence, creation and issue of securities, management, property
or operation of the Company have been complied with, and all permits,
authorities, licenses and consents have been obtained and all conditions
applicable thereto complied with and so far as the Company is aware there are no
circumstances which might lead to the suspension, alteration or cancellation of
any such permits, authorities, licenses or consents except where the failure to
obtain or maintain such permits, authorities, licenses or consents could not,
individually or in the aggregate, be expected to have a Material Adverse Effect
on the Company, nor is there any agreement which materially restricts the fields
within which the Company may carry on its business.

                                       18



      (b) The Company has not committed and is not liable for any criminal,
illegal, unlawful, ultra vires or unauthorized act or breach of covenant,
contract or statutory duty and so far as each of the Company is aware no officer
or senior manager of the Company has committed any crime other than minor
traffic offences.

      (c) No person, not being a director of the Company, has any actual or
ostensible authority, whether under a power of attorney, agency agreement or
otherwise, to commit the Company to any obligation other than an obligation of a
nature which it is usual for it to incur in the ordinary course of its business.

      SECTION 2.12 Records and Registers; Memorandum of Association and Articles
of Association.

      (a) The records (including computer records), statutory books, registers,
minute books and books of account of the Company are duly entered up and
maintained in accordance with all legal requirements applicable thereto and
contain true, full and accurate records of all matters required to be dealt with
therein and all such books and all records and documents (including documents of
title) which are its property are in its possession or under its control and all
accounts, documents and returns required to be delivered or made to the
Registrar of Companies have been duly and correctly delivered or made and there
has been no notice of any proceedings to rectify the register of members of the
Company and there are no circumstances which might lead to any application for
rectification of the register of members.

      (b) The Company has delivered or otherwise made available to Parent a true
and correct copy of the Memorandum of Association, Articles of Association and
other charter documents of the Company, each as amended to date and as currently
in full force and effect. The Company is not in violation of any of the
provisions of its Memorandum of Association, Articles of Association or other
charter documents.

      SECTION 2.13 Insurance. Section 2.13 of the Company Disclosure Letter
contains full and accurate details of all insurance policies held by the
Company. In respect of such insurances, (a) all premiums have been duly paid to
date, (b) all the policies are in full force and effect and, so far as the
Company is aware, are not voidable on account of any act, omission or
non-disclosure on the part of the insured party nor could they be declared null
and void or as a consequence of which any claim might be rejected and (c) so far
as the Company is aware there are no circumstances which would or might give
rise to any claim and no insurance claim is outstanding.

      SECTION 2.14 Group Structure. The Company does not have any Subsidiaries
nor has it at any time been the holding company of any company or a member of or
the beneficial owner of any shares, securities or other interest in any company
or other person. For purposes of this Agreement, "SUBSIDIARY" shall mean any
corporation, partnership, limited liability company, joint venture or other
legal entity of which Parent or the Company, as the case may be (either alone or
through or together with any other Subsidiary), owns, directly or indirectly,
50% or more of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation , partnership, limited liability company,
joint venture or other legal entity.

      SECTION 2.15 Agreements and Capital Commitments.

      (a) The Company (i) has no material capital commitments; (ii) is not a
party to any contract, arrangement or commitment (whether in respect of capital
expenditure or otherwise) which is of an unusual, onerous or long-term nature or
which involves or could involve a material obligation or liability; (iii) has
not become bound and no person has become entitled (or with the giving of notice
and/or the issue of a certificate and/or the passage of time or otherwise may
become entitled) to require it to repay any loan capital or other debenture,
redeemable preference share capital, borrowed money or grant made

                                       19



to it by any governmental or other authority or person prior to the stipulated
due date; (iv) is not a party to any agreement which is or may become terminable
as a result of the entry into or completion of this Agreement; (v) is not bound
by any guarantee or contract of indemnity or suretyship under which any
liability or contingent liability is outstanding; (vi) has not entered into any
agreement which requires or may require, or confers any right to require, the
sale (whether for cash or otherwise) or the transfer by it of any asset; (vii)
is not a party to any joint venture, consortium, partnership, unincorporated
association or profit sharing arrangement or agreement; (viii) is not a party to
or enjoys the benefit of any agreement requiring registration or notification
under or by virtue of any statute; or (ix) is not in default of any agreement or
arrangement to which it is a party (each of (i) through (ix) above being
referred to as a "COMPANY MATERIAL CONTRACT").

      (b) The Company has not been and is not a party to any contract or
arrangements binding upon it for the purchase or sale of property or the supply
of goods or services at a price different to that reasonably obtainable on an
arm's length basis.

      SECTION 2.16 Borrowings and Facilities. Full details of all limits on the
Company's bank overdraft facilities and all borrowings of the Company are set
out in Section 2.16 of the Company Disclosure Letter and the Company is not in
breach of any of their terms and none of such facilities or terms of borrowing
will be terminated as a result of the entry into of this Agreement.

      SECTION 2.17 Government Grants. The Company has applied for, or received,
the grants or investments or subsidies or financial assistance from government
departments or agencies or local or other government authorities as set forth on
Section 2.17 of the Company Disclosure Letter ("GOVERNMENTAL GRANTS"). The
Company has not done, or omitted to do, any act or thing which could result in
all or any part of any such Governmental Grant or other similar payment being
made of withheld in whole or in part and, to the Knowledge of the Company, no
such circumstances exist which could give rise to any such payment being
withheld.

      SECTION 2.18 Internal Accounting Controls. The Company has not been
informed by its auditors in relation to the audit of the Company Financial
Statements that any measures should be implemented to change the accounting
systems of the Company.

      SECTION 2.19 Authority and Enforceability; No Conflicts.

      (a) The Company has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and, assuming due authorization, execution
and delivery by Parent, constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.

      (b) The execution and delivery of this Agreement by the Company does not,
and the consummation by the Company of the transactions contemplated hereby will
not, conflict with, or result in a violation of, any provision of the Memorandum
of Association or Articles of Association of the Company, as amended to date and
as currently in full force and effect. The execution and delivery of this
Agreement by the Company does not, and the consummation by the Company of the
transactions contemplated hereby will not, give rise to any liability on the
part of the Company to make a payment to any person, or conflict with, or result
in a violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under, any mortgage, indenture, lease,
contract or other agreement or instrument, permit,

                                       20



concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its properties
or assets, except to the extent that such liability, conflict, violation,
default, right of termination, cancellation, acceleration or loss of benefit
could not reasonably be expected to have a Material Adverse Effect on the
Company. Section 2.19 of the Company Disclosure Letter lists all consents,
waivers and approvals under the Company's Articles of Association or the Company
Material Contracts or any other agreements, contracts, licenses, leases or other
obligations of the Company in effect as of the date of this Agreement required
to be obtained in connection with the consummation of the transactions
contemplated hereby, except to the extent that the failure to obtain such
consents, waivers and approvals could not reasonably be expected to have a
Material Adverse Effect on the Company. To the Knowledge of the Company, there
are no circumstances which may give rise to any material alteration in the terms
and conditions of any material facility or borrowings of the Company which might
affect or prejudice their continuation.

                                   ARTICLE III
                    REPRESENTATIONS AND WARRANTIES OF PARENT

      Parent represents and warrants to the Company, except as set forth in the
disclosure letter supplied by the Purchase to the Company dated as of the date
hereof (the "PARENT DISCLOSURE SCHEDULE"):

      SECTION 3.1 Subsidiaries. Parent has no direct or indirect Subsidiaries
other than those listed in Section 3.1(a) of the Parent Disclosure Schedule.
Parent owns, directly or indirectly, all of the capital stock or comparable
equity interests of each Subsidiary free and clear of any Encumbrance, and all
the issued and outstanding shares of capital stock or comparable equity
interests of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.

      SECTION 3.2 Organization and Qualification. Each of Parent and each
Subsidiary of Parent is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither Parent nor any Subsidiary of Parent is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of Parent and each Subsidiary of
Parent is duly qualified to do business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not, individually or in the aggregate, be expected to have a Material
Adverse Effect on Parent.

      SECTION 3.3 Authorization; Enforcement. Parent has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by Parent
and the consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action on the part of Parent and no
further consent or action is required by Parent, the Parent Board or its
stockholders. This Agreement has been (or upon delivery will be) duly executed
by Parent and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of Parent enforceable against
Parent in accordance with its terms.

      SECTION 3.4 No Conflicts. The execution, delivery and performance of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or violate
any provision of Parent's or any of Parent's Subsidiaries' certificate or
articles of incorporation, bylaws or other organizational or charter documents,
(ii) give rise to any liability on the part of Parent or any Subsidiary to make
any payment to any person, conflict with, or constitute a

                                       21



default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing any Parent
or Subsidiary debt or otherwise) or other understanding to which Parent or any
Subsidiary is a party or by which any property or asset of Parent or any
Subsidiary is bound or affected, except to the extent that such liability,
conflict, default or termination right could not reasonably be expected to have
a Material Adverse Effect on Parent, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which Parent or any Subsidiary of Parent
is subject (including federal and state securities laws and regulations and the
rules and regulations of any self-regulatory organization to which Parent or its
securities are subject), or by which any property or asset of Parent or a
Subsidiary of Parent is bound or affected.

      SECTION 3.5 Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock, options, warrants and other
securities of Parent (whether or not presently convertible into or exercisable
or exchangeable for shares of capital stock of Parent) is set forth in Section
3.5 of the Parent Disclosure Schedule. All outstanding shares of capital stock
are duly authorized, validly issued, fully paid and nonassessable and have been
issued in compliance with all applicable securities laws. Except as set forth on
Section 3.5 of the Parent Disclosure Schedule, there are no outstanding options,
warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any person any right to subscribe for
or acquire, any shares of Parent Common Stock, or contracts, commitments,
understandings or arrangements by which Parent or any Subsidiary of Parent is or
may become bound to issue additional shares of Parent Common Stock, or
securities or rights convertible or exchangeable into shares of Parent Common
Stock. There are no anti-dilution or price adjustment provisions contained in
any security issued by Parent (or in any agreement providing rights to security
holders) and the consummation of the transaction contemplated by this Agreement
will not obligate Parent to issue shares of Parent Common Stock or other
securities to any person and will not result in a right of any holder of Parent
securities to adjust the exercise, conversion, exchange or reset price under
such securities. To the Knowledge of Parent, except as specifically disclosed in
Section 3.5 of the Parent Disclosure Schedule, no person or group of related
persons beneficially owns (as determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934 (the "EXCHANGE ACT")), or has the right to
acquire, by agreement with or by obligation binding upon Parent, beneficial
ownership of in excess of 5% of the outstanding Parent Common Stock, ignoring
for such purposes any limitation on the number of shares of Parent Common Stock
that may be owned at any single time.

      SECTION 3.6 SEC Reports; Financial Statements. Parent has filed all
reports required to be filed by it under the Securities Act of 1933( the
"SECURITIES ACT") and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as Parent was required by law to file such material) (the foregoing
materials being collectively referred to herein as the "SEC REPORTS" and,
together with this Agreement and the Parent Disclosure Schedule, the "DISCLOSURE
MATERIALS") on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension. Parent has made available to the Company copies of all SEC Reports
filed within the ten (10) days preceding the date hereof. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of SEC
promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
financial statements of Parent included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of SEC with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States
generally

                                       22



accepted accounting principles applied on a consistent basis during the periods
involved ("US GAAP"), except as may be otherwise specified in such financial
statements or the notes thereto or in the case of unaudited financial
statements, as permitted by Form 10-Q of SEC, and fairly present in all material
respects the financial position of Parent and its consolidated subsidiaries as
of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. All material agreements, as such
contracts are defined in Section 601(a)(10) of Regulation S-K under the
Securities Act, to which Parent or any Subsidiary is a party or to which the
property or assets of Parent or any Subsidiary of Parent are subject are
included as part of or specifically identified in the SEC Reports.

      SECTION 3.7 Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that could result
in a Material Adverse Effect on Parent, (ii) Parent has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in Parent's financial
statements pursuant to US GAAP or required to be disclosed in filings made with
the SEC, (iii) Parent has not altered its method of accounting or the identity
of its auditors, (iv) Parent has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, and (v) Parent has not issued any equity securities to any officer,
director or affiliate, except pursuant to existing options to purchase Parent
Common Stock ("PARENT OPTIONS") and the stock purchase plan.

      SECTION 3.8 Absence of Litigation. Except as set forth in Section 3.8 of
the Parent Disclosure Schedule, there is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
Parent, overtly threatened against or affecting Parent or any of its
Subsidiaries that could, individually or in the aggregate, have a Material
Adverse Effect on Parent. Section 3.8 of the Parent Disclosure letter contains a
complete list and summary description of any pending or, to the knowledge of
Parent, threatened proceeding against or affecting Parent or any of its
Subsidiaries that could individually or in the aggregate, have a Material
Adverse Effect on Parent.

      SECTION 3.9 Compliance. Neither Parent nor any Subsidiary of Parent (i) is
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
Parent or any Subsidiary of Parent under), nor has Parent or any Subsidiary of
Parent received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or result in a
Material Adverse Effect on Parent.

      SECTION 3.10 Title to Assets. Parent and its Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of Parent and its Subsidiaries and good and marketable
title in all personal property owned by them that is material to the business of
Parent and its Subsidiaries, in each case free and clear of all Encumbrances,
except for Encumbrances as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by Parent and its Subsidiaries. Any real property and facilities
held

                                       23



under lease by Parent and its Subsidiaries are held by them under valid,
subsisting and enforceable leases of which Parent and its Subsidiaries are in
compliance.

      SECTION 3.11 Form S-3 Eligibility. Parent is eligible to register shares
of Parent Common Stock for resale by the shareholders of the Company using Form
S-3 promulgated under the Securities Act who may be deemed to be affiliates of
the Company (for purposes of paragraphs (c) and (d) of Rule 145 of the General
Rules and Regulations under the Securities Act.

      SECTION 3.12 Listing and Maintenance Requirements. Except as described in
Parent's amended Annual Report for the year ended December 31, 2003 filed on
Form 10-K/A with SEC on June 30, 2004, as amended (the "ANNUAL REPORT"), Parent
has not, in the two years preceding the date hereof, received notice (written or
oral) from any trading market on which the Parent Common Stock is or has been
listed or quoted to the effect that Parent is not in compliance with the listing
or maintenance requirements of such trading market.

      SECTION 3.13 Registration Rights. Except as described in Section 3.13 of
the Parent Disclosure Schedule, Parent has not granted or agreed to grant to any
person any rights (including "piggy-back" registration rights) to have any
securities of Parent registered with SEC or any other governmental authority
that have not been satisfied.

      SECTION 3.14 Disclosure. All disclosure provided to the Company regarding
Parent, its business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on behalf of Parent are true and
correct and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading. No
event or circumstance has occurred or information exists with respect to Parent
or any of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by Parent but which has
not been so publicly announced or disclosed, except, until such time as the
press release is issued as contemplated by Section 6.2, the execution of this
Agreement and the other agreements referred to herein and executed concurrently
herewith.

      SECTION 3.15 Intellectual Property.

      (a) Section 3.15 of the Parent Disclosure Schedule lists (i) all patents
and patent applications, all applications for trademarks, trade names and
service marks, and all registered trademarks, trade names, service marks, and
copyrights that are owned or purported to be owned by Parent or any Subsidiary
of Parent, and such list specifies, as applicable, the jurisdictions by or in
which each such patent, trademark, trade name, service mark or copyright has
been issued or registered or in which any application for such issuance and
registration has been filed, (ii) all material licenses, sub-licenses and other
agreements as to which Parent or any Subsidiary of Parent is a party and
pursuant to which any person is authorized to use any Parent Intellectual
Property (as defined below), and (iii) all material licenses, sub-licenses and
other agreements to which Parent or any Subsidiary of Parent is a party and
pursuant to which Parent or any Subsidiary of Parent is authorized to use any
third-party Intellectual Property that is included in the Parent Intellectual
Property (third-party Intellectual Property included in the Parent Intellectual
Property being referred to in this Agreement as "PARENT THIRD-PARTY INTELLECTUAL
PROPERTY RIGHTS"). All agreements described in Section 3.15 of the Parent
Disclosure Schedule as they relate to Sections 3.15(a)(ii) and (iii) are valid,
enforceable and legally binding, subject to the effect or availability of rules
of law governing specific performance, injunctive relief or other equitable
remedies (regardless of whether any such remedy is considered in a proceeding at
law or in equity), and to Parent's Knowledge, neither the Parent nor any
Subsidiary of Parent and no third party is in material breach of any such
agreement described in Section 3.15 of the Parent Disclosure Schedule. "PARENT
INTELLECTUAL PROPERTY" means the Intellectual

                                       24



Property that is material to the business of Parent or any Subsidiary of Parent
as currently conducted by Parent or any Subsidiary of Parent.

      (b) Parent and each of its Subsidiaries own all right, title and interest
in and to (free and clear of any Encumbrances), or are licensed to use, or
otherwise possess legally enforceable rights in the Parent Intellectual
Property, subject only to the license agreements to which Parent is a party and
pursuant to which Parent licenses others to use any such Parent Intellectual
Property as set forth in Section 3.15 of the Parent Disclosure Schedule.

      (c) To the Knowledge of Parent, there is no unauthorized use, disclosure,
infringement or misappropriation of any Parent Intellectual Property rights by
any third party, including any employee or former employee of Parent or any
Subsidiary of Parent. Neither Parent nor any Subsidiary of Parent has entered
into any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property, other than indemnification provisions
contained in purchase orders or agreements for the sale, license or distribution
of any Parent Intellectual Property or products containing Parent Intellectual
Property arising in the ordinary course of business.

      (d) The execution and delivery of this Agreement by Parent and the
consummation by Parent of the transactions contemplated hereby will not cause
Parent or any Subsidiary of Parent to breach any material license, sub-license
or other agreement relating to the Parent Intellectual Property, and will not
entitle any other party to any such license, sub-license or agreement to
terminate or modify such license, sub-license or agreement.

      (e) All issued patents and registered trademarks, service marks and
copyrights held by Parent or any Subsidiary of Parent are valid and subsisting
and there is no assertion or pending claim challenging the validity or
effectiveness of any Parent Intellectual Property, and to the Knowledge of
Parent, no such challenge is being threatened. Neither Parent nor any of its
Subsidiaries is a party to any suit, action or proceeding that involves a claim
against Parent or any of its Subsidiaries of infringement or violation of any
Intellectual Property of any third party, nor, to the Knowledge of Parent, is
any such suit, action or proceeding being threatened against Parent or any of
its Subsidiaries. The conduct of the business of Parent and each Subsidiary of
Parent as currently conducted does not conflict with or infringe, and no one has
asserted to Parent that such conduct of the business conflicts with or infringes
any Intellectual Property rights of any third party. To the Knowledge of Parent,
there are no facts or alleged facts which would reasonably serve as a basis for
any claim that Parent or any Subsidiary of Parent does not have the right to use
and to transfer the right to use, free of any rights or claims of others, all
Parent Intellectual Property rights in the development, manufacture, sale,
licensing or use of any material products of Parent or any Subsidiary of Parent
as presently being developed, manufactured, sold, licensed or used in the
business of Parent as currently conducted. Neither Parent nor any Subsidiary of
Parent nor any licensor of Parent or any Subsidiary of Parent is bringing any
action, suit or proceeding for infringement of Parent Intellectual Property or
breach of any license or agreement involving Parent Intellectual Property
against any third party. There are no pending or, to the Knowledge of Parent,
threatened interference, re-examinations, oppositions or nullities involving any
patents, patent rights or applications therefore included in the Parent
Intellectual Property, except such as may have been commenced by Parent or any
Subsidiary of Parent as disclosed in Section 3.15 of the Parent Disclosure
Schedule.

      (f) Parent has taken all commercially reasonable steps to protect and
preserve the confidentiality of all trade secrets and has taken all measures it
deems reasonable and appropriate to protect and preserve the confidentiality of
all other Parent Intellectual Property not otherwise protected by patents,
patent applications or copyright ("PARENT CONFIDENTIAL INFORMATION"). Each of
Parent and its Subsidiaries has a policy requiring each employee to execute an
employment and confidentiality agreement substantially in Parent's standard
form. Each current or former employee of Parent or any of its Subsidiaries has

                                       25



signed an employment and confidentiality agreement with Parent or its
Subsidiaries. Parent has delivered or made available to the Company the standard
form of employment and confidentiality agreement used by Parent and its
Subsidiaries and any employment and confidentiality agreement entered into by
Parent or any of its Subsidiaries that differs from the standard form of such
agreement in any material respect No current or former employee of Parent or any
Subsidiary of Parent has any right, claim or interest in or with respect to any
Parent Intellectual Property.

      SECTION 3.16 Insurance. Parent and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
Parent and the Subsidiaries of Parent are engaged. Neither Parent nor any
Subsidiary of Parent has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business.

      SECTION 3.17 Regulatory Permits. Parent and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect on Parent ("MATERIAL PERMITS"), and neither
Parent nor any Subsidiary of Parent has received any notice of proceedings
relating to the revocation or modification of any Material Permit.

      SECTION 3.18 Transactions With Affiliates and Employees. Except as set
forth in the Annual Report, none of the officers or directors of Parent and, to
the Knowledge of Parent, none of the employees of Parent is presently a party to
any transaction with Parent or any Subsidiary of Parent (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the Knowledge
of Parent, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.

      SECTION 3.19 Internal Accounting Controls. Parent and its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) 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 3.20 Employee Benefit Plans; Employee Benefits.

