Table of Contents

---

Table of Contents

---

Table of Contents

/s/ KENNETH I. MOCH
Kenneth I. Moch
Chairman of the Board
President and Chief Executive Officer
Alteon Inc.

---

Table of Contents

	By:	/s/ Noah Berkowitz

	Name: Noah Berkowitz
	Title:   President and Chief Executive Officer

---

Table of Contents

---

Table of Contents

	1. To approve the merger, the Agreement and Plan of Merger, dated as of April 19, 2006, by and among Alteon Inc., HaptoGuard, Inc., Alteon Merger Sub, Inc., and Genentech, Inc., and the issuance of shares, transfer and conversion of shares contemplated thereby, as described in the attached Proxy Statement;
	2. To consider and vote upon an adjournment of the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1;
	3. To consider and vote upon a proposal to amend Alteon’s Certificate of Designation of Series G Preferred Stock, as described in the attached Proxy Statement, in order to, among other related technical changes, change the written notice requirements to Alteon for conversion of the preferred stock in order to allow for the conversion pursuant to the merger agreement;
	4. To consider and vote upon a proposal to amend Alteon’s Certificate of Designation of Series H Preferred Stock, as described in the attached Proxy Statement, in order to, among other related technical changes, change the written notice requirements to Alteon for conversion of the preferred stock in order to allow for the conversion pursuant to the merger agreement;
	5. To elect two directors to hold office until the completion of the merger or, in the event the merger is not completed, until the 2009 Annual Meeting of Stockholders and until their successors have been duly elected and qualified;
	6. To reserve an additional 5,000,000 shares of common stock for issuance under Alteon’s 2005 Stock Plan in order to continue to meet the hiring needs for the upcoming year;
	7. To ratify the appointment of J.H. Cohn LLP as the independent registered public accounting firm of Alteon for the fiscal year ending December 31, 2006; and
	8. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

---

Table of Contents

	/s/ Kenneth I. Moch
	Name: Kenneth I. Moch
	Title:   Secretary

---

Table of Contents

	1. To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of April 19, 2006, by and among Alteon Inc., HaptoGuard, Alteon Merger Sub, Inc., and Genentech, Inc. as described in the attached Proxy Statement;
	2. To consider and vote upon an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1; and
	3. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

	/s/ Noah Berkowitz
	Name: Noah Berkowitz
	Title:   Secretary

---

 

CHAPTER ONE — THE MERGER				I-1
	SUMMARY			I-1
	SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA			I-11
	QUESTIONS AND ANSWERS ABOUT THE MERGER			I-16
	RISK FACTORS			I-20
	SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS			I-31
	THE MERGER TRANSACTION			I-32
	UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS			I-43
	INTERESTS OF CERTAIN PERSONS IN THE MERGER			I-50
	THE MERGER AGREEMENT			I-52
CHAPTER TWO — INFORMATION ABOUT THE MEETING AND VOTING				II-1
CHAPTER THREE — OTHER INFORMATION REGARDING ALTEON				III-1
	BUSINESS OF ALTEON			III-1
CHAPTER FOUR — OTHER INFORMATION REGARDING HAPTOGUARD				IV-1
	BUSINESS OF HAPTOGUARD			IV-1
CHAPTER FIVE — CERTAIN LEGAL INFORMATION				V-1
	COMPARISON OF STOCKHOLDER RIGHTS			V-1
	DESCRIPTION OF ALTEON CAPITAL STOCK			V-3
CHAPTER SIX — ALTEON ANNUAL MEETING PROPOSALS				VI-1
	ITEM 1 — MERGER PROPOSAL			VI-1
	ITEM 2 — AMENDMENTS OF CERTIFICATES OF DESIGNATION			VI-1
	ITEM 3 — ELECTION OF DIRECTORS			VI-1
	ITEM 4 — RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			VI-5
	ITEM 5 — APPROVE AMENDMENT TO OUR 2005 STOCK PLAN			VI-7
	EXECUTIVE OFFICERS			VI-10
	EXECUTIVE COMPENSATION			VI-11
	SUMMARY COMPENSATION TABLE			VI-11
	EQUITY COMPENSATION PLAN INFORMATION			VI-13
	COMPENSATION COMMITTEE REPORT			VI-17
	AUDIT COMMITTEE REPORT			VI-19
	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			VI-20
	SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			VI-21
	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			VI-22
CHAPTER SEVEN — HAPTOGUARD SPECIAL MEETING PROPOSAL				VII-1
	ITEMS 1 AND 2 — HAPTOGUARD MERGER PROPOSALS			VII-1
CHAPTER EIGHT — ADDITIONAL INFORMATION FOR STOCKHOLDERS				VIII-1
	STOCKHOLDER PROPOSALS			VIII-1
	OTHER MATTERS			VIII-1
	GENERAL			VIII-1
		WHERE YOU CAN FIND MORE INFORMATION		VIII-1
ALTEON FINANCIAL STATEMENTS				F-1
ANNEX INDEX