      (a) Section 3.20 of the Parent Disclosure Schedule contains a true and
complete list of each (i) deferred compensation and each incentive compensation
plan, equity compensation plan, "welfare" plan, fund or program (within the
meaning of section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or any similar welfare benefit plan under the laws of any
foreign jurisdiction, whether or not excluded from coverage under specific
titled or subtitles of ERISA; (ii) "pension" plan, fund or program (within the
meaning of section 3(2) of ERISA) or any similar pension benefit plan under the
laws of any foreign jurisdiction, whether or not excluded from coverage under
specific titles or subtitles of ERISA; (iii) employment, consulting, termination
or severance agreement;

                                       26



and (iv) other employee benefit plan, fund, program, agreement or arrangement,
in each case, that is sponsored, maintained or contributed to or required to be
contributed to by Parent or by any trade or business, whether or not
incorporated (an "PARENT ERISA AFFILIATE"), that together with Parent would be
deemed a "single employer" within the meaning of section 4001(b) of ERISA or
Section 414(b), (c), (m) or (o) of the Code, or to which Parent or an Parent
ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of Parent or any Subsidiary of Parent (the "PARENT
PLANS").

      (b) With respect to each Parent Plan, Parent has heretofore delivered or
made available to the Company true and complete copies of the Parent Plan and
any amendments thereto, any related trust or other funding vehicle, any reports
or summaries required under ERISA or the Code or any related contracts,
including service provider agreements, insurance contract, minimum premium
contracts, stop-loss agreements, subscription and participation agreements and
recordkeeping agreements and the most recent determination letter received from
the Internal Revenue Service with respect to each Parent Plan intended to
qualify under Section 401 of the Code.

      (c) Each Parent Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA and the Code and each Parent Plan intended to be "qualified"
within the meaning of section 401(a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under section 501(a) of the Code.

      (d) No liability under Title IV or section 302 of ERISA has been incurred
by Parent or any Parent ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a material risk to Parent or any Parent ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation (which premiums have been paid when
due).

      (e) There are no pending, threatened or anticipated claims by or on behalf
of any Parent Plan, by any employee or beneficiary covered under any such Parent
Plan, or otherwise involving any such Parent Plan (other than routine claims for
benefits).

      (f) Parent does not have any plan or commitment to create any plan, fund
or program (within the meaning of Section 3(1) of ERISA) or to modify or change
any existing Parent Plan and there has been no amendment to, written
interpretation or announcement (whether or not written) by Parent relating to,
or change in participation or coverage under, any Parent Plan which would
materially increase the expense of maintaining such parent Plan above the level
of expense incurred with respect to that Parent Plan for the most recent fiscal
year.

      (g) With respect to each Parent Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code, the provisions of section
4980B of the Code and Sections 601-609 of ERISA have been complied with in all
material respects.

      (h) As of the date of this Agreement, there are outstanding 550,405 Parent
Options. Section 3.20(h) of the Parent Disclosure Schedule set forth, as of the
date of this Agreement (i) the name of the holder of each Parent Option, (ii)
the exercise price per share of such Parent Option, (iii) the number of shares
covered by such Parent Option, (iv) the vesting schedule for such Parent Option,
(v) the term of each option and (vi) whether the exercisability of such Parent
Option shall be accelerated in any manner by any of the transactions
contemplated by this Agreement or upon any other event or condition and the
extent of such acceleration, if any. On the First Closing Date, the Company
shall deliver to Parent an updated Section 3.20(h) of the Parent Disclosure
Schedule setting forth the information referred to in the preceding sentence
updated to a date as close to the First Closing Date as is reasonably
practicable. All

                                       27



outstanding Parent Options have been duly authorized by the Parent Board or a
committee thereof, are validly issued, and were issued in compliance with all
applicable securities Laws.

      (i) Parent has not taken any action that would result in the accelerated
vesting, exercisability or payment of any Parent Options as a consequence of the
execution of, or consummation of, the transactions contemplated by this
Agreement.

      SECTION 3.21 Taxes. Except as would not, individually or in the aggregate,
have a Material Adverse Effect on Parent, (i) all Parent Tax Returns required to
be filed with any Taxing Authority by, or with respect to, Parent and its
Subsidiaries have been filed in accordance with all applicable Laws; (ii) Parent
and its Subsidiaries have timely paid all Taxes shown to be due on such Tax
Returns, (iii) as of the date or time of filing, the Parent Tax Returns filed
were true, correct and complete in all material respects; (iv) Parent and its
Subsidiaries have made an adequate provision (determined in accordance with US
GAAP) for any and all unpaid Taxes for periods through the date of Parent's
unaudited balance sheet as of June 30, 2004 (the "PARENT BALANCE SHEET"),
whether or not required to be shown on a Tax Return, and for all Taxes payable
by Parent and its Subsidiaries for which no Parent Tax Return has yet been
filed, and no Taxes have been incurred by the Company since the date of the
Company Balance Sheet other than in the ordinary course of Parent's business;
(v) there is not now, nor has there been in the past six years, any action,
suit, proceeding, audit or claim now proposed or pending against or with respect
to Parent or any of its Subsidiaries in respect of any Tax (other than Taxes
which are being contested in good faith and for which adequate reserves
(determined in accordance with US GAAP) are reflected on the Parent Balance
Sheet) and Parent is not aware of any matter which could lead to such a
proceeding; (vi) no waiver or extension of any statute of limitations is in
effect with respect to any Tax Return of Parent or any of its Subsidiaries; and
(vii) to the Knowledge of Parent, neither Parent nor any of its Subsidiaries is
liable for any Tax imposed on any entity other than Parent or such Subsidiaries;
(viii) Parent has withheld and paid over all Taxes required to have been
withheld and paid over, and complied in all material respects with all
information reporting and backup withholding in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other third party;
(ix) there are no Encumbrances on any of the assets of Parent or any of its
Subsidiaries with respect to Taxes; (x) neither Parent nor any of its
Subsidiaries have any liability for unpaid Taxes pursuant to Section 1.1502-6 of
the Treasury Regulations promulgated under the Code or comparable provisions of
state, local or foreign Tax law (other than Taxes of the affiliated group of
which Parent is the ultimate parent corporation); (xi) neither Parent nor any of
its Subsidiaries has been a distributing corporation or a controlled corporation
in a transaction described in Section 355 of the Code; (xii) neither Parent nor
any of its Subsidiaries is or has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code; and (xiii)
neither Parent nor any of its Subsidiaries has entered into any compensatory
agreements with respect to the performance of services which payment thereunder
would result in a nondeductible expense to it pursuant to Section 280G or 162(m)
of the Code or an excise tax to the recipient of such payment pursuant to
Section 4999 of the Code. Parent has made available to the Company accurate and
complete copies of all material Parent Tax Returns for the years ending December
31, 2001, 2002 and 2003.

      SECTION 3.22 Material Contracts.

      (a) Material Contracts. For purposes of this Agreement, "PARENT MATERIAL
CONTRACT" shall mean:

            (i) any employment or consulting Contract with any executive officer
or other employee of Parent earning an annual salary in excess of $50,000;

                                       28



            (ii) any agreement of indemnification or any guaranty other than any
agreement of indemnification or guaranty entered into in the ordinary course of
business;

            (iii) any contract containing any covenant limiting in any material
respect the right of Parent or any of its Subsidiaries to engage in any line of
business, to make use of any Parent Intellectual Property or compete with any
Person in any material line of business or to compete with any person or entity
after the First Closing Date;

            (iv) any contract relating to the disposition or acquisition by
Parent or any of its Subsidiaries after the date hereof of a material amount of
assets not in the ordinary course of business or pursuant to which Parent or any
of its Subsidiaries has any material ownership interest in any other person or
entity or other business enterprise other than its Subsidiaries;

            (v) any dealer, distributor, joint marketing or development
agreement under which Parent or any of its Subsidiaries have continuing material
obligations to jointly market any product, technology or service and which may
not be canceled without penalty upon notice of ninety (90) days or less, or any
material agreement pursuant to which Parent or any of its Subsidiaries have
continuing material obligations to jointly develop any Intellectual Property
that will not be owned, in whole or in part, by Parent or any of its
Subsidiaries and which may not be terminated without penalty upon notice of
ninety (90) days or less;

            (vi) any contract to provide source code to any third party for any
product or technology that is material to Parent and its Subsidiaries taken as a
whole;

            (vii) any contract containing any material support, maintenance or
service obligation on the part of Parent or any of its Subsidiaries, other than
those obligations that are terminable by Parent or any of its Subsidiaries
involving annual revenues to Parent in excess of $50,000 on no more than ninety
(90) days notice without material liability or financial obligation to Parent or
its Subsidiaries;

            (viii) any contract to license any third party to manufacture or
reproduce any of Parent's products, services or technology, except agreements in
the ordinary course of business and terminable without penalty upon notice of
ninety (90) days or less;

            (ix) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other contracts relating to the borrowing of
money or extension of credit, other than accounts receivables and payables in
the ordinary course of business; or

            (x) any other agreement, contract or commitment that involves a
payment to or from Parent in excess of $20,000 on its face in any individual
case.

      (b) Schedule. Section 3.23(b) of the Parent Disclosure Schedule sets forth
a list of all Parent Material Contracts to which Parent or any of its
Subsidiaries is a party or is bound by as of the date hereof.

      (c) No Breach. All Parent Material Contracts are valid and in full force
and effect except to the extent they have previously expired in accordance with
their terms or if the failure to be in full force and effect, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Parent. Neither Parent nor any of its Subsidiaries has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time or both would constitute a default under the provisions
of, any Parent Material Contract, except in each case for those violations and

                                       29



defaults which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on to Parent.

      SECTION 3.23 Financial Advisor. Neither Parent nor any of its Subsidiaries
has entered into or are bound by any agreements or understandings with any
investment bank, financial advisor or other similar entity whatsoever, except
for Seven Hills Partners LLC (the "PARENT FINANCIAL ADVISOR"). Parent has
furnished to the Company a true and complete copy of all agreements between
Parent and the Parent Financial Advisor pursuant to which such Parent Financial
Advisor is entitled to an "Opinion Fee" (as such term is defined in that certain
letter agreement dated July 15, 2004 between the Parent Financial Advisor and
Parent (the "PARENT FINANCIAL ADVISOR AGREEMENT")) upon the rendering of the
opinion of Financial Advisor described in Section 3.24 below, a "Transaction
Fee" (as such term is defined in the Parent Financial Advisor Agreement) upon
the occurrence of the First Closing or any other payment relating to the
transactions contemplated hereunder.

      SECTION 3.24 Opinion of Financial Advisor. The Parent Board has received
the written opinion of the Parent Financial Advisor to the effect that, as of
the date of the opinion, the consideration to be paid by Parent pursuant to this
Agreement is fair from a financial point of view to Parent. Parent will provide
the Company with a written copy of such opinion as soon as practicable following
the date hereof, and the Parent Financial Advisor has consented to the
reproduction of such opinion in its entirety in the Proxy Statement/Prospectus.

      SECTION 3.25 No Restrictions on the Offer; Takeover Statutes. The Parent
Board has unanimously approved this Agreement and the Offer and the other
transactions contemplated hereby and the execution of the Parent Support
Agreements, and such approval is sufficient to render inapplicable to this
Agreement, the Offer, the Loan Agreement, the Parent Support Agreements and the
other transactions contemplated hereby and thereby, the restrictions on business
combinations of Section 203 of the Delaware General Corporation Law. Parent has
not adopted any stockholder rights plan or similar "poison pill" arrangement
that would be applicable to this Agreement, the Offer, the Loan Agreement or the
Parent Support Agreements and the other transactions contemplated hereby and
thereby. No Delaware law or other takeover statute or similar law and no
provision of the certificate of incorporation or bylaws, or other organizational
documents or governing instruments of Parent or any of its Subsidiaries or any
material agreement to which any of them is a party (a) would or would purport to
impose restrictions which might adversely affect or delay the consummation of
the transactions contemplated by this Agreement, the Loan Agreement or the
Parent Support Agreement or (b) as a result of the consummation of the
transactions contemplated by this Agreement, the Loan Agreement or the Parent
Support Agreement would or would purport to entitle any person to acquire
securities of Parent.

                                   ARTICLE IV
                            COVENANTS OF THE COMPANY

      SECTION 4.1 Conduct of Business. During the period from the date of this
Agreement to the earlier of the First Closing Date or the termination of this
Agreement, the Company shall carry on its business in the ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent with such ordinary course, use all reasonable efforts to preserve
intact its current business organizations, keep available the services of its
current officers and employees (as a group) and preserve its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with it. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the earlier of the First
Closing Date or the termination of this Agreement, except as is strictly
necessary to perform its specific obligations hereunder and except for the
execution, delivery and performance of its obligations under the Modified
Agreements, the Company shall not, without the prior written approval of Parent:

                                       30



      (a) (i) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of its
capital stock, (ii) adjust, split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (iii) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities, provided that the foregoing shall not prohibit the
Company from making repurchases from employees following the termination of
their employment with the Company pursuant to the terms of preexisting
agreements at prices not exceeding fair market value on the date of such
repurchase;

      (b) issue, deliver, sell, pledge, grant options over or otherwise encumber
any of its share capital, any other voting securities or any securities
convertible into, or any rights, warrants or options, including Company Options,
to acquire, any such shares, voting securities or convertible securities (other
than (i) the issuance of Shares upon the exercise of Company Options outstanding
as of the date hereof), or (ii) the issuance of 277,778 B Preferred Shares with
respect to the investment of up to (pound)500,000 in the capital of the Company
pursuant to the Subscription and Shareholders' Agreement dated July 30, 2004
(the "SHAREHOLDERS' AGREEMENT") between the Company and certain shareholders
listed therein, together with a further 66,667 A Ordinary Shares issued as bonus
shares to satisfy the anti-dilution provisions, each as contemplated by the
Shareholders' Agreement); provided, however, that Parent's consent to the
Company's requested grant of options over the share capital of the Company shall
not be unreasonably withheld;

      (c) amend its Memorandum of Association, Articles of Association or other
comparable charter or organizational documents;

      (d) mortgage or otherwise encumber or subject to any material Lien or,
except in the ordinary course of business consistent with past practice and
pursuant to existing contracts or commitments, sell, lease, license, transfer or
otherwise dispose of any material properties or assets;

      (e) incur, assume, guarantee or become obligated with respect to any
indebtedness, or incur, assume, guarantee or become obligated with respect to
any other material obligations;

      (f) make any material tax election or take any material tax position
(unless required by law) or change its fiscal year or accounting methods,
policies or practices (except as required by changes in UK GAAP) or settle or
compromise any material income tax liability;

      (g) make any loan, advance or capital contributions to or investment in
any person or entity;

      (h) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction thereof, in the ordinary course of
business consistent with past practice and in accordance with their terms,
modify, amend or terminate any material contract or agreement to which it is a
party, or release or waive any material rights or claims, or waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company is a party;

      (i) (i) grant to any current or former director, officer or employee of
the Company any increase in compensation (cash, equity or otherwise) or benefits
(provided that the Company may increase the compensation of non-executive
employees in the ordinary course of business consistent with past practice),
(ii) grant to any such current or former director, officer, or employee any
increase in severance or termination pay (cash, equity or otherwise) or adopt
any new severance plan or amend or modify in any respect any severance plan,
agreement or arrangement existing on the date hereof, (iii) except as may

                                       31



be required by applicable Law, adopt or amend any Company Plan or enter into any
employment, deferred compensation, severance or termination agreement or
arrangement with or for the benefit of any such current or former director,
officer, or employee, (iv) waive any stock repurchase right, accelerate, amend
or change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other stock
plan or authorize cash payments in exchange for any options granted under any
such plans, (v) hire or offer to hire any employee or independent contractors;
provided, however, that Parent's consent to the Company's request to hire, or
offer to hire, any employee or independent contractor shall not be unreasonably
withheld.

      (j) transfer or license to any person or entity or otherwise extend, amend
or modify any rights to the Company Intellectual Property, or enter into grants
to transfer or license to any person future rights to the Company Intellectual
Property other than non-exclusive licenses granted to end-users and
non-exclusive distribution, reseller and similar commercial agreements entered
into in the ordinary course of business and consistent with past practice;
provided that in no event shall the Company (i) license, or enter into a
distribution, reseller or similar arrangement, on an exclusive basis, or sell,
any Company Intellectual Property; or (ii) enter into any contract (v)
containing pricing or discounting terms or provisions other than in the ordinary
course of business consistent with past practice, (w) requiring the Company to
use its "best efforts" or (x) limiting the right of the Company to engage in any
line of business or to compete with any person;

      (k) enter into any contract or commitment with aggregate commitments of
the Company in excess of $50,000;

      (l) take or agree or commit to take any action that would make any
representation or warranty of the Company hereunder inaccurate in any material
respect at, or as of any time prior to, the First Closing Date or (ii) omit or
agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at any
such time;

      (m) commence or settle any litigation, other than to enforce the Company's
rights under this Agreement; or

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

      SECTION 4.2 Access to Information. From the date hereof until the First
Closing Date, the Company will give Parent, its counsel, financial advisors,
auditors and other authorized representatives full access (during normal
business hours and upon reasonable notice) to the offices, properties, officers,
employees, accountants, auditors, counsel and other representatives, books and
records of the Company, will furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial, operating and
property related data and other information as such persons may reasonably
request, and will instruct the Company's employees, counsel and financial
advisors to cooperate with Parent in its investigation of the business of the
Company.

      SECTION 4.3 Waiver of Change of Control and Acceleration Benefits.
Following the date hereof, the Company shall use its reasonable best efforts to
obtain the waiver of the applicable Company securityholders and employees with
respect to any change of control or acceleration benefits, other than the
acceleration of Company Options pursuant to the Option Offer, that would
otherwise be triggered by the consummation of the Offer and the other
transactions contemplated hereby.

      SECTION 4.4 No Solicitation.

                                       32



      (a) The Company agrees that neither the Company nor any of its officers,
directors, employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by the Company) of the
Company shall, (i) initiate, continue, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to shareholders of the Company) with
respect to a merger, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or equity securities
of, the Company involving any person other than Parent (any such proposal or
offer being hereinafter referred to as an "COMPANY ACQUISITION PROPOSAL"), or
(ii) engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Company Acquisition Proposal, or otherwise facilitate any effort or attempt to
make or implement an Company Acquisition Proposal or enter into any agreement or
understanding with any other person or entity with the intent to effect any
Company Acquisition Proposal. Notwithstanding the foregoing, prior to the First
Closing Date the Company may, in the event that a third party that has made (and
not withdrawn) a bona fide Company Acquisition Proposal that the Company Board
reasonably concludes in good faith constitutes, or is likely to lead to, a
Company Superior Proposal, (i) engage or participate in discussions or
negotiations with such third party and/or (ii) furnish to such third party
nonpublic information relating to Company pursuant to a confidentiality
agreement with terms no less favorable to Company than those contained in the
Confidentiality Agreement; provided, that in each case (x) neither Company nor
any representative of Company shall have violated any of the restrictions set
forth in this Section 4.3, (y) the Company Board reasonably concludes in good
faith, after consultation with its outside legal counsel, that in light of such
Company Acquisition Proposal the failure to take such action would be reasonably
expected to be a violation of the fiduciary obligations of the Company Board to
the Company's shareholders, and (z) contemporaneously with furnishing any such
information to such person or group, the Company furnishes such information to
Parent (to the extent such information has not been previously furnished by
Company to Parent). The Company will take all necessary steps to inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 4.3. The Company will notify Parent
promptly, orally and in writing (including the names of any party making, the
principal terms of, and any written materials provided in connection with, any
such proposal, request or inquiry), if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with the Company.
Immediately following the execution of this Agreement, the Company will request
each person which has heretofore executed a confidentiality agreement in
connection with its consideration of acquiring the Company or any portion
thereof to return all confidential information heretofore furnished to such
person by or on behalf of the Company. The Company will keep Parent fully and
promptly informed of the status and details (including amendments or proposed
amendments) of, and will promptly provide copies of any written materials
provided in connection with, any such request, proposal or inquiry.

      (b) For purposes of this Agreement, "COMPANY SUPERIOR PROPOSAL" means any
bona fide Company Acquisition Proposal (1) to acquire, directly or indirectly,
at least a majority of the Shares then outstanding, or all or substantially all
of the assets of the Company, (2) that contains terms and conditions that the
Board of Directors reasonably determines in good faith (after consultation with
its financial advisor) to be more favorable from a financial point of view to
the Company's shareholders than the Offer, (3) that the Company Board reasonably
determines in its good faith judgment (after consultation with its legal
counsel) to be reasonably capable of being completed (taking into account all
legal, financial, regulatory and other aspects of the proposal and the person
making the proposal), and (4) that does not contain any "due diligence"
condition and for which any financing upon which it is conditioned is committed.

      (c) Except as set forth in this Section 4.3(c), the Company Board shall
not make a change in its recommendation that the shareholders accept the Offer
(a "CHANGE IN COMPANY RECOMMENDATION").

                                       33



Notwithstanding the foregoing, if the Company Board determines in its reasonable
good faith judgment prior to the First Closing Date, after consultation with
outside legal counsel, that the failure to make a Change in Company
Recommendation would be a violation of its fiduciary duties to the Company's
shareholders, then the Company Board may make a Change in Company
Recommendation. In the event that the Company Board determines that it shall be
necessary to make a Change in Company Recommendation, it shall give Parent at
least four (4) Business Day's prior written notice of such determination before
making a public announcement regarding such Change in Company Recommendation.