---

Table of Contents

	•	The ability of Alteon’s stockholders to continue to participate in the growth of the business conducted by Alteon and HaptoGuard after the completion of the merger;
	•	Anticipated improvements in the ability to raise capital;
	•	The strategic fit between Alteon and HaptoGuard in the cardiovascular and diabetes arenas;
	•	The synergy of the board of directors and the management of the combined company;

---

Table of Contents

	•	Anticipated synergies to be achieved by combining the management of the development and commercialization of HaptoGuard and Alteon products;
	•	The likelihood that the combined company will have better opportunities for future growth and increase the likelihood of successful commercialization of HaptoGuard and Alteon products; and
	•	The potential to improve Alteon’s strategic position in the potential markets it may serve.

	•	Anticipated improvements in the ability to raise capital;
	•	The belief that the merger represented the best value reasonably available to HaptoGuard’s stockholders for their shares of HaptoGuard;
	•	The likelihood that the combined company will have better opportunities for future growth by increasing the number of potential candidates;
	•	The ability of HaptoGuard’s stockholders to continue to participate in the growth of the business conducted by Alteon and HaptoGuard after the completion of the merger;
	•	The strategic fit between Alteon and HaptoGuard in the cardiovascular and diabetes arenas;
	•	The importance of scale in the increasingly competitive market environments in which both Alteon and HaptoGuard operate; and
	•	The belief that the combined company will be able to better develop and commercialize its products.

I-2

---

Table of Contents

	•	convert a portion of its existing preferred Alteon stock to 13,492,349 shares of Alteon common stock, which number when combined with prior shares owned would represent approximately 11.99% of the combined company after completion of the merger;
	•	transfer to HaptoGuard shareholders a portion of Genentech’s preferred stock, which when converted to common stock equals approximately $3.5 million in Alteon common stock;
	•	transfer to Alteon the remaining Alteon preferred stock it holds, which will be cancelled;
	•	as consideration for the conversion, transfer and cancellation of Alteon preferred stock by Genentech, receive from the combined company certain milestone payments and royalties on net sales of alagebrium, Alteon’s lead compound, as well as a right of first negotiation on ALT-2074, HaptoGuard’s lead compound. This restructuring reduces Genentech’s ownership of Alteon and removes the substantial liquidation preference of Genentech’s stock which we anticipate will remove an impediment to future financings of the combined company.

	•	Genentech will convert a portion of the Alteon preferred stock that it holds into shares of Alteon common stock, such that the number of such shares of Alteon common stock to be issued will, when added to the shares of Alteon common stock already owned by Genentech, equal 19.99% of Alteon’s outstanding common stock, as calculated after the conversion of such Alteon preferred stock but prior to (i) the issuance of shares of Alteon common stock in connection with the merger; (ii) the issuance of Alteon common stock and warrants in connection with the $2.6 million financing which occurred immediately after signing of the merger agreement; and (iii) the conversion of Alteon preferred stock to be transferred to HaptoGuard in connection with the merger as described below;
	•	Genentech will transfer to HaptoGuard a portion of Alteon preferred stock held by it, in such an amount that will convert to a number of shares of Alteon common stock, in accordance with the terms of Alteon’s certificate of incorporation and the terms of the merger agreement equal in value to $3,500,000 (the value of the price per share of the Alteon common stock being equal to $0.2353, based on the 20-trading day volume-weighted average price of the per share selling prices on the American Stock Exchange for the period immediately preceding the signing of the merger agreement);
	•	Genentech will transfer to Alteon all of the remaining shares of Alteon preferred stock held by Genentech which are not either converted or transferred, and such shares of Alteon preferred stock shall be canceled and retired without payment of any consideration therefor other than pursuant to the terms of the merger agreement and cease to be outstanding;

I-3

---

Table of Contents

	•	every share of HaptoGuard common stock issued and outstanding immediately prior to the effective time of the merger (other than the dissenting shares) shall be converted into the right to receive a number of shares of Alteon common stock equal to the quotient of (i) the sum of (x) a number of shares of Alteon common stock to be issued by Alteon to HaptoGuard stockholders at the effective time with a value of $5.3 million, which we refer to as the Alteon Shares, plus (y) the number of shares of Alteon common stock to be issued pursuant to the transfer of shares by Genentech to HaptoGuard as noted above, the market value of (x) and (y) to be equal to $8,800,000, divided by (ii) the sum of (x) the number of outstanding shares of HaptoGuard common stock at the effective time, and (y) the number of Share Equivalents (as defined below). This quotient is referred to as the exchange ratio; and
	•	each share of HaptoGuard common stock held in the treasury of HaptoGuard and each share of HaptoGuard common stock owned by Alteon or by any direct or indirect wholly-owned subsidiary of HaptoGuard or Alteon immediately prior to the effective time shall, by virtue of the merger and without any action on the part of the holder thereof, cease to be outstanding, be canceled and retired without payment of any consideration therefor other than pursuant to the terms of the merger agreement and cease to exist.

	•	will be exercisable following the merger for the number of shares of Alteon common stock that is equal to the product of the number of shares of HaptoGuard common stock that were purchasable under such option immediately prior to the effective time of the merger multiplied by the exchange ratio (rounded down to the nearest whole number of shares of Alteon common stock) and
	•	the per share exercise price for the shares of Alteon common stock issuable upon exercise of such assumed option will be equal to the quotient determined by dividing the exercise price per share of HaptoGuard common stock at which such option was exercisable immediately prior to the effective time of the merger by the exchange ratio (and rounding the resulting exercise price up to the nearest whole cent).

	•	the market value of the product of the number of shares of HaptoGuard common stock that were purchasable under such warrants immediately prior to the Effective Time multiplied by the Exchange Ratio (rounded down to the nearest whole number of shares of Alteon Common Stock) and
	•	the total exercise price of such warrant.

I-4

---

Table of Contents

	•	in favor of the adoption and approval of the merger agreement,
	•	against any action or agreement that would reasonably be expected to compete with, prevent, impede, interfere with, attempt to discourage the Merger or inhibit the timely consummation of the Merger,
	•	against any action or agreement that, to such stockholder’s knowledge, would result in a breach in any material respect of any covenant, representation or warranty or any other obligation of the Company under the Merger Agreement, and
	•	except for the merger and the merger agreement, against any merger, consolidation, business combination, reorganization, recapitalization, liquidation or sale or transfer of any material assets of HaptoGuard.

I-5

---

Table of Contents

I-6

---

Table of Contents

	•	approval and adoption of the merger agreement and issuance of shares pursuant to the merger agreement by the Alteon and HaptoGuard stockholders; and
	•	absence of all legal prohibition on completion of the merger.

	•	accuracy as of closing of the representations and warranties made by Alteon to the extent specified in the merger agreement;
	•	assumption by Alteon of all outstanding vested and unvested options to purchase HaptoGuard common stock;
	•	adoption of an employment agreement for Dr. Berkowitz in form and substance reasonably identical to the proposed employment agreement Dr. Berkowitz would have received from HaptoGuard in the event of an acquisition transaction involving HaptoGuard (where HaptoGuard remains the controlling entity); and
	•	performance by Alteon of the obligations required to be performed by it at or prior to closing to the extent specified in the merger agreement.

	•	accuracy as of closing of the representations and warranties made by HaptoGuard to the extent specified in the merger agreement;
	•	performance by HaptoGuard of the obligations required to be performed by it at or prior to closing to the extent specified in the merger agreement; and
	•	HaptoGuard shall have received all consents and approvals to the merger, if any, under certain material agreements, and such agreements shall be in full force and effect.