                                    ARTICLE V
                               COVENANTS OF PARENT

      SECTION 5.1 Conduct of Business. During the period from the date of this
Agreement to the earlier of the First Closing Date or the termination of this
Agreement, Parent shall, and shall cause its Subsidiaries to, carry on their
business in the ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such ordinary course, use all
reasonable efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees (as a group) and
preserve their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the earlier of the First Closing Date or the termination of this Agreement,
except as is strictly necessary to perform its specific obligations hereunder
and except for the execution, delivery and performance of its obligations under
the Modified Agreements, Parent shall not, and shall not permit any of its
Subsidiaries to, without the prior written approval of the Company:

      (a) (i) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of its
capital stock, other than dividends and distributions by any direct or indirect
wholly-owned subsidiary of Parent to its parent, (ii) adjust, split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) purchase, redeem or otherwise acquire any shares of
capital stock of Parent or any Subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities,
provided that the foregoing shall not prohibit Parent from making repurchases
from employees following the termination of their employment with Parent or one
of its Subsidiaries pursuant to the terms of preexisting agreements at prices
not exceeding fair market value on the date of such repurchase;

      (b) issue, deliver, sell, pledge, grant options over or otherwise encumber
any shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options, including Parent Options
and warrants to purchase Parent capital stock ("PARENT WARRANTS"), to acquire,
any such shares, voting securities or convertible securities (other than (i) the
issuance of Parent Common Stock upon the exercise of Parent Options and Parent
Warrants outstanding as of the date hereof or (ii) the issuance of Parent
Options and/or Parent Warrants in exchange for the cancellation of Parent
Options or Parent Warrants, as the case may be, which are outstanding as of the
date of this Agreement and which are "out-of-the-money" at the time of such
exchange and cancellation; provided that such exchange and cancellation is done
without the expenditure of any cash or cash equivalents by Parent and is
otherwise effected on terms satisfactory to the Company in its reasonable
discretion); provided, however, that the Company's consent to Parent's requested
grant of options to purchase Parent Common Stock shall not be unreasonably
withheld;

      (c) amend its certificate of incorporation, bylaws or other comparable
charter or organizational documents;

                                       34



      (d) mortgage or otherwise encumber or subject to any material Lien or,
except in the ordinary course of business consistent with past practice and
pursuant to existing contracts or commitments, sell, lease, license, transfer or
otherwise dispose of any material properties or assets;

      (e) incur, assume, guarantee or become obligated with respect to any
indebtedness, or incur, assume, guarantee or become obligated with respect to
any other material obligations;

      (f) make or agree to make any new capital expenditures or acquisitions of
assets or property or other acquisitions or commitments in excess of $15,000
individually or $50,000 in the aggregate payable in any calendar month or
otherwise acquire or agree to acquire any material assets or property other than
in the ordinary course and consistent with past practice;

      (g) make any material tax election or take any material tax position
(unless required by law) or change its fiscal year or accounting methods,
policies or practices (except as required by changes in US GAAP) or settle or
compromise any material income tax liability;

      (h) make any loan, advance or capital contributions to or investment in
any person or entity;

      (i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction thereof, in the ordinary course of
business consistent with past practice and in accordance with their terms,
modify, amend or terminate any material contract or agreement to which it is a
party, or release or waive any material rights or claims, or waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or similar
agreement to which Parent or any Subsidiary is a party;

      (j) (i) grant to any current or former director, officer or employee of
Parent or any Subsidiary any increase in compensation (cash, equity or
otherwise) or benefits (provided that Parent may increase the compensation of
non-executive employees in the ordinary course of business consistent with past
practice), (ii) grant to any such current or former director, officer, or
employee any increase in severance or termination pay (cash, equity or
otherwise) or adopt any new severance plan or amend or modify in any respect any
severance plan, agreement or arrangement existing on the date hereof, (iii)
except as may be required by applicable Law, adopt or amend any Parent Plan or
enter into any employment, deferred compensation, severance or termination
agreement or arrangement with or for the benefit of any such current or former
director, officer, or employee, (iv) waive any stock repurchase right,
accelerate, amend or change the period of exercisability of options or
restricted stock, or reprice options granted under any employee, consultant,
director or other stock plan or authorize cash payments in exchange for any
options granted under any such plans, or (v) hire or offer to hire any employee
or independent contractors; provided, however, that the Company's consent to
Parent's request to hire, or offer to hire, any employee or independent
contractor shall not be unreasonably withheld.

      (k) transfer or license to any person or entity or otherwise extend, amend
or modify any rights to Parent Intellectual Property, or enter into grants to
transfer or license to any person future rights to Parent Intellectual Property
other than non-exclusive licenses granted to end-users and non-exclusive
distribution, reseller and similar commercial agreements entered into in the
ordinary course of business and consistent with past practice; provided that in
no event shall Parent (i) license, or enter into a distribution, reseller or
similar arrangement, on an exclusive basis, or sell, any Company Intellectual
Property; or (ii) enter into any contract (v) providing for any site licenses,
(w) containing pricing or discounting terms or provisions other than in the
ordinary course of business consistent with past practice, (x) requiring Parent
to use its "best efforts" or (y) limiting the right of Parent to engage in any
line of business or to compete with any person;

                                       35



      (l) enter into any contract or commitment with aggregate commitments of
Parent in excess of $50,000;

      (m) take or agree or commit to take any action that would make any
representation or warranty of Parent hereunder inaccurate in any material
respect at, or as of any time prior to, the First Closing Date or (ii) omit or
agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at any
such time;

      (n) commence or settle any litigation, other than to enforce the Parent's
rights under this Agreement; or

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

      SECTION 5.2 Access to Information.

      From the date hereof until the First Closing Date, Parent will give the
Company, its counsel, financial advisors, auditors and other authorized
representatives full access (during normal business hours and upon reasonable
notice) to the offices, properties, officers, employees, accountants, auditors,
counsel and other representatives, books and records of Parent and its
Subsidiaries, will furnish to the Company, its counsel, financial advisors,
auditors and other authorized representatives such financial, operating and
property related data and other information as such persons may reasonably
request, and will instruct Parent's and its Subsidiaries' employees, counsel and
financial advisors to cooperate with the Company in its investigation of the
business of Parent and its Subsidiaries.

      SECTION 5.3 No Solicitation.

      (a) Parent agrees that neither Parent nor any Subsidiary nor any of the
respective officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by Parent or any Subsidiary) of Parent or any Subsidiary shall, (i)
initiate, continue, solicit or encourage, directly or indirectly, any inquiries
or the making of any proposal or offer (including, without limitation, any
proposal or offer to stockholders of Parent) with respect to a merger,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or equity securities of, Parent or any
Subsidiary involving any person other than the Company (any such proposal or
offer being hereinafter referred to as an "PARENT ACQUISITION PROPOSAL"), or
(ii) engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to a
Parent Acquisition Proposal, or otherwise facilitate any effort or attempt to
make or implement a Parent Acquisition Proposal or enter into any agreement or
understanding with any other person or entity with the intent to effect any
Parent Acquisition Proposal. Notwithstanding the foregoing, prior to the First
Closing Date Parent may, in the event that a third party that has made (and not
withdrawn) a bona fide Parent Acquisition Proposal that the Parent Board
reasonably concludes in good faith (after consultation with its financial
advisor) constitutes, or is likely to lead to, a Parent Superior Proposal, (i)
engage or participate in discussions or negotiations with such third party
and/or (ii) furnish to such third party nonpublic information relating to Parent
or any Subsidiary pursuant to a confidentiality agreement with terms no less
favorable to Parent than those contained in the Confidentiality Agreement;
provided, that in each case (x) neither Parent nor any representative of Parent
and its Subsidiaries shall have violated any of the restrictions set forth in
this Section 5.3, (y) the Parent Board reasonably concludes in good faith, after
consultation with its outside legal counsel, that in light of such Parent
Acquisition Proposal the failure to take such action would be reasonably
expected to be a violation of the fiduciary obligations of Parent Board to
Parent's stockholders, and (z) contemporaneously with furnishing any such
information to such person or group, Parent furnishes such information to the
Company (to the extent such information has not been previously furnished by
Parent to the Company).

                                       36



Parent will take all necessary steps to inform the individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 5.3. Parent will notify the Company promptly, orally and in writing
(including the names of any party making, the principal terms of, and any
written materials provided in connection with, any such proposal, request or
inquiry), if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with Parent. Immediately following the
execution of this Agreement, Parent will request each person which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring Parent or any portion thereof to return all
confidential information heretofore furnished to such person by or on behalf of
Parent. Parent will keep the Company fully and promptly informed of the status
and details (including amendments or proposed amendments) of, and will promptly
provide copies of any written materials provided in connection with, any such
request, proposal or inquiry.

      (b) For purposes of this Agreement, "PARENT SUPERIOR PROPOSAL" means any
bona fide Parent Acquisition Proposal (1) to acquire, directly or indirectly, at
least a majority of the shares of Parent Common Stock then outstanding, or all
or substantially all of the assets of Parent, (2) that contains terms and
conditions that the Parent Board reasonably determines in good faith (after
consultation with its financial advisor) to be more favorable from a financial
point of view to Parent's stockholders than the transactions contemplated
hereby, (3) that the Parent Board reasonably determines in its good faith
judgment (after consultation with its financial advisor and its legal counsel)
to be reasonably capable of being completed (taking into account all legal,
financial, regulatory and other aspects of the proposal and the person making
the proposal), and (4) that does not contain any "due diligence" condition and
for which any financing upon which it is conditioned is committed.

      (c) Except as set forth in this Section 5.3(c), the Parent Board shall not
make a change in its recommendation that the stockholders of Parent approve the
issuance of shares of Parent Common Stock pursuant to the Offer and the other
matters referred to in Section 1.1(f) (a "CHANGE IN PARENT RECOMMENDATION").
Notwithstanding the foregoing, if the Parent Board determines in its reasonable
good faith judgment prior to the First Closing Date, after consultation with
outside legal counsel, that the failure to make a Change in Parent
Recommendation would be a violation of its fiduciary duties to Parent's
stockholders, then the Parent Board may make a Change in Parent Recommendation.
In the event that the Patent Board determines that it shall be necessary to make
a Change in Parent Recommendation, it shall give the Company at least four (4)
Business Days' prior written notice of such determination before making a public
announcement regarding such Change in Parent Recommendation. Parent acknowledges
that the occurrence of a Change in Parent Recommendation shall in no way affect
the obligation of Parent to continue the Offer in accordance with Section 1.1(a)
and to convene the Parent Stockholders Meeting in accordance with the terms of
Section 1.1(f) hereof. Parent shall not submit to a vote of its stockholders any
transaction contemplated by a Parent Acquisition Proposal, or propose to do so,
prior to or at the Parent Stockholders Meeting.

      SECTION 5.4 Listing of Additional Shares. Parent shall use its reasonable
best efforts to file with Nasdaq prior to the First Closing Date a Notification
Form: Listing of Additional Shares for the listing of the Parent Common Stock to
be issued in connection with the transactions contemplated by this Agreement,
such listing to be effective prior to or as of the First Closing Date.

      SECTION 5.5 Director and Officer Liability. (a) For six years after the
First Closing Date, Parent will, or will cause the Company to, indemnify and
hold harmless the present and former officers, directors, employees and agents
of the Company (the "INDEMNIFIED PARTIES") in respect of acts or omissions
occurring on or prior to the First Closing Date or arising out of or pertaining
to the transactions contemplated by this Agreement to the extent provided under
the Company's articles of incorporation and bylaws in effect on the date hereof
and indemnification agreements existing on the date

                                       37



hereof; and shall pay any expenses of the Indemnified Parties, as incurred, in
advance of the final disposition of any such action or proceeding, provided that
such indemnification shall not be provided in violation of applicable Laws.
Parent shall not amend the Memorandum of Association or Articles of Association
of the Company to amend the indemnification provisions therein in a manner
inconsistent with this Section 5.5 for the six-year period referred to above.
For six years after the First Closing Date, Parent will use its reasonable best
efforts to cause to be maintained an extension of coverage of each of Parent's
and the Company's policies of directors and officers liability insurance
maintained by Parent and the Company, respectively, at the First Closing Date,
for the benefit of those persons who are covered by such policies at the First
Closing Date, with respect to matters occurring prior to the First Closing Date;
provided, however, that Parent shall not be required to cause to be maintained
such liability insurance policies to the extent that the annual cost of
maintaining such policies exceeds 125% of the premium paid by each of Parent and
the Company in respect of such insurance for the year ended December 31, 2003.

      (b) The Indemnified Parties are intended third party beneficiaries of this
Section 5.5 to the extent such provisions benefit any such Indemnified Party.

      (c) Parent will not, nor will Parent permit the Company following the
First Closing Date to, merge or consolidate with any other person or sell all or
substantially all of its assets unless Parent or the Company will ensure that
the surviving or resulting entity assumes the obligations imposed by this
Section 5.5.

      SECTION 5.6 Section 16 Matters. Prior to the First Closing Date, Parent
shall take all such steps as may be required to cause the transactions
contemplated by this Agreement, including any acquisitions of Parent securities
(including derivative securities with respect to Parent securities) by each
individual who will be subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to Parent, as the case may be, to be exempt under
Rule 16b-3 promulgated under the Exchange Act.

      SECTION 5.7 Compulsory Acquisition. Parent hereby agrees that promptly
following the First Closing Date, Parent shall, so far as it is eligible to do
so, deliver a notice to the holders of Company Shares who did not accept the
Offer that Parent intends to acquire such Shares in accordance with sections 428
through 430F of the Companies Act 1985 (the "COMPULSORY ACQUISITION"). Each
holder of B Preferred Shares, A Ordinary Share and Ordinary Shares who did not
accept the Offer shall receive, in exchange for each such Share held by such
shareholder, the applicable Exchange Ratio as set forth in Section 1.1(b)
hereof.

      SECTION 5.8 Waiver of Change of Control and Acceleration Benefits.
Following the date hereof, Parent shall use its reasonable best efforts to
obtain the waiver of the applicable Parent securityholders and employees with
respect to any change of control or acceleration benefits that would otherwise
be triggered by the consummation of the Offer and the other transactions
contemplated hereby.

                                   ARTICLE VI
                       COVENANTS OF PARENT AND THE COMPANY

      SECTION 6.1 Reasonable Efforts; Notification.

      (a) Subject to Section 6.1(b) below, each of the parties agrees to use
reasonable efforts to take, or cause to be taken, all other actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all other things reasonably necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable the Offer and the
other transactions contemplated by this Agreement, including (i) the obtaining
of all other necessary actions or nonactions, waivers, consents

                                       38



and approvals from Governmental Entities and the making of all other necessary
registrations and filings (including other filings with Governmental Entities,
if any), (ii) the obtaining of all necessary consents, approvals or waivers from
third parties, (iii) the preparation of the Registration Statement, the Proxy
Statement/Prospectus and the Offer Documents, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.

      (b) Notwithstanding the foregoing, promptly following the date hereof,
Parent and the Company agree to fully cooperate with one another and shall each
use their reasonable best efforts to identify the detailed steps, actions,
documents and procedures necessary or desirable to effect the Offer, the Option
Offer and the other transactions contemplated by this Agreement, and shall
negotiate in good faith such amendments or additions to Section 1.1(a), (c), (d)
and (f), Section 1.4 and Section 5.4 of this Agreement, whether required by Law
or otherwise, as each shall deem necessary or advisable to effect the
transactions contemplated by this Agreement in the most expeditious manner
possible.

      (c) The Company shall give prompt notice to Parent and Parent shall give
prompt notice to the Company of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any respect or (ii)
the failure by it to comply with or satisfy in any respect any covenant,
condition or agreement to be compiled with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.

      (d) The Company shall give prompt notice to Parent, and Parent shall give
prompt notice to the Company, of (i) any notice or other communication from any
person alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement and (ii) any
notice or other communication from any Governmental Entity in connection with
the transactions contemplated by this Agreement.

      SECTION 6.2 Public Announcements. Parent, on the one hand, and the
Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated by this
Agreement or with respect to, or relating to, the business of Parent or the
Company, as applicable, and shall not issue any such press release with respect
to the transactions contemplated by this Agreement or make any such public
statement with respect to the transactions contemplated by this Agreement
without the prior consent of the other party, except as may be required by
applicable Laws, court process or by obligations pursuant to any listing
agreement with any national securities exchange or with Nasdaq. The parties
agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement will be in a form to be reasonably
agreed to by the parties.

      SECTION 6.3 Modified Agreements. Promptly following the date hereof,
Parent and the Company will negotiate in good faith and use their respective
reasonable best efforts to modify the Colony Technology Sharing Agreement dated
March 22, 2004 (the "CTSA")and to enter into a proposed OEM arrangement between
Parent and the Company, which terms shall include a payment commitment by the
Company of $500,000 (subject to the satisfaction by Parent of Parent's
obligations under such agreements), in form and upon terms to be mutually agreed
by the parties (the "MODIFIED AGREEMENTS"). In addition to the foregoing, Parent
and the Company shall enter into all required modifications to the CTSA as
required by the Loan Agreement.

      SECTION 6.4 Joint Remuneration Planning Committee. Promptly following the
date hereof, Parent and the Company will appoint a joint remuneration planning
committee consisting of Craig Taylor and the members of the Company's existing
remuneration committee (the "JOINT REMUNERATION

                                       39



PLANNING COMMITTEE"). The Joint Remuneration Planning Committee will negotiate
in good faith and use its reasonable efforts to (a) negotiate and execute an
employment agreement with John West which sets forth the terms of Mr. West's
proposed employment with Parent as its Chief Executive Officer effective upon,
and subject to, the First Closing Date, and which agreement shall maintain the
economic terms and legal protections of Mr. West's existing employment agreement
with the Company; provided, however, that such terms and protections may be
amended as necessary to cause such employment agreement to comply with the laws
of the United States or any individual state within the United States, as
applicable; and (b) review other remuneration matters that may arise from time
to time following the execution of this Agreement and prior to the First Closing
Date and which may affect the combined company following the First Closing Date.

      SECTION 6.5 Certain Tax Matters.

      (a) This Agreement is intended to constitute a "plan of reorganization"
within the meaning of section 1.368-2(g) of the income tax regulations
promulgated under the Code. From and after the date of this Agreement and until
the First Closing Date (and thereafter where relevant), each party hereto shall
use its reasonable best efforts to cause the exchange of shares contemplated by
the Offer to qualify, and will not knowingly take any action, cause any action
to be taken, fail to take any action or cause any action to fail to be taken
which action or failure to act could prevent such exchange of shares from
qualifying, as a reorganization within the meaning of Section 368(a) of the
Code.

      (b) As of the date hereof, the Company does not know of any reason (i) why
it would not be able to deliver to counsel to the Company and Parent, at the
date of the legal opinions referred to below, a certificate substantially in
compliance with IRS published advance ruling guidelines, with customary
exceptions and modifications thereto, to enable such firms to deliver the legal
opinions contemplated by paragraph (p) of Section 2 of Annex A, or (ii) why
counsel to the Company and Parent would not be able to deliver the opinions
contemplated by paragraph (p) of Section 2 of Annex A. The Company will deliver
such certificate to counsel to the Company and Parent, effective as of the date
of such opinions.

      (c) As of the date hereof, Parent does not know of any reason (i) why it
would not be able to deliver to counsel to the Company and Parent, at the date
of the legal opinions referred to below, a certificate substantially in
compliance with IRS published advance ruling guidelines, with customary
exceptions and modifications thereto, to enable such firms to deliver the legal
opinions contemplated by paragraph (p) of Section 2 of Annex A, or (ii) why
counsel to the Company and Parent would not be able to deliver the opinions
contemplated by paragraph (p) of Section 2 of Annex A. Parent will deliver such
certificate to counsel to the Company and Parent, effective as of the date of
such opinions.

      (d) In the period prior to the First Closing Date, the Company shall be
entitled to seek confirmation from Inland Revenue pursuant to Section 138 of the
TCGA that the sale of the Shares in exchange of shares of Parent Common Stock
will be effected for bona fide commercial reasons and will not form part of any
such scheme or arrangement as is mentioned in Section 137(l) of the TCGA and
that, therefore, the proposed share exchange qualifies for roll-over relief from
capital gains tax pursuant to Section 135 of the TCGA.

                                   ARTICLE VII
                                   TERMINATION

      SECTION 7.1 Termination. This Agreement may be terminated and the Offer
may be abandoned at any time prior to the First Closing Date:

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

                                       40



      (b) by either Parent or the Company, if:

            (i) the Offer shall have expired, terminated or been withdrawn in
            accordance with the terms of this Agreement without Parent having
            exchanged any Shares pursuant to the Offer (unless a principal cause
            of the Offer having expired or having been terminated or withdrawn
            is a breach by the party seeking to terminate this Agreement of any
            of its obligations under this Agreement);

            (ii) the First Closing not having taken place on or before March 31,
            2005 (the "FINAL DATE") (unless a principal cause of the First Offer
            not having taken place by such date is a breach by the party seeking
            to terminate this Agreement of any of its obligations under this
            Agreement); or

            (iii) there shall be any law or regulation that makes consummation
            of the Offer illegal or otherwise prohibited or if any judgment,
            injunction, order or decree enjoining Parent or the Company from
            consummating the Offer is entered and such judgment, injunction,
            order or decree shall become final and non-appealable;

      (c) by Parent, at any time prior to the First Closing Date, if a Change in
Company Recommendation shall have occurred or the Company Board shall have
resolved to do so;

      (d) by the Company, at any time prior to the First Closing Date, if a
Change in Parent Recommendation shall have occurred or the Parent Board shall
have resolved to do so;

      (e) by Parent, if an event or circumstance shall have occurred that makes
satisfaction of or compliance with the conditions set forth in paragraphs of (b)
or (c) of Section 1 of Annex A impossible, or if there shall have been a breach
by the Company causing a failure of either of such conditions and such breach
shall have remained uncured for 30 days following receipt of written notice
thereof from Parent;

      (f) by the Company, if an event or circumstance shall have occurred that
makes satisfaction of or compliance with the conditions set forth in paragraphs
of (c), (d) or (h) of Section 2 of Annex A impossible, or if there shall have
been a breach by Parent or one of its Subsidiaries causing a failure of either
of such conditions and such breach shall have remained uncured for 30 days
following receipt of written notice thereof from the Company;

      (g) by either Parent or the Company, if the Parent Stockholders Meeting
shall have been duly convened and the Parent Stockholder Approvals shall not
have been obtained; or

      (h) by the Company, if an event or circumstance set forth in paragraphs
(e) or (n) of Section 2 of Annex A shall have occurred; provided, however, that
the event or circumstance set forth in paragraph (n) of Section 2 of Annex A is
not the direct result of the Company's failure to perform its obligations
pursuant to the Loan Agreement or the Modified Agreements;

      (i) by the Company, if an event or circumstance set forth in paragraph (o)
of Section 2 of Annex A shall have occurred and such event or circumstance shall
have remained uncured for 45 days following receipt of written notice thereof
from the Company; or

      (j) by Parent, if an event or circumstance set forth in paragraph (k) of
Section 1 f Annex A shall have occurred and such event or circumstance shall
have remained uncured for 45 days following receipt of written notice thereof
from Parent.