	•	Alteon shall have filed an amendment to its Certificate of Designations of its Series G Preferred Stock and Series H Preferred Stock as described herein;

I-7

---

Table of Contents

	•	the shares of Alteon common stock issuable to Genentech upon conversion of the shares of Series G Preferred Stock and Series H Preferred Stock held by Genentech shall have been approved for listing on the American Stock Exchange;
	•	accuracy as of closing of the representations and warranties made by Alteon and HaptoGuard to the extent specified in the merger agreement; and
	•	performance by Alteon and HaptoGuard of the obligations required to be performed by it at or prior to closing to the extent specified in the merger agreement except as would not have a material adverse effect on such party.

I-8

---

Table of Contents

	•	in the event of the failure to receive HaptoGuard stockholder approval of the merger agreement;
	•	upon breach of any of HaptoGuard’s covenants or agreements but only with respect to a termination for a breach of any material covenant or agreement, (provided that at the time of such termination Alteon is not in material breach of any of the covenants or agreements set forth in the merger agreement that are applicable to Alteon); or
	•	if any representation or warranty of HaptoGuard proves to be untrue prior to the effective time of the merger, if such failure to be true would reasonably be likely to have a material adverse effect, as defined in the merger agreement, if Alteon is not in material breach of any of its obligation under the merger agreement and such representation or warranty is not made true within ten (10) business days of the date such representation or warranty became untrue.

	•	in the event of the failure to receive Alteon stockholder approval of the issuance of shares of Alteon common stock or adoption of the merger agreement;
	•	upon breach of any of Alteon’s covenants or agreements but only with respect to a termination for a breach of any material covenant or agreement, (provided that at the time of such termination HaptoGuard is not in material breach of any of the covenants or agreements set forth in this Agreement that are applicable to HaptoGuard); or
	•	if any representation or warranty of Alteon proves to be untrue prior to the effective time of the merger, if such failure to be true would reasonably be likely to have a material adverse effect, as defined in the merger agreement, if HaptoGuard is not in material breach of any of its obligation under the merger agreement and such representation or warranty is not made true within ten (10) business days of the date such representation or warranty became untrue.

I-9

---

Table of Contents

I-10

---

Table of Contents

I-11

---

Table of Contents

		Three Months
		Ended March 31,								Years Ended December 31,
		2006				2005				2005				2004				2003				2002				2001
										(In thousands, except per share data)
CONSOLIDATED STATEMENTS OF OPERATIONS
Income		$	60			$	99			$	458			$	334			$	179			$	410			$	452
Loss before income tax benefit			(1,621	)			(4,741	)			(12,941	)			(14,345	)			(14,797	)			(17,528	)			(12,770	)
Preferred stock dividends			1,175				1,072				4,486				4,135				3,791				3,485				3,204
Net loss applicable to common stockholders		$	(2,797	)		$	(5,714	)		$	(17,100	)		$	(18,094	)		$	(18,243	)		$	(20,366	)		$	(14,997	)
Basic/diluted net loss per share applicable to common stockholders		$	(0.05	)		$	(0.10	)		$	(0.30	)		$	(0.41	)		$	(0.50	)		$	(0.64	)		$	(0.61	)
Weighted average common shares used in computing basic/diluted net loss per share			57,997				56,547				57,639				44,349				36,190				31,793				24,556

		Three Months Ended
		March 31,								As of December 31,
		2006				2005				2005				2004				2003				2002				2001
										(In thousands, except per share data)
CONSOLIDATED BALANCE SHEET DATA
Cash, cash equivalents and short-term investments		$	4,469			$	6,583			$	6,583			$	11,176			$	16,679			$	17,439			$	10,726
Working capital			3,756				13,712				5,657				8,740				15,033				13,786				9,758
Total assets			5,157				7,134				7,134				11,642				17,255				18,099				13,233
Accumulated deficit			(225,610	)			(222,813	)			(222,813	)			(205,713	)			(187,619	)			(169,376	)			(149,009	)
Total stockholders’ equity			4,370				5,992				5,992				9,047				15,384				14,303				10,871