                                       41



      SECTION 7.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto or their respective officers and
directors, except that the agreements contained in this Section 7.2 and in
Sections 8.4 (Fees and Expenses) and 8.6 (Governing Law) shall survive the
termination hereof. Specifically, and without limiting the generality of the
foregoing and except as otherwise contemplated by the Loan Agreement and the
Loan Agreement Side Letter, Parent agrees that termination of this Agreement
shall be its sole and exclusive remedy for any nonwillful breach by the Company
of its representations, warranties and covenants under this Agreement and the
Company agrees that termination of this Agreement shall be its sole and
exclusive remedy for any nonwillful breach by Parent of its representations,
warranties and covenants under this Agreement. Any such termination shall not
relieve any party from liability for any willful breach of this Agreement.

                                  ARTICLE VIII
                                  MISCELLANEOUS

      SECTION 8.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given:

      if to the Company, to:

            Solexa Limited
            c/o Abingworth Management Ltd.
            3000 Sand Hill Road
            Bldg. 4, Suite 135
            Menlo Park, CA 94025
            Facsimile:  650.926.9782
            Telephone: 650.926.0604
            Attn: John West

      with a copy to:

            Heller Ehrman White & McAuliffe LP
            275 Middlefield Road
            Menlo Park. CA 94025
            Facsimile: 650.324.0638
            Telephone: 650.324.7000
            Attn: Steven J. Tonsfeldt

      and with a copy to:

            CMS Cameron McKenna
            Mitre House
            160 Aldersgate Street
            London EC1A 4DD
            United Kingdom
            Facsimile:  +44 20 7367 2000
            Telephone:  +44 20 7367 3000
            Attn: Michael Draper

      if to Parent, to:

                                       42



            Lynx Therapeutics, Inc.
            25861 Industrial Blvd.
            Hayward, CA 94545
            Facsimile: 510.670.9303
            Telephone: 510.670.9300
            Attn: President and Chief Executive Officer

      with a copy to:

            Cooley Godward LLP
            Five Palo Alto Square
            3000 El Camino Real
            Palo Alto, CA 94306
            Facsimile: 650.849.7400
            Telephone: 650.843.5000
            Attn: James C. Kitch

or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice, request
or other communication shall be deemed to be properly delivered, given and
received: (i) when delivered by hand; (ii) on the day sent by facsimile,
provided that the sender has received confirmation of transmission as of or
prior to 5:00 p.m. local time of the recipient, on such day; (iii) the first
Business Day after sent by facsimile (to the extent that (a) the sender has
received confirmation of transmission after 5:00 p.m. local time of the
recipient on the day sent by facsimile or (b) notice is sent on a day that is
not a Business Day); or (iv) the third Business Day after sent by registered
mail or by courier or express delivery service.

      SECTION 8.2 Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
First Closing Date or the termination of this Agreement; provided, however, that
the covenants set forth in Section 7.2 (Effect of Termination), Section 8.4
(Fees and Expenses), and Section 8.6 (Governing Law) and the Confidentiality
Agreement (as defined in Section 8.8 below), the Loan Agreement and the Loan
Agreement Side Letter shall survive any such termination.

      SECTION 8.3 Amendments; No Waivers. Any provision of this Agreement may be
amended or waived prior to the First Closing Date if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Parent, or in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by any party in exercising any
right, power or privilege 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, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.

      SECTION 8.4 Fees and Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense.

      SECTION 8.5 Successors and Assigns; Parties in Interest. The provisions of
this Agreement shall be binding, upon and inure to the benefit of the parties
hereto and their respective successors and assigns, provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto except that
Parent may transfer or assign, in whole or from time to time in part, to one or
more of its wholly-owned Subsidiaries, any or all of its rights or obligations,
but any such transfer or assignment will not relieve Parent of its obligations

                                       43



under this Agreement. Except as expressly set forth herein, nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
not a party hereto any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, including to confer third party beneficiary
rights.

      SECTION 8.6 Governing Law; Enforcement. This Agreement shall be construed
in accordance with and governed by the laws of the State of Delaware, without
regard to the conflict of laws principles thereof; provided, however, that the
terms and provisions of this Agreement with respect to the implementation and
provisions of the Offer shall be construed in accordance with and governed by
the laws of England. Each of the parties hereto, (a) consents to submit itself
to the personal jurisdiction of the Court of Chancery of the State of Delaware
and Federal District Court for the District of Delaware in the event a dispute
arises out of this Agreement or any agreement or transaction contemplated
hereby, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or any
agreement or transaction contemplated hereby in any court other than the Court
of Chancery of the State of Delaware or Federal District Court for the District
of Delaware and (d) waives any right to trial by jury with respect tot any
action related to or arising out of this Agreement or any agreement or
transaction contemplated hereby.

      SECTION 8.7 Counterparts; Effectiveness; Interpretation. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
When a reference is made in this Agreement to a Section, such reference shall be
to a Section of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".

      SECTION 8.8 Entire Agreement. This Agreement, the Loan Agreement, the Loan
Agreement Side Letter, the Mutual Confidentiality Agreement between Parent and
the Company dated August 12, 2004 (the "CONFIDENTIALITY AGREEMENT") and the
Colony Technology Sharing Agreement between Parent and the Company dated March
22, 2004 constitute the entire agreement among the parties hereto and supersede
all prior agreements and understandings, both written and oral, among the
parties hereto with respect to the subject matter hereof.

      SECTION 8.9 Definitions. The definitions used in this Agreement are
defined in the following sections:



               DEFINED TERM                                     SECTION
- ------------------------------------------------           -------------------
                                                        
A Ordinary Share Exchange Ratio                            Section 1.1(b)(ii)
A Ordinary Shares                                          Recitals
First Closing Date                                         Section 1.3(a)
Agreement                                                  Preamble
Annual Report                                              Section 3.12
B Preferred Exchange Ratio                                 Section 1.1(b)(iii)
B Preferred Shares                                         Recitals
Business Day                                               Section 1.1(c)
Change in Parent Recommendation                            Section 5.3(c)
Code                                                       Recitals


                                       44





                DEFINED TERM                                    SECTION
- ------------------------------------------------           -------------------
                                                        
Companies Act                                              Section 1.1(a)
Company                                                    Preamble
Company Acquisition Proposal                               Section 4.4(a)
Company Balance Sheet                                      Section 2.2(a)
Company Balance Sheet Date                                 Section 2.2(b)
Company Board                                              Recitals
Company Disclosure Letter                                  Article II
Company Financial Statements                               Section 2.2(a)
Company Intellectual Property                              Section 2.7(a)
Company License                                            Section 2.7(a)
Company Material Contract                                  Section 2.15(a)
Company Option; Company Options                            Section 1.4(a)
Company Property                                           Section 2.6(a)
Company Share Option Schemes                               Section 1.4(a)
Company Superior Proposal                                  Section 4.4(b)
Company Support Agreements                                 Recitals
Company Third-Party Intellectual Property Rights           Section 2.7(a)
Compulsory Acquisition                                     Section 5.7
Confidentiality Agreement                                  Section 8.8
Consultant Share Option Scheme                             Section 1.4(a)
CTSA                                                       Section 6.3
Disclosure Materials                                       Section 3.6
Effective Date                                             Section 1.1(a)
Encumbrances                                               Section 2.6(b)
Environmental Law                                          Section 2.6(m)
ERISA                                                      Section 3.21
Exchange Act                                               Section 3.5
Exchange Rate                                              Section 1.4(b)
Exchange Ratio                                             Section 1.1(b)(iii)
Final Date                                                 Section 7.1(b)(ii)
First Closing                                              Section 1.1(a)
First Closing Date                                         Section 1.1(c)
FSA                                                        Section 1.1(d)
Government Entity                                          Annex A
Government Grant                                           Section 2.17
GPP Scheme                                                 Section 2.10(h)
Hazardous Substance                                        Section 2.6(m)
ICTA                                                       Section 2.3(c)
Indemnified Parties                                        Section 5.5
Intellectual Property                                      Section 2.7(a)
Joint Remuneration Planning Committee                      Section 6.4
Knowledge                                                  Section 2.3
Law                                                        Section 1.1(d)
Life Assurance Scheme                                      Section 2.10(i)
Loan Agreement                                             Recitals
Loan Agreement Side Letter                                 Recitals
Management Accounts                                        Section 2.2(e)
Management Share Option Scheme                             Section 1.4(a)
Material Adverse Effect                                    Section 2.4(f)


                                       45





                DEFINED TERM                                    SECTION
- ------------------------------------------------           -------------------
                                                        
Material Permits                                           Section 3.17
Minimum Condition                                          Section 1.1(a)
Modified Agreements                                        Section 6.3
Nasdaq                                                     Section 1.1(c)
Offer                                                      Recitals
Offer Documents                                            Section 1.1(d)
Option Exercise                                            Section 1.4(b)
Option Offer                                               Section 1.4(a)
Option Roll Over                                           Section 1.4(b)
Ordinary Share Exchange Ratio                              Section 1.1(b)(i)
Ordinary Shares                                            Recitals
Parent                                                     Preamble
Parent Acquisition Proposal                                Section 5.3(a)
Parent Balance Sheet                                       Section 3.22
Parent Board                                               Recitals
Parent Common Stock                                        Recitals
Parent Confidential Information                            Section 3.15(f)
Parent Disclosure Schedule                                 Article III
Parent ERISA Affiliate                                     Section 3.21(a)
Parent Financial Advisor                                   Section 3.23
Parent Financial Advisor Agreement                         Section 3.23
Parent Financial Statements                                Section 3.6(c)
Parent Intellectual Property                               Section 3.15(a)
Parent Material Contract                                   Section 3.23
Parent Options                                             Section 3.7
Parent Plans                                               Section 3.21(a)
Parent Stockholder Approval                                Section 1.1(f)
Parent Stockholders Meeting                                Section 1.1(f)
Parent Superior Proposal                                   Section 5.3(b)
Parent Support Agreements                                  Recitals
Parent Third-Party Intellectual Property Rights            Section 3.15(a)
Parent Warrants                                            Section 5.1(b)
Proxy Statement/Prospectus                                 Section 1.1(d)
Registration Statement                                     Section 1.1(d)
SEC                                                        Section 1.1(c)
Securities Act                                             Section 3.6
Shareholders' Agreement                                    Section 4.1(b)
Shares                                                     Recitals
Subscription Agreement Addendum                            Recitals
Subsequent Closing Date                                    Section 1.1(c)
Subsidiary                                                 Section 2.14
Tax                                                        Section 2.4(f)
Tax Authority                                              Section 2.4(f)
Tax Return(s)                                              Section 2.4(f)
TCGA                                                       Recitals
Total Share Consideration                                  Section 1.1(b)(iv)
UK GAAP                                                    Section 2.2(a)
Unapproved Share Option Scheme                             Section 1.4(a)
US GAAP                                                    Section 3.6


                                       46



                      [signature page immediately follows]

                                       47



      The parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.

                                                SOLEXA LIMITED

                                                By: /s/ John West
                                                    -----------------------
                                                Title:  CEO

                                                LYNX THERAPEUTICS, INC.

                                                By: /s/ Kevin P. Corcoran
                                                    -----------------------
                                                Title:  President & CEO

                                       48


                                    Exhibit A

                        Form of Company Support Agreement

  [The Form of Company Support Agreement is filed separately as Exhibit 99.2 of
     the Company's Current Report on Form 8-K, filed on September 30, 2004.]

                                        1


                                    Exhibit B

                        Form of Parent Support Agreement

  [The Form of Parent Support Agreement is filed separately as Exhibit 99.1 of
     the Company's Current Report on Form 8-K, filed on September 30, 2004.]

                                        1

EX-99.1

                                                                    EXHIBIT 99.1

                            PARENT SUPPORT AGREEMENT

      This Parent Support Agreement (the "AGREEMENT") is made and entered into
as of September 28, 2004, between Solexa Limited, a company registered in
England and Wales (the "COMPANY") and the undersigned stockholder ("HOLDER") of
Lynx Therapeutics, Inc., a Delaware corporation ("PARENT").

                                    RECITALS

      Pursuant to an Acquisition Agreement dated as of September 28, 2004 (the
"ACQUISITION AGREEMENT") by and between Parent and the Company, it is proposed
that Parent shall make the Offer and the Option Offer within the meanings set
forth in the Acquisition Agreement. Concurrently with the execution and delivery
of the Acquisition Agreement and as a condition and inducement to the Company
entering into the Acquisition Agreement, the Company has required that Holder
enter into this Agreement. The Holder is the record and beneficial owner (as
such term is defined in Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended) of (1) such number of shares of
Parent Common Stock (the "SHARES") and (2) such number of options to purchase
Parent Common Stock (the "OPTIONS"), each as is indicated beneath Holder's
signature on the last page of this Agreement. Terms used herein and not defined
herein shall have the meaning set forth in the Acquisition Agreement.

                                    AGREEMENT

      The parties agree as follows:

      1. AGREEMENT TO RETAIN SHARES.

            (a) TRANSFER AND ENCUMBRANCE. Except as contemplated by the
Acquisition Agreement, and except as provided in Sections 1(b) or 2 below,
during the period beginning on the date hereof and ending on the earlier to
occur of (i) one hundred eighty (180) days following the First Closing Date, and
(ii) the Expiration Date (as defined below), Holder agrees not to, directly or
indirectly (x) transfer (except as may be specifically required by court order),
sell, exchange, tender, pledge, assign, contribute to the capital of any entity,
hypothecate or otherwise dispose of (including by merger, consolidation or
otherwise by operation of law) or encumber the Shares or any New Shares (as
defined below), enter into any short sale with respect to the Shares or any New
Shares, enter into or acquire an offsetting derivative contract with respect to
such Shares or any New Shares, enter into or acquire a futures or forward
contract to deliver such Shares or any New Shares or enter into any other
hedging or other derivative transaction that has the effect of materially
changing the economic benefits and risks of ownership of the Shares or any New
Shares, or to, directly or indirectly, make any offer or agreement relating
thereto, (y) grant any proxies or powers of attorney, deposit any of such Shares
or New Shares into a voting trust or enter into a voting agreement with respect
to any of such Shares or New Shares, or enter into any agreement or arrangement
providing for any of the actions described in this clause (y), or (z) take any
action that could reasonably be expected to have the effect of preventing or
disabling Holder from performing Holder's obligations under this Agreement, and
Holder has not agreed to carry out any of the foregoing matters in relation to
the Shares or any



New Shares. As used herein, the term "EXPIRATION DATE" shall mean the date of
termination of the Acquisition Agreement in accordance with the terms and
provisions thereof.

            (b) PERMITTED TRANSFERS. Section 1(a) shall not prohibit a transfer
of Shares or New Shares by Holder (i) if Holder is an individual (A) to any
member of Holder's immediate family, or to a trust for the benefit of Holder or
any member of Holder's immediate family, or (B) upon the death of Holder, or
(ii) if Holder is a partnership or limited liability company, to one or more
partners or members of Holder or to an affiliated Person under common control
with Holder; provided, however, that any such transfer pursuant to either clause
(i) or (ii) of this Section 1(b) shall be permitted only if, as a precondition
to such transfer, the transferee agrees in writing to be bound by all of the
terms of this Agreement.

            (c) NEW SHARES. Holder agrees that any shares of capital stock or
other securities of Parent that Holder purchases or with respect to which Holder
otherwise acquires record or beneficial ownership after the date of this
Agreement and prior to the earlier to occur of (i) one hundred eighty (180) days
following the First Closing Date and (ii) the Expiration Date ("NEW SHARES")
shall be subject to the terms and conditions of this Agreement to the same
extent as if they constituted Shares.

            2. AGREEMENT TO VOTE SHARES. Until the earlier to occur of (x) the
First Closing Date and (y) the Expiration Date, Holder shall, at any meeting
(whether annual or special and whether or not an adjourned or postponed meeting)
of stockholders of Parent, however called, or in connection with any written
consent of the holders of Parent Common Stock, vote the Shares and any New
Shares (i) in favor of (A) approving the issuance of shares of Parent Common
Stock in connection with the Offer, (B) approving the change-of-control of
Parent in connection with the transactions contemplated by the Acquisition
Agreement, (C) approving each of the other proposals to be acted on by the
stockholders at the Parent Stockholders Meeting in accordance with Section
1.1(f) of the Acquisition Agreement, and (D) approving any other matters that
could reasonably be expected to facilitate the transactions contemplated by the
Acquisition Agreement, and (ii) against any of the following actions (other than
in relation to the Offer and any other transactions contemplated by the
Acquisition Agreement): (A) any merger, consolidation, business combination,
sale of assets, reorganization or recapitalization of the Parent or any
Subsidiary of Parent with any party, (B) any sale, lease or transfer of any
significant part of the assets of Parent or any Subsidiary of Parent, (C) any
reorganization, recapitalization, dissolution, liquidation or winding up of
Parent or any Subsidiary of Parent, (D) any material change in the
capitalization of Parent or any Subsidiary of Parent or the corporate structure
of Parent or any Subsidiary of Parent, or (E) any other action or agreement that
could reasonably be expected to result in a breach of any covenant,
representation or warranty or any other obligation or agreement of Parent under
the Acquisition Agreement or Holder under this Agreement or which could
reasonably be expected to result in any of the conditions to the obligations of
Parent under the Acquisition Agreement not being fulfilled. This Agreement is
intended to bind Holder as a stockholder of Parent only with respect to the
specific matters set forth herein. Except as set forth in clauses (i) and (ii)
of this Section 2, Holder shall not be restricted from voting in favor of,
against or abstaining with respect to any other matter presented to the
stockholders of Parent.

                                       2


      3. IRREVOCABLE PROXY. Concurrently with the execution of this Agreement,
Holder agrees to deliver to the Company a proxy in the form attached hereto as
Exhibit A (the "PROXY"), which shall be irrevocable to the extent provided in
the Delaware General Corporation Law.

      4. STOCKHOLDER AGREEMENT. Holder represents and warrants to the Company
that:

      (a) LEGEND. Holder understands and agrees that stop transfer instructions
will be given to Parent's transfer agent with respect to the Shares and/or New
Shares and there will be placed on any certificates for Parent Common Stock
surrendered to the transfer agent pursuant to Section 4(b) below, as applicable,
or any substitutions therefore, a legend stating in substance: "THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED UNTIL THE DATE THAT IS
180 DAYS FOLLOWING THE FIRST CLOSING DATE (AS DEFINED IN THE ACQUISITION
AGREEMENT DATED SEPTEMBER 28, 2004 BETWEEN LYNX THERAPEUTICS, INC. AND SOLEXA
LIMITED) IN ACCORDANCE WITH THE TERMS OF A PARENT SUPPORT AGREEMENT DATED
SEPTEMBER 28, 2004 BETWEEN THE REGISTERED HOLDER HEREOF AND SOLEXA LIMITED, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF LYNX
THERAPEUTICS, INC."

      (b) SURRENDER OF PARENT COMMON STOCK CERTIFICATES. Within five (5)
Business Days following the First Closing Date, Holder shall surrender all
certificates held in the name of Holder representing Shares and/or New Shares to
Parent's transfer agent in exchange for shares of Parent Common Stock bearing
the restrictive legend set forth in Section 4(a) above.

      (c) REMOVAL OF LEGEND. It is understood and agreed that certificates with
the legend set forth in Section 4(a) above will, to the extent required to
enable the shares represented by such certificate to be transferred by the
holder thereof, be substituted by delivery of certificates without such legend
upon the written request of the Holder if 180 days shall have elapsed from the
First Closing Date. Upon receipt of any such written request, Parent shall use
its reasonable efforts to instruct its transfer agent to deliver shares of
Parent Common Stock without the legend set forth in Section 4(a) above as soon
as practicable following receipt of such written request.

      5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDER. Holder hereby
represents, warrants and covenants to the Company that Holder (i) is the record
and beneficial owner of the Shares and Options, which at the date of this
Agreement and at all times up until the earlier to occur of (A) one hundred
eighty (180) days following the First Closing Date, and (B) the Expiration Date,
are, and will be, free and clear of any liens, claims, options, charges or other
encumbrances, and (ii) does not own of record or beneficially any shares,
options or other securities in, or convertible into, shares of Parent Common
Stock, other than the Shares and the Options, if any, indicated below Holder's
signature on the last page of this Agreement. Holder has the legal capacity,
power and authority to enter into and perform all of Holder's obligations under
this Agreement (including under the Proxy). This Agreement (including the Proxy)
has been duly and validly executed and delivered by Holder and constitutes a
valid and binding agreement of Holder, enforceable against Holder in accordance
with its terms, subject to (a) laws

                                       3


of general application relating to bankruptcy, insolvency and the relief of
debtors and (b) rules of law governing specific performance, injunctive relief
and other equitable remedies.

      6. FURTHER ASSURANCES. Holder shall perform such further acts and execute
such further documents and instruments as may reasonably be required to vest in
the Company the power to carry out and give effect to the provisions of this
Agreement..