I-12

---

Table of Contents

		For the												For the Period
		Three Months Ended								For the				from July 19, 2004
										Year Ended				(Inception) to
		March 31,				March 31,				December 31,				December 31,
		2006				2005				2005				2004
		(In thousands, except per share data)
CONSOLIDATED STATEMENTS OF OPERATIONS
Income		$	2				3			$	10			$	3
Net loss		$	(670	)			(679	)		$	(1,655	)		$	(771	)

		As of
		March 31,				December 31,				December 31,
		2006				2005				2004
		(In thousands, except per share data)
CONSOLIDATED BALANCE SHEET DATA
Cash and cash equivalents			3				101				582
Working capital deficiency			(238	)			(267	)			39
Total assets			33				115				587
Accumulated deficit			(3,095	)			(2,425	)			(771	)
Total stockholders’ equity (deficiency)			(210	)			(259	)			40

I-13

---

Table of Contents

		Three Months Ended				Year Ended
		March 31, 2006				December 31, 2005
		(In thousands,				(In thousands,
		except per share				except per share
		data)				data)
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Income		$	62			$	468
Loss before income tax benefit		$	(2,273	)		$	(14,596	)
Net loss applicable to common stockholders		$	(2,273	)		$	(14,270	)
Basic/diluted net loss per share applicable to common stockholders		$	(0.02	)		$	(0.12	)
Weighted average common shares used in computing basic/diluted net loss per share			119,848,525				119,491,069

		As of March 31, 2006
		(In thousands)
PRO FORMA CONDENSED COMBINED BALANCE SHEET DATA
Cash and cash equivalents		$	6,972
Working capital		$	5,642
Total assets		$	7,266
Accumulated deficit		$	(235,738	)
Total stockholders’ equity		$	5,862

I-14

---

Table of Contents

		For the Three				For the
		Months Ended				Year Ended
		March 31,				December 31,
		2006				2005
Alteon Inc. — Historical per share:
Basic and diluted net loss per common share		$	(0.05	)		$	(0.30	)
Book value per share		$	0.08			$	0.10
HaptoGuard, Inc. — Historical per share:
Basic and diluted net loss per common share		$	(62.03	)		$	(179.51	)
Book value per share		$	(20.03	)		$	(26.82	)
Pro forma — Combined Alteon Inc. per share:
Basic and diluted net loss per common share		$	(0.02	)		$	(0.12	)
Book value per share		$	0.05

I-15

---

Table of Contents

A:

We are proposing the merger because, among other things, we believe that combining the products and technologies of the two companies will enhance the combined companies’ ability to raise capital to continue its product development, and offer a broader range of products, which could result in an increase in stockholder value. For a full discussion of our reasons for the merger, we urge you to read the sections entitled “The Merger Transaction — Factors Considered by, and Recommendation of, the Alteon Board of Directors” beginning on page I-35.

A:

In the merger, HaptoGuard will become a wholly-owned subsidiary of Alteon. Based upon the outstanding shares of Alteon common stock on June 9, 2006 and HaptoGuard’s outstanding shares of common stock and warrants on June 9, 2006, immediately following the completion of the merger, HaptoGuard stockholders will own approximately 31.37% of Alteon’s then outstanding common stock. Based upon the fully-diluted capitalization of Alteon and HaptoGuard on June 9, 2006, immediately following the completion of the merger, HaptoGuard security holders would own approximately 28.93% of the combined company assuming (i) shares of Alteon common stock outstanding following the cash exercise of all outstanding Alteon warrants and stock options and (ii) shares of Alteon common stock outstanding following the cash exercise of all HaptoGuard stock options assumed by Alteon at the closing of the merger. Genentech, Inc., an Alteon stockholder and party to the merger agreement, would own approximately 11.99% of the combined company after the merger.