      7. CONSENT AND WAIVER. Holder hereby gives any consents or waivers that
are reasonably required for the consummation of the Offer under the terms of any
agreement to which Holder is a party or pursuant to any rights Holder may have.

      8. FIDUCIARY DUTIES. Notwithstanding anything in this Agreement to the
contrary: (i) Holder makes no agreement or understanding herein in any capacity
other than in Holder's capacity as a record holder and beneficial owner of the
Shares and, to the extent applicable, any New Shares, (ii) nothing in this
Agreement shall be construed to limit or affect any action or inaction by
Holder, or any officer, partner, member or employee, as applicable, of Holder,
serving on Parent's Board of Directors acting in such person's capacity as a
director or fiduciary of Parent, and (iii) Holder shall have no liability to the
Company or any its affiliates under this Agreement as a result of any action or
inaction by Holder, or any officer, partner, member or employee, as applicable,
of Holder, serving on Parent's Board of Directors acting in such person's
capacity as a director or fiduciary of Parent.

      9. MISCELLANEOUS.

            (a) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 9(a) shall be binding upon the parties and their respective successors
and assigns.

            (b) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.

            (c) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

            (d) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

            (e) NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received (i) when delivered by hand;
(ii) on the day sent by facsimile, provided that the sender has received
confirmation of transmission as of or prior to 5:00 p.m.

                                       4


local time of the recipient, on such day; (iii) the first Business Day after
sent by facsimile (to the extent that (A) the sender has received confirmation
of transmission after 5:00 p.m. local time of the recipient on the day sent by
facsimile, or (B) notice is sent on a day that is not a Business Day); or (iv)
the third Business Day after sent by registered mail or by courier or express
delivery service, in each case to the address or facsimile number set forth on
the signature page to this Agreement beneath the name of such party, or to such
other address or facsimile number as such party shall have specified in a
written notice given to the other party hereto).

            (f) SEVERABILITY. If one or more provisions of this Agreement are
held to be invalid or unenforceable under the applicable law of any
jurisdiction, the parties agree to renegotiate such provision in good faith, in
order to maintain the economic position enjoyed by each party as close as
possible to that under the provision rendered unenforceable. In the event that
the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Agreement,
(ii) the balance of the Agreement shall be interpreted as if such provision were
so excluded and (iii) the balance of the Agreement shall be valid and
enforceable in accordance with its terms. Each provision of this Agreement is
separable from any other provision of this Agreement, and each part of each
provision of this Agreement is severable from every other part of such
provision.

            (g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach of any covenants or agreements contained in this
Agreement will cause the Company to sustain damages for which it would not have
an adequate remedy at law for money damages, and therefore each of the parties
hereto agrees that in the event of any such breach the Company shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
they may be entitled, at law or in equity.

            (h) DISCLOSURE. Holder hereby agrees to permit Parent and he Company
to publish and disclose in the Registration Statement (including all documents
and schedules filed with the SEC) and the Proxy Statement, and in any press
release or other disclosure document in which parent or the Company reasonably
determines in its good faith judgment that such disclosure is required by law,
including the rules and regulations of the SEC or the Financial Services and
Markets Act 2000 and the Companies Act 1985 (as amended), as appropriate, in
connection with the Offer and any transactions related thereto, such Holder's
identity and ownership of the Shares and New Shares and the nature of the
commitments, arrangements and undertakings under this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       5


      The parties have caused this Agreement to be duly executed on the date
first above written.

                                           COMPANY

                                           By: _________________________________

                                           Name:________________________________

                                           Title:_______________________________

                                           Address:  Solexa Limited
                                           c/o Abingworth Management Ltd.
                                           3000 Sand Hill Road
                                           Bldg. 4, Suite 135
                                           Menlo Park, CA 94025
                                           Attention: John West
                                           Facsimile No.: 650.926.9782

                   SIGNATURE PAGE TO PARENT SUPPORT AGREEMENT



                                           HOLDER

                                           By:__________________________________
                                              [Name]

                                           Holder's Address for Notice:
                                           _____________________________________
                                           _____________________________________
                                           _____________________________________

                                           Attention:
                                           Facsimile No.:

Shares owned of record:                    Beneficially owned shares:



Class of Shares              Number        Class of Shares           Number
- ---------------              ------        ---------------           ------
                                                            
Common Stock                               Common Stock

Options to Purchase                        Options to Purchase
Common Stock                               Common Stock


                   SIGNATURE PAGE TO PARENT SUPPORT AGREEMENT



                                CONSENT OF SPOUSE

      The undersigned is the spouse of [_____________], the Holder (as such term
is defined in the Parent Support Agreement) in the foregoing Parent Support
Agreement dated as of September 28, 2004 (the "PARENT SUPPORT AGREEMENT")
between Solexa Limited and Holder. Capitalized terms used herein and not defined
herein have the meaning set forth in the Parent Support Agreement.

      I hereby acknowledge that I have carefully reviewed the Parent Support
Agreement and such other documents as I have deemed appropriate. I have
discussed the contents of the Parent Support Agreement, to the extent I felt
necessary, with my legal counsel. I understand fully the transactions described
in the Parent Support Agreement, and I hereby approve of and consent to all such
transactions. I am aware that by the provisions of the Parent Support Agreement,
my spouse agrees, among other things, to vote all of the outstanding shares of
Parent Common Stock that he or she now owns or hereafter acquires, including my
community property interest therein, if any, in accordance with the Parent
Support Agreement, and that my spouse agrees, among other things, to certain
matters related to the control and disposition of Parent Common Stock. I hereby
agree, on behalf of myself and all persons who may claim on my behalf, that
prior to the fulfillment of all of my spouse's obligations under the Parent
Support Agreement, upon any legal separation from or dissolution of my marriage
to my present spouse, or upon the death of my spouse, neither I nor anyone
claiming on my behalf will seek to partition my or my spouse's community
property interest in the Parent Common Stock and that in any such event I shall
be entitled only to the value of my interest in such Parent Common Stock, if
any, and that I shall have no claim or right to the Parent Common Stock itself.

                                      EXECUTED this ____ day of September, 2004

                                      _________________________________________



                                    EXHIBIT A

                                IRREVOCABLE PROXY

                                TO VOTE STOCK OF

                             LYNX THERAPEUTICS, INC.

      The undersigned stockholder of Lynx Therapeutics, Inc., a Delaware
corporation ("PARENT"), hereby irrevocably (to the full extent permitted by the
Delaware General Corporation Law) appoints the Chief Executive Officer and each
of the other members of the Board of Directors of Solexa Limited, a company
registered in England and Wales (the "COMPANY"), and each of them, as the sole
and exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of Parent that now are or
hereafter may be owned of record or beneficially by the undersigned, and any and
all other shares or securities of Parent issued or issuable in respect thereof
on or after the date hereof (collectively, the "SHARES") in accordance with the
terms of this Proxy and that certain Parent Support Agreement of even date
herewith, by and between the Company and the undersigned (the "PARENT SUPPORT
AGREEMENT"). The shares of Parent Common Stock and options to purchase shares of
Parent Common Stock owned by the undersigned stockholder of Parent as of the
date of this Proxy are listed beneath the undersigned's signature on the final
page of this Proxy. Upon the undersigned's execution of this Proxy, any and all
prior proxies given by the undersigned with respect to any Shares are hereby
revoked and the undersigned agrees not to grant any subsequent proxies with
respect to the Shares until after the earlier to occur of (i) the Expiration
Date (as defined below) and (ii) the First Closing Date. Terms used herein and
not defined herein shall have the meaning set forth in the Parent Support
Agreement.

      This Proxy is coupled with an interest, is irrevocable (to the fullest
extent permitted by the Delaware General Corporation Law), is granted pursuant
to the Parent Support Agreement and is granted in consideration of Parent
entering into that certain Acquisition Agreement, of even date herewith, by and
between the Company and Parent (the "ACQUISITION AGREEMENT"). Pursuant to the
Acquisition Agreement it is proposed that Parent shall (a) commence an offer
(the "SHARE OFFER") to acquire all of the issued shares in the share capital of
the Company and (b) simultaneously therewith, commence an offer (the "OPTION
OFFER" and, together with the Share Offer the "OFFER") to have each Company
Option under the Company Share Option Schemes, whether vested or unvested, at
the election of the holder of each Company Option, either (i) be exercised in
accordance with the rules of the relevant Company Share Option Scheme and such
Ordinary Shares received upon the exercise be exchanged for shares of Parent
Common Stock on the same terms as those offered under the Share Offer or (ii)
become an option to acquire, on the same terms and conditions as were applicable
under the relevant Company Share Option Scheme immediately prior to the First
Closing Date, including the same vesting schedule, a number of shares of Parent
Common Stock equal to the



number of Ordinary shares issuable upon the exercise of each such Company Option
prior to the First Closing Date multiplied by the Ordinary Share Exchange Ratio.
As used herein, the term "EXPIRATION DATE" shall mean the date of termination of
the Acquisition Agreement in accordance with the terms and provisions thereof.

      The attorneys and proxies named above, and each of them, are hereby
further authorized and empowered by the undersigned, at any time prior to the
earlier to occur of (i) the First Closing Date and (ii) the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
consents pursuant to the Delaware General Corporation Law), at every annual,
special or adjourned meeting of the stockholders of Parent and in every written
consent in lieu of such meeting (i) in favor of (A) approving the issuance of
shares of Parent Common Stock in connection with the Offer, (B) approving the
change-of-control of Parent in connection with the transactions contemplated by
the Acquisition Agreement, (C) approving each of the other proposals to be acted
on by the stockholders at the Parent Stockholders Meeting in accordance with
Section 1.1(f) of the Acquisition Agreement, and (D) approving any other matters
that could reasonably be expected to facilitate the transactions contemplated by
the Acquisition Agreement, and (ii) against any of the following actions (other
than the Offer and any other transactions contemplated by the Acquisition
Agreement): (A) any merger, consolidation, business combination, sale of assets,
reorganization or recapitalization of the Parent or any Subsidiary of Parent
with any party, (B) any sale, lease or transfer of any significant part of the
assets of Parent or any Subsidiary of Parent, (C) any reorganization,
recapitalization, dissolution, liquidation or winding up of Parent or any
Subsidiary of Parent, (D) any material change in the capitalization of Parent or
any Subsidiary of Parent, of the corporate structure of Parent or any subsidiary
of Parent, or (E) any other action or agreement that could reasonably be
expected to result in a breach of any covenant, representation or warranty or
any other obligation or agreement of Parent under the Acquisition Agreement or
Holder under this Agreement or which could reasonably be expected to result in
any of the conditions to the obligations of Parent under the Acquisition
Agreement not being fulfilled.

      This Proxy and all acts and transactions pursuant hereto and the rights
and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law.

      Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

      This Proxy is irrevocable (to the fullest extent provided in the Delaware
General Corporation Law).

                            [SIGNATURE PAGE FOLLOWS]

                                       2


Dated: September __, 2004

___________________________
[Name]

Shares owned of record:                     Beneficially owned shares:



Class of Shares              Number         Class of Shares           Number
- ---------------              ------         ---------------           ------
                                                             
Common Stock                                Common Stock

Options to Purchase                         Options to Purchase
Common Stock                                Common Stock


                       SIGNATURE PAGE TO IRREVOCABLE PROXY

EX-99.2

                                                                    EXHIBIT 99.2

                            COMPANY SUPPORT AGREEMENT

      This Company Support Agreement (the "AGREEMENT") is made and entered into
as of September 28, 2004, between Lynx Therapeutics, Inc., a Delaware
corporation ("PARENT"), and the undersigned shareholder ("HOLDER") of Solexa
Limited, a company registered in England and Wales (the "COMPANY").

                                    RECITALS

      Pursuant to an Acquisition Agreement dated as of September 28, 2004 (the
"ACQUISITION AGREEMENT") by and between Parent and the Company, it is proposed
that Parent shall make the Offer and the Option Offer within the meanings set
forth in the Acquisition Agreement. Concurrently with the execution and delivery
of the Acquisition Agreement and as a condition and inducement to Parent
entering into the Acquisition Agreement, Parent has required that Holder enter
into this Agreement. The Holder is the registered owner of: (1) such number of
issued B Preferred Shares, (2) such number of issued A Ordinary Shares, (3) such
number of issued Ordinary Shares (clauses (1), (2) and (3) collectively, the
"SHARES") and (4) such number of options to purchase Ordinary Shares, each as is
indicated beneath Holder's signature on the last page of this Agreement. Terms
used herein and not defined herein shall have the meaning set forth in the
Acquisition Agreement.

                                    AGREEMENT

      The parties agree as follows:

      1. AGREEMENT TO RETAIN SHARES.

            (a) TRANSFER AND ENCUMBRANCE. Except as contemplated by the
Acquisition Agreement, and except as provided in Sections 1(b), 2, 3 and 4
below, during the period beginning on the date hereof and ending on the earlier
to occur of (i) one hundred eighty (180) days following the First Closing Date,
and (ii) the Expiration Date (as defined below), Holder agrees not to, directly
or indirectly, (x) transfer (except as may be specifically required by court
order), sell, exchange, tender, pledge, assign, contribute to the capital of any
entity, hypothecate or otherwise dispose of (including by merger, consolidation
or otherwise by operation of law) or encumber the Shares or any New Shares (as
defined below), including any shares of Parent Common Stock received in exchange
for such Shares pursuant to the Offer, enter into any short sale with respect to
the Shares or any New Shares, enter into or acquire an offsetting derivative
contract with respect to such Shares or any New Shares, enter into or acquire a
futures or forward contract to deliver such Shares or any New Shares or enter
into any other hedging or other derivative transaction that has the effect of
materially changing the economic benefits and risks of ownership of the Shares
or any New Shares, or to, directly or indirectly, make any offer or agreement
relating thereto, (y) grant any proxies or powers of attorney, deposit any of
such Shares or New Shares into a voting trust or enter into a voting agreement
with respect to any of such Shares or New Shares, or enter into any agreement or
arrangement providing for any of the actions described in this clause (y), or
(z) take any action that could reasonably be expected to have the effect of
preventing or disabling Holder from performing Holder's obligations under this
Agreement, and Holder warrants that it has not agreed to carry out any of the
foregoing



matters in relation to the Shares or any New Shares. As used herein, the term
"EXPIRATION DATE" shall mean the date of termination of the Acquisition
Agreement in accordance with the terms and provisions thereof.

            (b) PERMITTED TRANSFERS. Section 1(a) shall not prohibit a transfer
of Shares or New Shares by Holder (i) if Holder is an individual (A) to any
member of Holder's immediate family, or to a trust for the benefit of Holder or
any member of Holder's immediate family, or (B) upon the death of Holder, or
(ii) if Holder is a partnership or limited liability company, to one or more
partners or members of Holder or to an affiliated Person under common control or
common management with Holder; provided, however, that any such transfer
pursuant to either clause (i) or (ii) of this Section 1(b) shall be permitted
only if, as a precondition to such transfer, the transferee agrees in writing to
be bound by all of the terms of this Agreement.

            (c) NEW SHARES. Holder agrees that any shares of capital stock or
interests in shares or other securities of the Company or Parent. including any
shares of Parent Common Stock received in exchange for such Shares pursuant to
the Offer, that Holder purchases or with respect to which Holder otherwise
acquires registered or beneficial ownership after the date of this Agreement and
prior to the earlier to occur of (i) one hundred eighty (180) days following the
First Closing Date and (ii) the Expiration Date ("NEW SHARES") shall be subject
to the terms and conditions of this Agreement to the same extent as if they
constituted Shares.

      2. IRREVOCABLE UNDERTAKING TO ACCEPT OFFER. Holder hereby irrevocably
undertakes, represents and warrants to Parent that Holder shall accept or
procure acceptance of the Offer and make an election under the Option Offer in
accordance with their respective terms in respect of all the Shares or Company
Options, as appropriate, held or owned by Holder by not later than 5:00 p.m.
California time on the tenth Business Day after the dispatch of the Offer
Documents, and forward or procure that there is forwarded with such acceptance
the share certificates or other documents of title in respect of the Shares and
the Company Options in accordance with the terms of the Offer and the Option
Offer. Holder shall not withdraw Holder's acceptance and shall procure that
Holder's acceptance is not withdrawn in respect of all or any of the Shares and
that Holder's election is not withdrawn in respect of any or all Company Options
held or owned by Holder. Until the earlier of the First Closing Date or the
Expiration Date, Holder shall not accept or solicit any exchange offer commenced
by a third party other than Parent or any Subsidiary of Parent with respect to
the Shares. Parent acknowledges and agrees that this Agreement shall not be
binding upon Holder in the event the Acquisition Agreement is amended by the
parties thereto to lower or change the form of consideration set forth in the
Acquisition Agreement.

      3. AGREEMENT TO VOTE SHARES. Until the earlier to occur of (x) the First
Closing Date and (y) the Expiration Date, Holder shall, at any meeting (whether
annual or extraordinary and whether or not an adjourned or postponed meeting) of
shareholders of the Company or of any class of shareholders of the Company,
however called, or in connection with any written resolution of the holders of
shares or any class of shares in the capital of the Company, vote the Shares and
any New Shares (i) in favor of (A) to the extent deemed necessary or appropriate
by the Board of Directors of the Company, delivery of a Selling Notice (as that
term is defined in the Company's Articles of Association) to invoke the
compulsory transfer to Parent of the

                                       2


remaining share capital of the Company pursuant to Article 7 of the Company's
Articles of Association, and (B) approving any other matters that could
reasonably be expected to facilitate the transactions contemplated by the
Acquisition Agreement, and (ii) against any of the following actions (other than
the Offer and any other transactions contemplated by the Acquisition Agreement):
(A) any merger, consolidation, business combination, takeover, sale of assets,
reorganization or recapitalization of the Company with any party, (B) any sale,
lease or transfer of any significant part of the assets of the Company, (C) any
reorganization, recapitalization, dissolution, liquidation or winding up of the
Company, (D) any material change in the capitalization of the Company or the
corporate structure of the Company, (E) the requisition (and the Holder shall
not propose such a requisition) of any general or separate class meeting of the
Company for the purposes of considering any resolution relating to the Offer
(including without limitation, a resolution to enable the Offer to become
unconditional), except with the prior written consent of Parent, or (F) any
other action or agreement that could reasonably be expected to result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Acquisition Agreement or Holder under this
Agreement or which could reasonably be expected to result in any of the
conditions to the obligations of the Company under the Acquisition Agreement not
being fulfilled. This Agreement is intended to bind Holder as a shareholder of
the Company only with respect to the specific matters set forth herein. Except
as set forth in clauses (i) and (ii) of this Section 3, Holder shall not be
restricted from voting in favor of, against or abstaining with respect to any
other matter presented to the shareholders of the Company.

      4. IRREVOCABLE PROXY. Concurrently with the execution of this Agreement,
Holder agrees to deliver to the Company a proxy in the form attached hereto as
Exhibit A (the "PROXY"), which shall be irrevocable to the fullest extent
permitted by law.

      5. AFFILIATE AGREEMENT.

            (a) GENERAL. Holder has been advised that, as of the date hereof,
Holder may be deemed to be an "affiliate" of the Company, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
rules and regulations (the "RULES AND REGULATIONS") of the SEC under the
Securities Act. Pursuant to the terms of the Offer, Parent will acquire all of
the issued share capital of Company. As a result of the Offer, Holder will
receive Parent Common Stock in exchange for the Shares or any New Shares.
Notwithstanding anything to the contrary set forth in this Section 5, the
execution of this Agreement should not be considered an admission on Holder's
part that Holder is an "affiliate" of Company, nor as a waiver of any rights
Holder may have to object to any claim that Holder is such an affiliate on or
after the date of this Agreement.

            (b) HOLDER REPRESENTATIONS; RESTRICTIONS ON TRANSFER; LEGENDS.
Holder represents, warrants and covenants to Parent that in the event Holder
receives any Parent Common Stock upon consummation of the Offer:

                  (i) Holder shall not make any sale, transfer or other
disposition of the Parent Common Stock in violation of the Securities Act.

                                       3


                  (ii) Holder has carefully read this Agreement and discussed
the requirements of this Agreement and other applicable limitations upon
Holder's ability to sell, transfer or otherwise dispose of Parent Common Stock
received in exchange for the Shares, to the extent Holder has felt necessary,
with Holder's counsel.

                  (iii) Holder has been advised that the issuance of Parent
Common Stock in connection with the Offer will be registered on a registration
statement on Form S-4 promulgated under the Securities Act (the "REGISTRATION
STATEMENT") and the resale of such Parent Common Stock may be subject to
restrictions set forth in Rule 145 under the Securities Act. Holder has been
advised that, because Holder may be deemed to be an "affiliate" of the Company,
Holder may not sell, transfer or otherwise dispose of the Parent Common Stock
issued to Holder in the Offer, unless (i) such sale, transfer or other
disposition is made in conformity with the limitations of Rule 145 promulgated
by the SEC under the Securities Act, (ii) such sale, transfer or other
disposition has been registered under the Securities Act or (iii) in the opinion
of counsel reasonably acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration under the Securities Act.

                  (iv) Holder understands and agrees that stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Common Stock issued to Holder and that there will be placed on the certificates
for the Parent Common Stock issued to Holder, or any substitutions therefor, a
legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF A COMPANY SUPPORT AGREEMENT
DATED SEPTEMBER 28, 2004 BETWEEN THE REGISTERED HOLDER HEREOF AND LYNX
THERAPEUTICS, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF LYNX THERAPEUTICS, INC." If a sale or transfer is made prior to such
legend being removed pursuant to Section 5(c) below, certificates with the above
legend will be substituted by delivery of certificates without such legend upon
delivery of a declaration to Parent (the "DECLARATION"), which Declaration shall
be reasonably satisfactory in form and substance to Parent, that the
requirements of Rule 145(d)(1) have been complied with.

                  (v) Holder understands and agrees that stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Common Stock issued to Holder and there will be placed on the certificates for
the Parent Common Stock issued to Holder, or any substitutions therefore, a
legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED UNTIL THE DATE THAT IS 180 DAYS FOLLOWING THE FIRST CLOSING DATE
(AS DEFINED IN THE ACQUISITION AGREEMENT DATED SEPTEMBER 28, 2004 BETWEEN LYNX
THERAPEUTICS, INC. AND SOLEXA LIMITED) IN ACCORDANCE WITH THE TERMS OF A COMPANY
SUPPORT AGREEMENT DATED SEPTEMBER 28, 2004 BETWEEN THE REGISTERED HOLDER HEREOF
AND LYNX THERAPEUTICS, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF LYNX THERAPEUTICS, INC."

                                       4


            (c) PARENT REPRESENTATIONS.

                  (i) Parent hereby agrees that, unless previously sold pursuant
to the applicable requirements of Rule 145, it is understood and agreed that
certificates with the legend set forth in Section 5(b)(iv) above will be
substituted by delivery of certificates without such legend, and any stop
transfer instructions then in effect will be terminated, if (i) one year shall
have elapsed from the date Holder acquired the Parent Common Stock received in
the Offer and the provisions of Rule 145(d)(2) are then available to Holder,
(ii) two years shall have elapsed from the date Holder acquired the Parent
Common Stock received in the Offer and the provisions of Rule 145(d)(3) are then
available to Holder, or (iii) Parent has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to Parent, or a "no
action" letter obtained by Holder from the staff of the SEC, to the effect that
the restrictions imposed by Rule 145 under the Securities Act no longer apply to
Holder. For as long as resales of any shares of Parent Common Stock owned by
Holder are subject to Rule 145, Parent will use its reasonable efforts to make
all filings of the nature specified in paragraph (c)(1) of Rule 144 under the
Securities Act. Upon receipt of a properly completed Declaration, Parent shall
use its reasonable efforts to instruct its transfer agent to deliver shares of
Parent Common Stock without the legend set forth in Section 5(b)(iv) above in
accordance with the terms of the transfer set forth in the Declaration as soon
as practicable following receipt of such Declaration.

                  (ii) Parent hereby agrees that it is understood and agreed
that certificates with the legend set forth in Section 5(b)(v) above will, to
the extent required to enable the shares represented by such certificate to be
transferred by the holder thereof, be substituted by delivery of certificates
without such legend upon the written request of the Holder if 180 days shall
have elapsed from the First Closing Date. Upon receipt of any such written
request, Parent shall use its reasonable efforts to instruct its transfer agent
to deliver shares of Parent Common Stock without the legend set forth in Section
5(b)(v) above as soon as practicable following receipt of such written request.

      6. RESALE REGISTRATION RIGHTS.

            (a) REGISTRABLE SHARES. For purposes of this Agreement, "REGISTRABLE
SHARES" shall mean the shares of Parent Common Stock issued to the Company
shareholders who have executed a Company Support Agreement (the "ORIGINAL HOLDER
GROUP"), including Holder, pursuant to the Offer.

            (b) REQUIRED REGISTRATION. Parent shall use its commercially
reasonable efforts to (i) file a post-effective amendment to the Registration
Statement on Form S-3 registering the resale of the Registrable Shares within 60
days following the First Closing Date (the "AMENDMENT"), so long as the holders
of such Registrable Shares shall provide the information necessary for inclusion
therein in a timely manner to enable Parent to file the Amendment within such
period, (ii) to cause such Amendment to be declared effective by the SEC as soon
thereafter as possible and in any event no later than one hundred eighty (180)
days following the First Closing Date, (iii) to file such amendments or
supplements as may be necessary so that the prospectus contained in the
Amendment will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or

                                       5


necessary to make the statements therein not misleading in light of the
circumstances then existing, and (iv) to effect all such registrations,
qualifications and compliances (including, without limitation, obtaining
appropriate qualifications under applicable state securities or "blue sky" laws
and compliance with any other applicable governmental requirements or
regulations) as Holder may reasonably request and that would permit or
facilitate the sale of all Holder's Registrable Shares (provided, however, that
Parent shall not be required in connection therewith to qualify to do business
or to file a general consent to service of process in any such state or
jurisdiction), and in each case Parent will use its commercially reasonable
efforts to cause such Amendment and all other such registrations, qualifications
and compliances to be declared effective as promptly as practicable thereafter.
As soon as reasonably practicable after the First Closing Date, Parent will
provide to each holder of Registrable Securities a questionnaire setting forth
the information that Parent will require from each such holder to include such
holder's Registrable Shares in the Registration Statement. If Holder shall fail
to furnish such information to Parent within twenty (20) days following the date
on which such questionnaire shall be delivered to the Holders, Parent may
exclude Holder from the Registration Statement.

            (c) EFFECTIVENESS; DELIVERY OF PROSPECTUS; SUSPENSION RIGHT.

                  (i) Parent will use its commercially reasonable efforts to
maintain the effectiveness of the Amendment and other applicable registrations,
qualifications and compliances until such time as fewer than 25% of the
Registrable Securities remain held by the Original Holder Group, calculated on
an aggregate basis (the "REGISTRATION EFFECTIVE PERIOD"). As soon as practicable
following the effectiveness of the Amendment, Parent will furnish to each holder
of Registrable Shares such number of copies of the prospectus contained in the
Amendment in conformity with the requirements of the Securities Act, and such
other documents as such holder may reasonably request in order to facilitate the
public sale or other disposition of such shares.

                  (ii) For any offer or sale of any of the Registrable Shares by
a shareholder in a transaction that is not exempt under the Securities Act, the
shareholder, in addition to complying with any other federal securities laws,
will deliver a copy of the final prospectus (or amendment of or supplement to
such prospectus) of Parent covering the Registrable Shares in the form furnished
to the shareholder by Parent to the purchaser of any of the Registrable Shares
on or before the settlement date for the purchase of such Registrable Shares.

                  (iii) Following the date on which the Amendment is first
declared effective, the holder of Registrable Shares will be permitted (subject
in all cases to Section 7 below) to offer and sell Registrable Shares pursuant
to the Amendment during the Registration Effective Period in the manner
described in the Amendment provided that the Amendment remains effective and has
not been suspended.

                  (iv) Notwithstanding any other provision of this Section 6 but
subject to Section 7, Parent shall have the right at any time to require that
all holders of Registrable Shares suspend further open market offers and sales
of Registrable Shares pursuant to the Amendment whenever, and for so long as, in
the reasonable judgment of Parent after consultation with counsel there is or
may be in existence material undisclosed information or

                                       6


events with respect to Parent (the "SUSPENSION RIGHT") ; provided, however, that
Parent shall not be entitled to invoke the Suspension Right unless such right or
an equivalent restriction has been imposed on, and is then applicable to, all of
Parent's executive officers, directors and other holders of Parent Common Stock
which are registered for resale under the Securities Act. In the event Parent
exercises the Suspension Right, such suspension will continue for the period of
time reasonably necessary for disclosure (including any necessary filings with
the SEC) to occur at a time that is not detrimental to Parent and its
shareholders or until such time as the information or event is no longer
material, each as determined in good faith by Parent (it being understood that
Parent will use all reasonably commercial efforts to minimize the duration of
the suspension period). The termination of the Registration Effective Period
will extend by one (1) day for each day during which the holders of Registrable
Shares suspend further open market offers and sales of Registrable Shares
pursuant to the Parent's exercise of the Suspension Right.

            (d) EXPENSES. The costs and expenses to be borne by Parent for
purposes of this Section 6 shall include, without limitation, printing expenses
(including a reasonable number of prospectuses for circulation by the selling
holders of Registrable Shares, including the Holder (the "SELLING
SHAREHOLDERS")), legal fees and disbursements of counsel for Parent, "blue sky"
expenses, accounting fees and filing fees, but shall not include underwriting
commissions or similar charges, or any legal fees and disbursements of counsel
to the Selling Shareholders.

            (e) INDEMNIFICATION.

                  (i) To the extent permitted by law, Parent will indemnify and
hold harmless each holder of Registrable Shares, any underwriter (as defined in
the Securities Act) for such shareholder, its officers, directors, shareholders
or partners and each person, if any, who controls such shareholder or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "VIOLATION"): (A)
any untrue statement or alleged untrue statement of a material fact contained in
the Amendment, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (B) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (C) any violation
or alleged violation by Parent of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and Parent will pay to each
such shareholder (and its officers, directors, shareholders or partners),
underwriter or controlling person, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 6(e)(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of Parent; nor shall Parent be liable
in any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon (a) a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in the Amendment by any such shareholder, or (b) a Violation that would not
have occurred if such shareholder had

                                       7


delivered to the purchaser the version of the Prospectus most recently provided
by Parent to the shareholder as of the date of such sale.

                  (ii) To the extent permitted by law, each Selling Shareholder
will indemnify and hold harmless Parent, each of its directors, each of its
officers who has signed the Amendment, each person, if any, who controls Parent
within the meaning of the Securities Act, any underwriter, any other Selling
Shareholder selling securities pursuant to the Amendment and any controlling
person of any such underwriter or other shareholder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation (which
includes without limitation the failure of the shareholder to comply with the
prospectus delivery requirements under the Securities Act, and the failure of
the shareholder to deliver the most current prospectus provided by Parent prior
to such sale), in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Shareholder expressly for use in the Amendment or such
Violation is caused by the shareholder's failure to deliver to the purchaser of
the Selling Shareholder's Registrable Shares a prospectus (or amendment or
supplement thereto) that had been made available to the shareholder by Parent;
and each such Selling Shareholder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 6(e)(ii) in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 6.5(e)(ii) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Selling Shareholder, which
consent shall not be unreasonably withheld. The aggregate indemnification
liability of each Selling Shareholder under this Section 6(e)(ii) shall not
exceed the net proceeds received by such Selling Shareholder in connection with
sale of shares pursuant to the Amendment.

                  (iii) Each person entitled to indemnification under this
Section 6(e) (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought and shall permit the Indemnifying Party to assume the defense of any such
claim and any litigation resulting therefrom, provided that counsel for the
Indemnifying Party who conducts the defense of such claim or any litigation
resulting therefrom shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 6.5 unless the
Indemnifying Party is materially prejudiced thereby. No Indemnifying Party, in
the defense of any such claim or litigation, shall (except with the consent of
each Indemnified Party) consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably

                                       8


request in writing and as shall be reasonably required in connection with the
defense of such claim and litigation resulting therefrom.

                  (iv) To the extent that the indemnification provided for in
this Section 6(e) is held by a court of competent jurisdiction to be unavailable
to an Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The aggregate contribution liability of each
Selling Shareholder under this Section 6.5(e)(iv) shall not exceed the net
proceeds received by such Selling Shareholder in connection with sale of shares
pursuant to the Amendment.

      7. PROCEDURES FOR SALE OF SHARES UNDER REGISTRATION STATEMENT.

            (a) NOTICE AND APPROVAL. If any shareholder shall propose to sell
any Registrable Shares pursuant to the Amendment, it shall notify Parent of its
intent to do so (including the proposed manner and timing of all sales) at least
three (3) full trading days prior to such sale, and the provision of such notice
to Parent shall conclusively be deemed to reestablish and reconfirm an agreement
by such Selling Shareholder to comply with the registration provisions set forth
in this Agreement. Unless otherwise specified in such notice, such notice shall
be deemed to constitute a representation that any information previously
supplied by such Selling Shareholder expressly for inclusion in the Amendment
(as the same may have been superseded by subsequent such information) is
accurate as of the date of such notice. Parent may delay the resale by such
Selling Shareholder of any Registrable Shares pursuant to the Amendment by
delivering to such Selling Shareholder a written notification that Parent's
Suspension Right has been exercised and is then in effect (the "SUSPENSION
NOTICE"); provided, however, that the Suspension Notice must be delivered within
the three (3) trading-day period following receipt of such Selling Shareholder's
notice of intent to sell Registrable Securities under the Amendment so long as
such notice included a working facsimile number for purposes of delivery of
Parent's response. Upon receipt of the Suspension Notice, such Selling
Shareholder shall refrain from selling any Registrable Shares pursuant to the
Amendment in the open market until his, her or its receipt of a supplemented or
amended prospectus pursuant to Section 7(b) below or written notice from Parent
that the suspension period has ended and use of the prospectus previously
furnished to such Selling Shareholder may be resumed.

            (b) COPIES OF PROSPECTUS. Subject to the provisions of this Section
7, when a Selling Shareholder is entitled to sell and gives notice of its intent
to sell Registrable Shares

                                       9


pursuant to the Amendment, Parent shall, within two (2) trading days following
the request or, in the event that Parent's Suspension Right has been exercised
and is then in effect, as soon as practicable following the termination of the
suspension period, furnish to such Selling Shareholder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable Shares,
such prospectus shall not as of the date of delivery to the Selling Shareholder
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or incomplete in the light of the circumstances then existing.

      8. WAIVER OF RIGHTS OF FIRST REFUSAL.

            (a) Holder irrevocably undertakes represents and warrants to the
Parent that in transferring any Shares to Parent pursuant to the Offer it will
transfer to Parent all accrued dividend rights and entitlements attaching to the
Shares (whether or not declared, due or owing) including any debts due by the
Company in respect thereof.

            (b) In the event that Holder is the registered holder of any B
Preferred Shares, Holder hereby irrevocably undertakes to the Parent that it
shall not following receipt of a Notice of a Company-Building Merger (as each is
defined in the Articles of Association of the Company) or otherwise in
contemplation of the Offer elect or vote in favor of Article 2.5(a)(ii) of the
Articles of Association of the Company.

            (c) In the event that Holder is the registered holder of any A
Ordinary Shares, Holder hereby irrevocably undertakes to the Parent that it
shall not following receipt of a Notice of a Company-Building Merger (as each is
defined in the Articles of Association of the Company) or otherwise in
contemplation of the Offer elect or vote in favor of Article 2.5(b)(ii) of the
Articles of Association of the Company.

            (d) Solely in connection with the exchange of Shares pursuant to the
Offer, Holder hereby waives any and all rights of pre-emption or first refusal
that it may have (including, without limitation, under the Articles of
Association of the Company, the Subscription and Shareholders' Agreement dated
July 30, 2004 relating to the Company, or otherwise) with respect to the
proposed transfer of any shares in the capital of the Company to Parent pursuant
to the terms of the Offer, or any Shares or other securities in the share
capital of the Company owned by, or issuable to, any person.

      9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDER. Holder hereby
represents, warrants and covenants to Parent that Holder (i) is the registered
owner and, as set forth on the signature page, beneficial owner, of the Shares
and options to purchase Ordinary Shares, if any, indicated below Holder's
signature on the signature page to this Agreement, which at the date of this
Agreement and at all times up until the earlier to occur of (A) one hundred
eighty (180) days following the First Closing Date, and (B) the Expiration Date,
are, and will be, free and clear of any liens, claims, options, charges or other
encumbrances, and (ii) is not the registered owner of any shares, options or
other securities in, or convertible into, share capital of the Company, other
than the Shares and the options to purchase Ordinary Shares, if any, indicated
below Holder's signature on the last page of this Agreement. Holder has the

                                       10


legal capacity, power and authority to enter into and perform all of Holder's
obligations under this Agreement (including under the Proxy). This Agreement
(including the Proxy) has been duly and validly executed and delivered by Holder
and constitutes a valid and binding agreement of Holder, enforceable against
Holder in accordance with its terms, subject to (a) laws of general application
relating to bankruptcy, insolvency and the relief of debtors and (b) rules of
law governing specific performance, injunctive relief and other equitable
remedies.

      10. FURTHER ASSURANCES. Holder shall perform such further acts and execute
such further documents and instruments as may reasonably be required to vest in
Parent the power to carry out and give effect to the provisions of this
Agreement.

      11. CONSENT AND WAIVER. Holder hereby gives any consents or waivers that
are reasonably required for the consummation of the Offer under the terms of any
agreement (including, without limitation, the Articles of Association of the
Company and the Subscription and Shareholders' Agreement dated July 30, 2004
relating to the Company, or otherwise) to which Holder is a party or pursuant to
any rights Holder may have.

      12. FIDUCIARY DUTIES. Notwithstanding anything in this Agreement to the
contrary: (i) Holder makes no agreement or understanding herein in any capacity
other than in Holder's capacity as a registered owner of the Shares and, to the
extent applicable, any New Shares, (ii) nothing in this Agreement shall be
construed to limit or affect any action or inaction by Holder, or any officer,
partner, member or employee, as applicable, of Holder, serving on the Company's
Board of Directors acting in such person's capacity as a director or fiduciary
of the Company, and (iii) Holder shall have no liability to Parent or any its
affiliates under this Agreement as a result of any action or inaction by Holder,
or any officer, partner, member or employee, as applicable, of Holder, serving
on the Company's Board of Directors acting in such person's capacity as a
director or fiduciary of the Company.

      13. MISCELLANEOUS.

            (a) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 13(a) shall be binding upon the parties and their respective successors
and assigns.

            (b) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.

            (c) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

            (d) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

                                       11


            (e) NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received (i) when delivered by hand;
(ii) on the day sent by facsimile, provided that the sender has received
confirmation of transmission as of or prior to 5:00 p.m. local time of the
recipient, on such day; (iii) the first Business Day after sent by facsimile (to
the extent that (A) the sender has received confirmation of transmission after
5:00 p.m. local time of the recipient on the day sent by facsimile, or (B)
notice is sent on a day that is not a Business Day); or (iv) the third Business
Day after sent by registered mail or by courier or express delivery service, in
each case to the address or facsimile number set forth on the signature page to
this Agreement beneath the name of such party, or to such other address or
facsimile number as such party shall have specified in a written notice given to
the other party hereto).

            (f) SEVERABILITY. If one or more provisions of this Agreement are
held to be invalid or unenforceable under the applicable law of any
jurisdiction, the parties agree to renegotiate such provision in good faith, in
order to maintain the economic position enjoyed by each party as close as
possible to that under the provision rendered unenforceable. In the event that
the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Agreement,
(ii) the balance of the Agreement shall be interpreted as if such provision were
so excluded and (iii) the balance of the Agreement shall be valid and
enforceable in accordance with its terms. Each provision of this Agreement is
separable from any other provisions of this Agreement, and each part of each
provision of this Agreement is severable from every other part of such
provision.

            (g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach of any covenants or agreements contained in this
Agreement will cause Parent to sustain damages for which it would not have an
adequate remedy at law for money damages, and therefore each of the parties
hereto agrees that in the event of any such breach Parent shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
they may be entitled, at law or in equity.

            (h) DISCLOSURE. Holder hereby agrees to permit Parent and the
Company to publish and disclose in the Registration Statement (including all
documents and schedules filed with the SEC), the Amendment and the Proxy
Statement, and in any press release or other disclosure document in which Parent
or the Company reasonably determines in its good faith judgment that such
disclosure is required by law, including the rules and regulations of the SEC,
the Financial Services and Markets Act 2000 and the Companies Act 1985 (as
amended), as appropriate, in connection with the Offer and any transactions
related thereto, such Holder's identity and ownership of the Shares and New
Shares and the nature of the commitments, arrangements and undertakings under
this Agreement.

            (i) ACKNOWLEDGEMENT. Holder hereby agrees and acknowledges that the
terms and provisions of Section 7.6 of the Subscription and Shareholders'
Agreement dated July 30, 2004 shall survive and remain in full force and effect
following the consummation of the Offer.

                                       12


                            [SIGNATURE PAGE FOLLOWS]

                                       13


      The parties have caused this Agreement to be duly executed on the date
first above written.

                                PARENT

                                By:___________________________________________
                                Name:_________________________________________
                                Title:________________________________________

                                Address: Lynx Therapeutics, Inc.
                                25861 Industrial Boulevard
                                Hayward, California 94545
                                Attention: President and Chief Executive Officer
                                Facsimile No.: 650.670.9303

                   SIGNATURE PAGE TO COMPANY SUPPORT AGREEMENT



                                  HOLDER

                                  By:___________________________________________
                                       [Name]

                                  Holder's Address for Notice:

                                  ______________________________________________
                                  ______________________________________________
                                  ______________________________________________
                                  Attention:
                                  Facsimile No.:

Shares owned of record:           Beneficially owned shares:



Class of Shares         Number    Class of Shares           Number
- ---------------         ------    ---------------           ------
                                                   
B Preferred Shares                B Preferred Shares

A Ordinary Shares                 A Ordinary Shares

Ordinary Shares                   Ordinary Shares

Options to Purchase               Options to Purchase
Ordinary Shares                   Ordinary Shares


                   SIGNATURE PAGE TO COMPANY SUPPORT AGREEMENT


                                CONSENT OF SPOUSE

                        [TO BE EXECUTED WHERE RELEVANT.]

      The undersigned is the spouse of [_____________], the Holder (as such term
is defined in the Company Support Agreement) in the foregoing Company Support
Agreement dated as of September 28, 2004 (the "COMPANY SUPPORT AGREEMENT")
between Lynx Therapeutics, Inc. and Holder. Capitalized terms used herein and
not defined herein have the meaning set forth in the Company Support Agreement.

      I hereby acknowledge that I have carefully reviewed the Company Support
Agreement and such other documents as I have deemed appropriate. I have
discussed the contents of the Company Support Agreement, to the extent I felt
necessary, with my legal counsel. I understand fully the transactions described
in the Company Support Agreement, and I hereby approve of and consent to all
such transactions. I am aware that by the provisions of the Company Support
Agreement, my spouse agrees, among other things, to vote all of the outstanding
shares of Company capital stock that he or she now owns or hereafter acquires,
including my community property interest therein, if any, in accordance with the
Company Support Agreement, and that my spouse agrees, among other things, to
certain matters related to the control and disposition of Company capital stock.
I hereby agree, on behalf of myself and all persons who may claim on my behalf,
that prior to fulfillment of all of my spouse's obligations under the Company
Support Agreement in accordance with the terms and provisions of the Company
Support Agreement, upon any legal separation from or dissolution of my marriage
to my present spouse, or upon the death of my spouse, neither I nor anyone
claiming on my behalf will seek to partition my or my spouse's community
property interest in the Company capital stock and that in any such event I
shall be entitled only to the value of my interest in such Company capital
stock, if any, and that I shall have no claim or right to the Company capital
stock itself.

                                       EXECUTED this ____ day of September, 2004

                                       _________________________________________



                                    EXHIBIT A

                                IRREVOCABLE PROXY

                                TO VOTE SHARES OF

                                 SOLEXA LIMITED

      The undersigned shareholder ("HOLDER") of Solexa Limited, a company
incorporated under the laws of England and Wales (the "COMPANY"), hereby
irrevocably (to the fullest extent permitted under the laws of England and
Wales) appoints the Chief Executive Officer and each of the other members of the
Board of Directors of Lynx Therapeutics, Inc., a Delaware corporation
("PARENT"), and each of them, as the sole and exclusive attorneys and proxies of
the undersigned, with full power of substitution and resubstitution, to vote and
exercise all voting and related rights (to the full extent that the undersigned
is entitled to do so) with respect to all of the shares in the capital of the
Company that now are or hereafter may be owned of record by and/or registered in
the name of the undersigned, and any and all other shares or securities of the
Company issued or issuable in respect thereof on or after the date hereof
(collectively, the "SHARES") in accordance with the terms of this Proxy, the
Shares and that certain Company Support Agreement of even date herewith, by and
between Parent and the undersigned (the "COMPANY SUPPORT AGREEMENT"). The shares
of, and/or options over, the share capital of the Company owned by the
undersigned shareholder of the Company as of the date of this Proxy are listed
beneath the undersigned's signature on the final page of this Proxy. Upon the
undersigned's execution of this Proxy, any and all prior proxies given by the
undersigned with respect to any Shares are hereby revoked and the undersigned
agrees not to grant any subsequent proxies with respect to the Shares until
after the earlier to occur of (i) the Expiration Date (as defined below) and
(ii) the First Closing Date. Terms used herein and not defined herein shall have
the meaning set forth in the Company Support Agreement.

      This Proxy is coupled with an interest, is irrevocable (to the fullest
extent permitted by law), is granted pursuant to the Company Support Agreement
and is granted in consideration of Parent entering into that certain Acquisition
Agreement, of even date herewith, by and between the Company and Parent (the
"ACQUISITION AGREEMENT"). Pursuant to the Acquisition Agreement it is proposed
that Parent shall (a) make an offer (the "SHARE OFFER") to acquire all of the
issued and to be issued shares in the share capital of the Company and (b)
simultaneously therewith, make an offer (the "OPTION OFFER" and, together with
the Share Offer, the "OFFER") to have each Company Option under the Company
Share Option Schemes, whether vested or unvested, at the election of the holder
of each Company Option, either (i) be exercised in accordance with the rules of
the relevant Company Share Option Scheme and such Ordinary Shares received upon
the exercise be exchanged for shares of Parent Common Stock on the same terms as
those offered under the Share Offer or (ii) become an option to acquire, on the
same terms and conditions as were applicable under the relevant Company Share
Option Scheme immediately prior to the First Closing Date, including the same
vesting schedule, a



number of shares of Parent Common Stock equal to the number of Ordinary shares
issuable upon the exercise of each such Company Option prior to the First
Closing Date multiplied by the Ordinary Share Exchange Ratio. As used herein,
the term "EXPIRATION DATE" shall mean the date of termination of the Acquisition
Agreement in accordance with the terms and provisions thereof.

      The attorneys and proxies named above, and each of them, are hereby
further authorized and empowered by the undersigned, at any time prior to the
earlier to occur of (i) the First Closing Date and (ii) the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
resolutions), at every annual, extraordinary or adjourned meeting of the
shareholders or any class of shareholders of the Company and in every written
resolution in lieu of any such meeting (i) in favor of: (A) delivery of a
Selling Notice (as that term is defined in the Company's Articles of
Association) to invoke the compulsory transfer to Parent of the remaining share
capital of the Company pursuant to Article 7 of the Company's Articles of
Association, and (B) approving any other matters that could reasonably be
expected to facilitate the transactions contemplated by the Acquisition
Agreement, and (ii) against any of the following actions (other than the Offer
and any other transactions contemplated by the Acquisition Agreement): (A) any
merger, consolidation, business combination, takeover, sale of assets,
reorganization or recapitalization of the Company with any party, (B) any sale,
lease or transfer of any significant part of the assets of the Company, (C) any
reorganization, recapitalization, dissolution, liquidation or winding up of the
Company, (D) any material change in the capitalization of the Company, of the
corporate structure of the Company, (E) the requisition (and the Holder shall
not propose such a requisition) of any general or separate class meeting of the
Company for the purposes of considering any resolution relating to the Offer
(including without limitation, a resolution to enable the Offer to become
unconditional) except with the prior written consent of Parent, or (F) any other
action or agreement that could reasonably be expected to result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Acquisition Agreement or Holder under the Company Support
Agreement or which could reasonably be expected to result in any of the
conditions to the obligations of the Company under the Acquisition Agreement not
being fulfilled.

      This Proxy and all acts and transactions pursuant hereto and the rights
and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law.

      Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

      This Proxy is irrevocable to the fullest extent permitted by law.

                            [SIGNATURE PAGE FOLLOWS]

                                       2


Dated: September __, 2004

__________________________
[Name]

Shares owned of record:                     Beneficially owned shares:



Class of Shares              Number         Class of Shares            Number
- ---------------              ------         ---------------            ------
                                                              
B Preferred Shares                          B Preferred Shares

A Ordinary Shares                           A Ordinary Shares

Ordinary Shares                             Ordinary Shares

Options to Purchase                         Options to Purchase
Ordinary Shares                             Ordinary Shares


                                       1

EX-99.3

                                                                    EXHIBIT 99.3

                            COMPANY SUPPORT AGREEMENT

      This Company Support Agreement (the "AGREEMENT") is made and entered into
as of September 28, 2004, between Lynx Therapeutics, Inc., a Delaware
corporation ("PARENT"), and the undersigned shareholder ("HOLDER") of Solexa
Limited, a company registered in England and Wales (the "COMPANY").

                                    RECITALS

      Pursuant to an Acquisition Agreement dated as of September 28, 2004 (the
"ACQUISITION AGREEMENT") by and between Parent and the Company, it is proposed
that Parent shall make the Offer and the Option Offer within the meanings set
forth in the Acquisition Agreement. Concurrently with the execution and delivery
of the Acquisition Agreement and as a condition and inducement to Parent
entering into the Acquisition Agreement, Parent has required that Holder enter
into this Agreement. The Holder is the registered owner of: (1) such number of
issued B Preferred Shares, (2) such number of issued A Ordinary Shares, (3) such
number of issued Ordinary Shares (clauses (1), (2) and (3) collectively, the
"SHARES") and (4) such number of options to purchase Ordinary Shares, each as is
indicated beneath Holder's signature on the last page of this Agreement. Terms
used herein and not defined herein shall have the meaning set forth in the
Acquisition Agreement.

                                    AGREEMENT

      The parties agree as follows:

      1. AGREEMENT TO RETAIN SHARES.

            (a) TRANSFER AND ENCUMBRANCE. Except as contemplated by the
Acquisition Agreement, and except as provided in Sections 1(b), 2, 3 and 4
below, during the period beginning on the date hereof and ending on the earlier
to occur of (i) one hundred eighty (180) days following the First Closing Date,
and (ii) the Expiration Date (as defined below), Holder agrees not to, directly
or indirectly, (x) transfer (except as may be specifically required by court
order), sell, exchange, tender, pledge, assign, contribute to the capital of any
entity, hypothecate or otherwise dispose of (including by merger, consolidation
or otherwise by operation of law) or encumber the Shares or any New Shares (as
defined below), including any shares of Parent Common Stock received in exchange
for such Shares pursuant to the Offer, enter into any short sale with respect to
the Shares or any New Shares, enter into or acquire an offsetting derivative
contract with respect to such Shares or any New Shares, enter into or acquire a
futures or forward contract to deliver such Shares or any New Shares or enter
into any other hedging or other derivative transaction that has the effect of
materially changing the economic benefits and risks of ownership of the Shares
or any New Shares, or to, directly or indirectly, make any offer or agreement
relating thereto, (y) grant any proxies or powers of attorney, deposit any of
such Shares or New Shares into a voting trust or enter into a voting agreement
with respect to any of such Shares or New Shares, or enter into any agreement or
arrangement providing for any of the actions described in this clause (y), or
(z) take any action that could reasonably be expected to have the effect of
preventing or disabling Holder from performing Holder's obligations under this
Agreement, and Holder warrants that it has not agreed to carry out any of the
foregoing



matters in relation to the Shares or any New Shares. As used herein, the term
"EXPIRATION DATE" shall mean the date of termination of the Acquisition
Agreement in accordance with the terms and provisions thereof.

            (b) PERMITTED TRANSFERS. Section 1(a) shall not prohibit a transfer
of Shares or New Shares by Holder (i) if Holder is an individual (A) to any
member of Holder's immediate family, or to a trust for the benefit of Holder or
any member of Holder's immediate family, or (B) upon the death of Holder, or
(ii) if Holder is a partnership or limited liability company, to one or more
partners or members of Holder or to an affiliated Person under common control or
common management with Holder; provided, however, that any such transfer
pursuant to either clause (i) or (ii) of this Section 1(b) shall be permitted
only if, as a precondition to such transfer, the transferee agrees in writing to
be bound by all of the terms of this Agreement.

            (c) NEW SHARES. Holder agrees that any shares of capital stock or
interests in shares or other securities of the Company or Parent. including any
shares of Parent Common Stock received in exchange for such Shares pursuant to
the Offer, that Holder purchases or with respect to which Holder otherwise
acquires registered or beneficial ownership after the date of this Agreement and
prior to the earlier to occur of (i) one hundred eighty (180) days following the
First Closing Date and (ii) the Expiration Date ("NEW SHARES") shall be subject
to the terms and conditions of this Agreement to the same extent as if they
constituted Shares.

      2. IRREVOCABLE UNDERTAKING TO ACCEPT OFFER. Holder hereby irrevocably
undertakes, represents and warrants to Parent that Holder shall accept or
procure acceptance of the Offer and make an election under the Option Offer in
accordance with their respective terms in respect of all the Shares or Company
Options, as appropriate, held or owned by Holder by not later than 5:00 p.m.
California time on the tenth Business Day after the dispatch of the Offer
Documents, and forward or procure that there is forwarded with such acceptance
the share certificates or other documents of title in respect of the Shares and
the Company Options in accordance with the terms of the Offer and the Option
Offer. Holder shall not withdraw Holder's acceptance and shall procure that
Holder's acceptance is not withdrawn in respect of all or any of the Shares and
that Holder's election is not withdrawn in respect of any or all Company Options
held or owned by Holder; provided, however, that in the event that immediately
prior to the First Closing Date acceptances have been received by Parent in
respect of all shares in the capital of the Company, Holder shall, and shall be
entitled to, withdraw its acceptance in respect of one (and only one) of the
Shares held by Holder. Until the earlier of the First Closing Date or the
Expiration Date, Holder shall not accept or solicit any exchange offer commenced
by a third party other than Parent or any Subsidiary of Parent with respect to
the Shares. Parent acknowledges and agrees that this Agreement shall not be
binding upon Holder in the event the Acquisition Agreement is amended by the
parties thereto to lower or change the form of consideration set forth in the
Acquisition Agreement.

      3. AGREEMENT TO VOTE SHARES. Until the earlier to occur of (x) the First
Closing Date and (y) the Expiration Date, Holder shall, at any meeting (whether
annual or extraordinary and whether or not an adjourned or postponed meeting) of
shareholders of the Company or of any class of shareholders of the Company,
however called, or in connection with any written resolution of the holders of
shares or any class of shares in the capital of the Company, vote the

                                        2


Shares and any New Shares (i) in favor of (A) to the extent deemed necessary or
appropriate by the Board of Directors of the Company, delivery of a Selling
Notice (as that term is defined in the Company's Articles of Association) to
invoke the compulsory transfer to Parent of the remaining share capital of the
Company pursuant to Article 7 of the Company's Articles of Association, and (B)
approving any other matters that could reasonably be expected to facilitate the
transactions contemplated by the Acquisition Agreement, and (ii) against any of
the following actions (other than the Offer and any other transactions
contemplated by the Acquisition Agreement): (A) any merger, consolidation,
business combination, takeover, sale of assets, reorganization or
recapitalization of the Company with any party, (B) any sale, lease or transfer
of any significant part of the assets of the Company, (C) any reorganization,
recapitalization, dissolution, liquidation or winding up of the Company, (D) any
material change in the capitalization of the Company or the corporate structure
of the Company, (E) the requisition (and the Holder shall not propose such a
requisition) of any general or separate class meeting of the Company for the
purposes of considering any resolution relating to the Offer (including without
limitation, a resolution to enable the Offer to become unconditional), except
with the prior written consent of Parent, or (F) any other action or agreement
that could reasonably be expected to result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Acquisition Agreement or Holder under this Agreement or which could
reasonably be expected to result in any of the conditions to the obligations of
the Company under the Acquisition Agreement not being fulfilled. This Agreement
is intended to bind Holder as a shareholder of the Company only with respect to
the specific matters set forth herein. Except as set forth in clauses (i) and
(ii) of this Section 3, Holder shall not be restricted from voting in favor of,
against or abstaining with respect to any other matter presented to the
shareholders of the Company.

      4. IRREVOCABLE PROXY. Concurrently with the execution of this Agreement,
Holder agrees to deliver to the Company a proxy in the form attached hereto as
Exhibit A (the "PROXY"), which shall be irrevocable to the fullest extent
permitted by law.

      5. AFFILIATE AGREEMENT.

            (a) GENERAL. Holder has been advised that, as of the date hereof,
Holder may be deemed to be an "affiliate" of the Company, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
rules and regulations (the "RULES AND REGULATIONS") of the SEC under the
Securities Act. Pursuant to the terms of the Offer, Parent will acquire all of
the issued share capital of Company. As a result of the Offer, Holder will
receive Parent Common Stock in exchange for the Shares or any New Shares.
Notwithstanding anything to the contrary set forth in this Section 5, the
execution of this Agreement should not be considered an admission on Holder's
part that Holder is an "affiliate" of Company, nor as a waiver of any rights
Holder may have to object to any claim that Holder is such an affiliate on or
after the date of this Agreement.

            (b) HOLDER REPRESENTATIONS; RESTRICTIONS ON TRANSFER; LEGENDS.
Holder represents, warrants and covenants to Parent that in the event Holder
receives any Parent Common Stock upon consummation of the Offer:

                                        3


                  (i) Holder shall not make any sale, transfer or other
disposition of the Parent Common Stock in violation of the Securities Act.

                  (ii) Holder has carefully read this Agreement and discussed
the requirements of this Agreement and other applicable limitations upon
Holder's ability to sell, transfer or otherwise dispose of Parent Common Stock
received in exchange for the Shares, to the extent Holder has felt necessary,
with Holder's counsel.

                  (iii) Holder has been advised that the issuance of Parent
Common Stock in connection with the Offer will be registered on a registration
statement on Form S-4 promulgated under the Securities Act (the "REGISTRATION
STATEMENT") and the resale of such Parent Common Stock may be subject to
restrictions set forth in Rule 145 under the Securities Act. Holder has been
advised that, because Holder may be deemed to be an "affiliate" of the Company,
Holder may not sell, transfer or otherwise dispose of the Parent Common Stock
issued to Holder in the Offer, unless (i) such sale, transfer or other
disposition is made in conformity with the limitations of Rule 145 promulgated
by the SEC under the Securities Act, (ii) such sale, transfer or other
disposition has been registered under the Securities Act or (iii) in the opinion
of counsel reasonably acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration under the Securities Act.

                  (iv) Holder understands and agrees that stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Common Stock issued to Holder and that there will be placed on the certificates
for the Parent Common Stock issued to Holder, or any substitutions therefor, a
legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF A COMPANY SUPPORT AGREEMENT
DATED SEPTEMBER28, 2004 BETWEEN THE REGISTERED HOLDER HEREOF AND LYNX
THERAPEUTICS, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF LYNX THERAPEUTICS, INC." If a sale or transfer is made prior to such
legend being removed pursuant to Section 5(c) below, certificates with the above
legend will be substituted by delivery of certificates without such legend upon
delivery of a declaration to Parent (the "DECLARATION"), which Declaration shall
be reasonably satisfactory in form and substance to Parent, that the
requirements of Rule 145(d)(1) have been complied with.

                  (v) Holder understands and agrees that stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Common Stock issued to Holder and there will be placed on the certificates for
the Parent Common Stock issued to Holder, or any substitutions therefore, a
legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED UNTIL THE DATE THAT IS 180 DAYS FOLLOWING THE FIRST CLOSING DATE
(AS DEFINED IN THE ACQUISITION AGREEMENT DATED SEPTEMBER 28, 2004 BETWEEN LYNX
THERAPEUTICS, INC. AND SOLEXA LIMITED) IN ACCORDANCE WITH THE TERMS OF A COMPANY
SUPPORT AGREEMENT DATED SEPTEMBER 28, 2004 BETWEEN THE REGISTERED HOLDER HEREOF
AND LYNX THERAPEUTICS, INC., A COPY OF WHICH

                                       4


AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF LYNX THERAPEUTICS, INC."

            (c) PARENT REPRESENTATIONS.

                  (i) Parent hereby agrees that, unless previously sold pursuant
to the applicable requirements of Rule 145, it is understood and agreed that
certificates with the legend set forth in Section 5(b)(iv) above will be
substituted by delivery of certificates without such legend, and any stop
transfer instructions then in effect will be terminated, if (i) one year shall
have elapsed from the date Holder acquired the Parent Common Stock received in
the Offer and the provisions of Rule 145(d)(2) are then available to Holder,
(ii) two years shall have elapsed from the date Holder acquired the Parent
Common Stock received in the Offer and the provisions of Rule 145(d)(3) are then
available to Holder, or (iii) Parent has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to Parent, or a "no
action" letter obtained by Holder from the staff of the SEC, to the effect that
the restrictions imposed by Rule 145 under the Securities Act no longer apply to
Holder. For as long as resales of any shares of Parent Common Stock owned by
Holder are subject to Rule 145, Parent will use its reasonable efforts to make
all filings of the nature specified in paragraph (c)(1) of Rule 144 under the
Securities Act. Upon receipt of a properly completed Declaration, Parent shall
use its reasonable efforts to instruct its transfer agent to deliver shares of
Parent Common Stock without the legend set forth in Section 5(b)(iv) above in
accordance with the terms of the transfer set forth in the Declaration as soon
as practicable following receipt of such Declaration.

                  (ii) Parent hereby agrees that it is understood and agreed
that certificates with the legend set forth in Section 5(b)(v) above will, to
the extent required to enable the shares represented by such certificate to be
transferred by the holder thereof, be substituted by delivery of certificates
without such legend upon the written request of the Holder if 180 days shall
have elapsed from the First Closing Date. Upon receipt of any such written
request, Parent shall use its reasonable efforts to instruct its transfer agent
to deliver shares of Parent Common Stock without the legend set forth in Section
5(b)(v) above as soon as practicable following receipt of such written request.

      6. RESALE REGISTRATION RIGHTS.

            (a) REGISTRABLE SHARES. For purposes of this Agreement, "REGISTRABLE
SHARES" shall mean the shares of Parent Common Stock issued to the Company
shareholders who have executed a Company Support Agreement (the "ORIGINAL HOLDER
GROUP"), including Holder, pursuant to the Offer.

            (b) REQUIRED REGISTRATION. Parent shall use its commercially
reasonable efforts to (i) file a post-effective amendment to the Registration
Statement on Form S-3 registering the resale of the Registrable Shares within 60
days following the First Closing Date (the "AMENDMENT"), so long as the holders
of such Registrable Shares shall provide the information necessary for inclusion
therein in a timely manner to enable Parent to file the Amendment within such
period, (ii) to cause such Amendment to be declared effective by the SEC as soon
thereafter as possible and in any event no later than one hundred eighty (180)
days following the First Closing Date, (iii) to file such amendments or
supplements as may be

                                       5


necessary so that the prospectus contained in the Amendment will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and (iv) to effect all such
registrations, qualifications and compliances (including, without limitation,
obtaining appropriate qualifications under applicable state securities or "blue
sky" laws and compliance with any other applicable governmental requirements or
regulations) as Holder may reasonably request and that would permit or
facilitate the sale of all Holder's Registrable Shares (provided, however, that
Parent shall not be required in connection therewith to qualify to do business
or to file a general consent to service of process in any such state or
jurisdiction), and in each case Parent will use its commercially reasonable
efforts to cause such Amendment and all other such registrations, qualifications
and compliances to be declared effective as promptly as practicable thereafter.
As soon as reasonably practicable after the First Closing Date, Parent will
provide to each holder of Registrable Securities a questionnaire setting forth
the information that Parent will require from each such holder to include such
holder's Registrable Shares in the Registration Statement. If Holder shall fail
to furnish such information to Parent within twenty (20) days following the date
on which such questionnaire shall be delivered to the Holders, Parent may
exclude Holder from the Registration Statement.

            (c) EFFECTIVENESS; DELIVERY OF PROSPECTUS; SUSPENSION RIGHT.

                  (i) Parent will use its commercially reasonable efforts to
maintain the effectiveness of the Amendment and other applicable registrations,
qualifications and compliances until such time as fewer than 25% of the
Registrable Securities remain held by the Original Holder Group, calculated on
an aggregate basis (the "REGISTRATION EFFECTIVE PERIOD"). As soon as practicable
following the effectiveness of the Amendment, Parent will furnish to each holder
of Registrable Shares such number of copies of the prospectus contained in the
Amendment in conformity with the requirements of the Securities Act, and such
other documents as such holder may reasonably request in order to facilitate the
public sale or other disposition of such shares.

                  (ii) For any offer or sale of any of the Registrable Shares by
a shareholder in a transaction that is not exempt under the Securities Act, the
shareholder, in addition to complying with any other federal securities laws,
will deliver a copy of the final prospectus (or amendment of or supplement to
such prospectus) of Parent covering the Registrable Shares in the form furnished
to the shareholder by Parent to the purchaser of any of the Registrable Shares
on or before the settlement date for the purchase of such Registrable Shares.

                  (iii) Following the date on which the Amendment is first
declared effective, the holder of Registrable Shares will be permitted (subject
in all cases to Section 7 below) to offer and sell Registrable Shares pursuant
to the Amendment during the Registration Effective Period in the manner
described in the Amendment provided that the Amendment remains effective and has
not been suspended.

                  (iv) Notwithstanding any other provision of this Section 6 but
subject to Section 7, Parent shall have the right at any time to require that
all holders of Registrable Shares suspend further open market offers and sales
of Registrable Shares pursuant to the

                                       6


Amendment whenever, and for so long as, in the reasonable judgment of Parent
after consultation with counsel there is or may be in existence material
undisclosed information or events with respect to Parent (the "SUSPENSION
RIGHT") ; provided, however, that Parent shall not be entitled to invoke the
Suspension Right unless such right or an equivalent restriction has been imposed
on, and is then applicable to, all of Parent's executive officers, directors and
other holders of Parent Common Stock which are registered for resale under the
Securities Act. In the event Parent exercises the Suspension Right, such
suspension will continue for the period of time reasonably necessary for
disclosure (including any necessary filings with the SEC) to occur at a time
that is not detrimental to Parent and its shareholders or until such time as the
information or event is no longer material, each as determined in good faith by
Parent (it being understood that Parent will use all reasonably commercial
efforts to minimize the duration of the suspension period). The termination of
the Registration Effective Period will extend by one (1) day for each day during
which the holders of Registrable Shares suspend further open market offers and
sales of Registrable Shares pursuant to the Parent's exercise of the Suspension
Right.

            (d) EXPENSES. The costs and expenses to be borne by Parent for
purposes of this Section 6 shall include, without limitation, printing expenses
(including a reasonable number of prospectuses for circulation by the selling
holders of Registrable Shares, including the Holder (the "SELLING
SHAREHOLDERS")), legal fees and disbursements of counsel for Parent, "blue sky"
expenses, accounting fees and filing fees, but shall not include underwriting
commissions or similar charges, or any legal fees and disbursements of counsel
to the Selling Shareholders.

            (e) INDEMNIFICATION.

                  (i) To the extent permitted by law, Parent will indemnify and
hold harmless each holder of Registrable Shares, any underwriter (as defined in
the Securities Act) for such shareholder, its officers, directors, shareholders
or partners and each person, if any, who controls such shareholder or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "VIOLATION"): (A)
any untrue statement or alleged untrue statement of a material fact contained in
the Amendment, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (B) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (C) any violation
or alleged violation by Parent of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and Parent will pay to each
such shareholder (and its officers, directors, shareholders or partners),
underwriter or controlling person, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 6(e)(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of Parent; nor shall Parent be liable
in any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon (a) a Violation which occurs in
reliance upon and

                                       7


in conformity with written information furnished expressly for use in the
Amendment by any such shareholder, or (b) a Violation that would not have
occurred if such shareholder had delivered to the purchaser the version of the
Prospectus most recently provided by Parent to the shareholder as of the date of
such sale.

                  (ii) To the extent permitted by law, each Selling Shareholder
will indemnify and hold harmless Parent, each of its directors, each of its
officers who has signed the Amendment, each person, if any, who controls Parent
within the meaning of the Securities Act, any underwriter, any other Selling
Shareholder selling securities pursuant to the Amendment and any controlling
person of any such underwriter or other shareholder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation (which
includes without limitation the failure of the shareholder to comply with the
prospectus delivery requirements under the Securities Act, and the failure of
the shareholder to deliver the most current prospectus provided by Parent prior
to such sale), in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Shareholder expressly for use in the Amendment or such
Violation is caused by the shareholder's failure to deliver to the purchaser of
the Selling Shareholder's Registrable Shares a prospectus (or amendment or
supplement thereto) that had been made available to the shareholder by Parent;
and each such Selling Shareholder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 6(e)(ii) in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 6.5(e)(ii) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Selling Shareholder, which
consent shall not be unreasonably withheld. The aggregate indemnification
liability of each Selling Shareholder under this Section 6(e)(ii) shall not
exceed the net proceeds received by such Selling Shareholder in connection with
sale of shares pursuant to the Amendment.

                  (iii) Each person entitled to indemnification under this
Section 6(e) (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought and shall permit the Indemnifying Party to assume the defense of any such
claim and any litigation resulting therefrom, provided that counsel for the
Indemnifying Party who conducts the defense of such claim or any litigation
resulting therefrom shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 6.5 unless the
Indemnifying Party is materially prejudiced thereby. No Indemnifying Party, in
the defense of any such claim or litigation, shall (except with the consent of
each Indemnified Party) consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such

                                       8


information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.

                  (iv) To the extent that the indemnification provided for in
this Section 6(e) is held by a court of competent jurisdiction to be unavailable
to an Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The aggregate contribution liability of each
Selling Shareholder under this Section 6.5(e)(iv) shall not exceed the net
proceeds received by such Selling Shareholder in connection with sale of shares
pursuant to the Amendment.

      7. PROCEDURES FOR SALE OF SHARES UNDER REGISTRATION STATEMENT.

            (a) NOTICE AND APPROVAL. If any shareholder shall propose to sell
any Registrable Shares pursuant to the Amendment, it shall notify Parent of its
intent to do so (including the proposed manner and timing of all sales) at least
three (3) full trading days prior to such sale, and the provision of such notice
to Parent shall conclusively be deemed to reestablish and reconfirm an agreement
by such Selling Shareholder to comply with the registration provisions set forth
in this Agreement. Unless otherwise specified in such notice, such notice shall
be deemed to constitute a representation that any information previously
supplied by such Selling Shareholder expressly for inclusion in the Amendment
(as the same may have been superseded by subsequent such information) is
accurate as of the date of such notice. Parent may delay the resale by such
Selling Shareholder of any Registrable Shares pursuant to the Amendment by
delivering to such Selling Shareholder a written notification that Parent's
Suspension Right has been exercised and is then in effect (the "SUSPENSION
NOTICE"); provided, however, that the Suspension Notice must be delivered within
the three (3) trading-day period following receipt of such Selling Shareholder's
notice of intent to sell Registrable Securities under the Amendment so long as
such notice included a working facsimile number for purposes of delivery of
Parent's response. Upon receipt of the Suspension Notice, such Selling
Shareholder shall refrain from selling any Registrable Shares pursuant to the
Amendment in the open market until his, her or its receipt of a supplemented or
amended prospectus pursuant to Section 7(b) below or written notice from Parent
that the suspension period has ended and use of the prospectus previously
furnished to such Selling Shareholder may be resumed.

                                       9


            (b) COPIES OF PROSPECTUS. Subject to the provisions of this Section
7, when a Selling Shareholder is entitled to sell and gives notice of its intent
to sell Registrable Shares pursuant to the Amendment, Parent shall, within two
(2) trading days following the request or, in the event that Parent's Suspension
Right has been exercised and is then in effect, as soon as practicable following
the termination of the suspension period, furnish to such Selling Shareholder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Shares, such prospectus shall not as of the date
of delivery to the Selling Shareholder include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or incomplete in the light of the
circumstances then existing.

      8. WAIVER OF RIGHTS OF FIRST REFUSAL. Solely in connection with the
exchange of Shares pursuant to the Offer, Holder hereby waives any and all
rights of first refusal it may have (including, without limitation, under the
Articles of Association of the Company, the Subscription and Shareholders'
Agreement dated July 30, 2004 relating to the Company, or otherwise) with
respect to any Shares or other securities in the share capital of the Company
owned by, or issuable to, any person.

      9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDER. Holder hereby
represents, warrants and covenants to Parent that Holder (i) is the registered
owner and, as set forth on the signature page, beneficial owner, of the Shares
and options to purchase Ordinary Shares, if any, indicated below Holder's
signature on the signature page to this Agreement, which at the date of this
Agreement and at all times up until the earlier to occur of (A) one hundred
eighty (180) days following the First Closing Date, and (B) the Expiration Date,
are, and will be, free and clear of any liens, claims, options, charges or other
encumbrances, and (ii) is not the registered owner of any shares, options or
other securities in, or convertible into, share capital of the Company, other
than the Shares and the options to purchase Ordinary Shares, if any, indicated
below Holder's signature on the last page of this Agreement. Holder has the
legal capacity, power and authority to enter into and perform all of Holder's
obligations under this Agreement (including under the Proxy). This Agreement
(including the Proxy) has been duly and validly executed and delivered by Holder
and constitutes a valid and binding agreement of Holder, enforceable against
Holder in accordance with its terms, subject to (a) laws of general application
relating to bankruptcy, insolvency and the relief of debtors and (b) rules of
law governing specific performance, injunctive relief and other equitable
remedies.

      10. FURTHER ASSURANCES. Holder shall perform such further acts and execute
such further documents and instruments as may reasonably be required to vest in
Parent the power to carry out and give effect to the provisions of this
Agreement.

      11. CONSENT AND WAIVER. Holder hereby gives any consents or waivers that
are reasonably required for the consummation of the Offer under the terms of any
agreement (including, without limitation, the Articles of Association of the
Company and the Subscription and Shareholders' Agreement dated July 30, 2004
relating to the Company, or otherwise) to which Holder is a party or pursuant to
any rights Holder may have.

                                       10


      12. FIDUCIARY DUTIES. Notwithstanding anything in this Agreement to the
contrary: (i) Holder makes no agreement or understanding herein in any capacity
other than in Holder's capacity as a registered owner of the Shares and, to the
extent applicable, any New Shares, (ii) nothing in this Agreement shall be
construed to limit or affect any action or inaction by Holder, or any officer,
partner, member or employee, as applicable, of Holder, serving on the Company's
Board of Directors acting in such person's capacity as a director or fiduciary
of the Company, and (iii) Holder shall have no liability to Parent or any its
affiliates under this Agreement as a result of any action or inaction by Holder,
or any officer, partner, member or employee, as applicable, of Holder, serving
on the Company's Board of Directors acting in such person's capacity as a
director or fiduciary of the Company.

      13. MISCELLANEOUS.

            (a) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 13(a) shall be binding upon the parties and their respective successors
and assigns.

            (b) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.

            (c) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

            (d) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

            (e) NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received (i) when delivered by hand;
(ii) on the day sent by facsimile, provided that the sender has received
confirmation of transmission as of or prior to 5:00 p.m. local time of the
recipient, on such day; (iii) the first Business Day after sent by facsimile (to
the extent that (A) the sender has received confirmation of transmission after
5:00 p.m. local time of the recipient on the day sent by facsimile, or (B)
notice is sent on a day that is not a Business Day); or (iv) the third Business
Day after sent by registered mail or by courier or express delivery service, in
each case to the address or facsimile number set forth on the signature page to
this Agreement beneath the name of such party, or to such other address or
facsimile number as such party shall have specified in a written notice given to
the other party hereto).

            (f) SEVERABILITY. If one or more provisions of this Agreement are
held to be invalid or unenforceable under the applicable law of any
jurisdiction, the parties agree to renegotiate such provision in good faith, in
order to maintain the economic position enjoyed by each party as close as
possible to that under the provision rendered unenforceable. In the event

                                       11


that the parties cannot reach a mutually agreeable and enforceable replacement
for such provision, then (i) such provision shall be excluded from this
Holder represents, warrants and covenants to Parent that in the event Holder
provision were so excluded and (iii) the balance of the Agreement shall be valid
and enforceable in accordance with its terms. Each provision of this Agreement
is separable from any other provisions of this Agreement, and each part of each
provision of this Agreement is severable from every other part of such
provision.

            (g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach of any covenants or agreements contained in this
Agreement will cause Parent to sustain damages for which it would not have an
adequate remedy at law for money damages, and therefore each of the parties
hereto agrees that in the event of any such breach Parent shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
they may be entitled, at law or in equity.

            (h) DISCLOSURE. Holder hereby agrees to permit Parent and the
Company to publish and disclose in the Registration Statement (including all
documents and schedules filed with the SEC), the Amendment and the Proxy
Statement, and in any press release or other disclosure document in which Parent
or the Company reasonably determines in its good faith judgment that such
disclosure is required by law, including the rules and regulations of the SEC,
the Financial Services and Markets Act 2000 and the Companies Act 1985 (as
amended), as appropriate, in connection with the Offer and any transactions
related thereto, such Holder's identity and ownership of the Shares and New
Shares and the nature of the commitments, arrangements and undertakings under
this Agreement.

            (i) ACKNOWLEDGEMENT. Holder hereby agrees and acknowledges that the
terms and provisions of Section 7.6 of the Subscription and Shareholders'
Agreement dated July 30, 2004 shall survive and remain in full force and effect
following the consummation of the Offer.

                            [SIGNATURE PAGE FOLLOWS]

                                       12


      The parties have caused this Agreement to be duly executed on the date
first above written.

                              PARENT

                              By:_______________________________________________
                              Name:_____________________________________________
                              Title:____________________________________________

                              Address: Lynx Therapeutics, Inc.
                              25861 Industrial Boulevard
                              Hayward, California 94545
                              Attention:  President and Chief Executive Officer
                              Facsimile No.:  510.670.9303

                   SIGNATURE PAGE TO COMPANY SUPPORT AGREEMENT



                              HOLDER

                              By:_______________________________________________
                                           Nick McCooke

                              Holder's Address for Notice:
                              __________________________________________________
                              __________________________________________________
                              __________________________________________________

                              Attention:
                              Facsimile No.:



Shares owned of record:                 Beneficially owned shares:
Class of Shares             Number      Class of Shares        Number
- ---------------             ------      ---------------        ------
                                                      
B Preferred Shares                      B Preferred Shares

A Ordinary Shares                       A Ordinary Shares

Ordinary Shares                         Ordinary Shares

Options to Purchase                     Options to Purchase
Ordinary Shares                         Ordinary Shares


                   SIGNATURE PAGE TO COMPANY SUPPORT AGREEMENT


                                CONSENT OF SPOUSE

                        [TO BE EXECUTED WHERE RELEVANT.]

      The undersigned is the spouse of [_____________], the Holder (as such term
is defined in the Company Support Agreement) in the foregoing Company Support
Agreement dated as of September 28, 2004 (the "COMPANY SUPPORT AGREEMENT")
between Lynx Therapeutics, Inc. and Holder. Capitalized terms used herein and
not defined herein have the meaning set forth in the Company Support Agreement.

      I hereby acknowledge that I have carefully reviewed the Company Support
Agreement and such other documents as I have deemed appropriate. I have
discussed the contents of the Company Support Agreement, to the extent I felt
necessary, with my legal counsel. I understand fully the transactions described
in the Company Support Agreement, and I hereby approve of and consent to all
such transactions. I am aware that by the provisions of the Company Support
Agreement, my spouse agrees, among other things, to vote all of the outstanding
shares of Company capital stock that he or she now owns or hereafter acquires,
including my community property interest therein, if any, in accordance with the
Company Support Agreement, and that my spouse agrees, among other things, to
certain matters related to the control and disposition of Company capital stock.
I hereby agree, on behalf of myself and all persons who may claim on my behalf,
that prior to fulfillment of all of my spouse's obligations under the Company
Support Agreement in accordance with the terms and provisions of the Company
Support Agreement, upon any legal separation from or dissolution of my marriage
to my present spouse, or upon the death of my spouse, neither I nor anyone
claiming on my behalf will seek to partition my or my spouse's community
property interest in the Company capital stock and that in any such event I
shall be entitled only to the value of my interest in such Company capital
stock, if any, and that I shall have no claim or right to the Company capital
stock itself.

                              EXECUTED this ____ day of September, 2004

                               __________________________________________


                                    EXHIBIT A

                                IRREVOCABLE PROXY

                                TO VOTE SHARES OF

                                 SOLEXA LIMITED

      The undersigned shareholder ("HOLDER") of Solexa Limited, a company
incorporated under the laws of England and Wales (the "COMPANY"), hereby
irrevocably (to the fullest extent permitted under the laws of England and
Wales) appoints the Chief Executive Officer and each of the other members of the
Board of Directors of Lynx Therapeutics, Inc., a Delaware corporation
("PARENT"), and each of them, as the sole and exclusive attorneys and proxies of
the undersigned, with full power of substitution and resubstitution, to vote and
exercise all voting and related rights (to the full extent that the undersigned
is entitled to do so) with respect to all of the shares in the capital of the
Company that now are or hereafter may be owned of record by and/or registered in
the name of the undersigned, and any and all other shares or securities of the
Company issued or issuable in respect thereof on or after the date hereof
(collectively, the "SHARES") in accordance with the terms of this Proxy, the
Shares and that certain Company Support Agreement of even date herewith, by and
between Parent and the undersigned (the "COMPANY SUPPORT AGREEMENT"). The shares
of, and/or options over, the share capital of the Company owned by the
undersigned shareholder of the Company as of the date of this Proxy are listed
beneath the undersigned's signature on the final page of this Proxy. Upon the
undersigned's execution of this Proxy, any and all prior proxies given by the
undersigned with respect to any Shares are hereby revoked and the undersigned
agrees not to grant any subsequent proxies with respect to the Shares until
after the earlier to occur of (i) the Expiration Date (as defined below) and
(ii) the First Closing Date. Terms used herein and not defined herein shall have
the meaning set forth in the Company Support Agreement.

      This Proxy is coupled with an interest, is irrevocable (to the fullest
extent permitted by law), is granted pursuant to the Company Support Agreement
and is granted in consideration of Parent entering into that certain Acquisition
Agreement, of even date herewith, by and between the Company and Parent (the
"ACQUISITION AGREEMENT"). Pursuant to the Acquisition Agreement it is proposed
that Parent shall (a) make an offer (the "SHARE OFFER") to acquire all of the
issued and to be issued shares in the share capital of the Company and (b)
simultaneously therewith, make an offer (the "OPTION OFFER" and, together with
the Share Offer, the "OFFER") to have each Company Option under the Company
Share Option Schemes, whether vested or unvested, at the election of the holder
of each Company Option, either (i) be exercised in accordance with the rules of
the relevant Company Share Option Scheme and such Ordinary Shares received upon
the exercise be exchanged for shares of Parent Common Stock on the same terms as
those offered under the Share Offer or (ii) become an option to acquire, on the
same terms and conditions as were applicable under the relevant Company Share
Option Scheme immediately prior to the First Closing Date, including the same
vesting schedule, a



number of shares of Parent Common Stock equal to the number of Ordinary shares
issuable upon the exercise of each such Company Option prior to the First
Closing Date multiplied by the Ordinary Share Exchange Ratio. As used herein,
the term "EXPIRATION DATE" shall mean the date of termination of the Acquisition
Agreement in accordance with the terms and provisions thereof.

      The attorneys and proxies named above, and each of them, are hereby
further authorized and empowered by the undersigned, at any time prior to the
earlier to occur of (i) the First Closing Date and (ii) the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
resolutions), at every annual, extraordinary or adjourned meeting of the
shareholders or any class of shareholders of the Company and in every written
resolution in lieu of any such meeting (i) in favor of: (A) delivery of a
Selling Notice (as that term is defined in the Company's Articles of
Association) to invoke the compulsory transfer to Parent of the remaining share
capital of the Company pursuant to Article 7 of the Company's Articles of
Association, and (B) approving any other matters that could reasonably be
expected to facilitate the transactions contemplated by the Acquisition
Agreement, and (ii) against any of the following actions (other than the Offer
and any other transactions contemplated by the Acquisition Agreement): (A) any
merger, consolidation, business combination, takeover, sale of assets,
reorganization or recapitalization of the Company with any party, (B) any sale,
lease or transfer of any significant part of the assets of the Company, (C) any
reorganization, recapitalization, dissolution, liquidation or winding up of the
Company, (D) any material change in the capitalization of the Company, of the
corporate structure of the Company, (E) the requisition (and the Holder shall
not propose such a requisition) of any general or separate class meeting of the
Company for the purposes of considering any resolution relating to the Offer
(including without limitation, a resolution to enable the Offer to become
unconditional) except with the prior written consent of Parent, or (F) any other
action or agreement that could reasonably be expected to result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Acquisition Agreement or Holder under the Company Support
Agreement or which could reasonably be expected to result in any of the
conditions to the obligations of the Company under the Acquisition Agreement not
being fulfilled.

      This Proxy and all acts and transactions pursuant hereto and the rights
and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law.

      Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

      This Proxy is irrevocable to the fullest extent permitted by law.

                            [SIGNATURE PAGE FOLLOWS]

                                        2


Dated: September __, 2004

______________________________
[Name]



Shares owned of record:                   Beneficially owned shares:
Class of Shares        Number             Class of Shares           Number
- ---------------        ------             ---------------           ------
                                                           
B Preferred Shares                        B Preferred Shares

A Ordinary Shares                         A Ordinary Shares

Ordinary Shares                           Ordinary Shares

Options to Purchase                       Options to Purchase
Ordinary Shares                           Ordinary Shares


                       SIGNATURE PAGE TO IRREVOCABLE PROXY