A:

We currently estimate that HaptoGuard stockholders and warrant holders will receive an aggregate of 37,399,065 shares of Alteon common stock. The aggregate number of shares of Alteon common stock to be issued for the outstanding HaptoGuard common stock and outstanding warrants will not be adjusted based upon changes in the value of these shares. It is presently expected that each holder of a HaptoGuard common share would receive 3,521 shares of Alteon common stock. The exchange ratios are subject to adjustment depending upon the number of outstanding shares and warrants to purchase HaptoGuard common stock at the effective time of the merger. For a more detailed discussion of the exchange ratios, see “The Merger — The Merger Agreement — Merger Consideration” on page I-52. As a result, the exact number of shares of Alteon common stock that HaptoGuard security holders will receive in the merger will not be known until immediately prior to the completion of the merger. Moreover, the value of these shares and warrants will go up or down as the market price of Alteon common stock goes up or down. Neither party will be permitted to terminate its obligations to complete the merger or fail to solicit the vote of its stockholders based solely on changes in stock valuation of either party.

A:	The Alteon annual meeting will take place on July 19, 2006 at 10:00 a.m., Eastern Time at The Hanover Marriott, 1401 Route 10 East, Whippany, New Jersey 07981.

	The HaptoGuard special meeting will take place on July 18, 2006 at 10:00 a.m., Eastern Time at Park 80 West, Plaza II, Suite 200, Saddle Brook, NJ 07663.

A:

Yes, after careful consideration, Alteon’s board of directors, by unanimous vote of those directors voting on such matters, has determined the merger to be fair to Alteon stockholders and in their best interests and declared the merger advisable. Alteon’s board of directors approved the merger agreement and recommends that Alteon stockholders approve the merger and merger agreement and the issuance of

I-16

---

Table of Contents

shares of Alteon common stock and the transfer and conversion of shares of Alteon common stock contemplated thereby. In considering the recommendation of the Alteon board of directors with respect to the merger agreement, Alteon stockholders should be aware that certain directors of Alteon have certain interests in the merger that are different from, or are in addition to, the interests of Alteon stockholders generally. We encourage you to read the section titled “Interests of Certain Persons in the Merger” at page I-50 for a discussion of these interests.

After careful consideration, HaptoGuard’s board of directors has determined, by unanimous vote of those directors voting on such matters, the merger to be fair to HaptoGuard stockholders and in their best interests and declared the merger advisable. HaptoGuard’s board of directors approved the merger agreement and recommends the adoption of the merger agreement by HaptoGuard stockholders. In considering the recommendation of the HaptoGuard board of directors with respect to the merger agreement, HaptoGuard stockholders should be aware that certain directors and officers of HaptoGuard have certain interests in the merger that are different from, or are in addition to, the interests of HaptoGuard stockholders generally. We encourage you to read the section titled “Interests of Certain Persons in the Merger” at page I-50 for a discussion of these interests.

A:	Only stockholders who own Alteon common stock at the close of business on June 9, 2006 are entitled to vote at the Alteon annual meeting. On this record date, there were 68,957,111 shares of Alteon common stock outstanding and entitled to vote. Each share of stock of common stock is entitled to one vote on any matter presented at the meeting. Alteon common stock is its only class of voting stock.

Only stockholders who own HaptoGuard common stock at the close of business on June 27, 2006 are entitled to vote at the HaptoGuard annual meeting. On this record date, there were 10,464 shares of HaptoGuard common stock outstanding and entitled to vote. Each share of stock of common stock is entitled to one vote on any matter presented at the meeting. HaptoGuard common stock is its only class of voting stock.

A:	You may vote by mail by completing, signing and dating your proxy card and returning it in the enclosed, postage-paid and addressed envelope. If you mark your voting instructions on the proxy card, your shares will be voted:

	•	as you instruct, and
	•	according to the best judgment of the proxy holders if a proposal comes up for a vote at the annual meeting that is not on the proxy card.

	If you return a signed card, but do not provide voting instructions, your shares will be voted:

	•	if you are an Alteon stockholder, FOR the merger and merger agreement and the issuance of shares of Alteon common stock and the transfer and conversion of shares of Alteon common stock contemplated thereby, FOR the amendment to Alteon’s Certificate of Designation of Series G Preferred Stock, FOR the amendment to Alteon’s Certificate of Designation of Series H Preferred Stock, FOR the election of two directors to hold office until the completion of the merger or, in the event the merger is not completed, until the 2009 Annual Meeting of Stockholders and until their successors have been duly elected and qualified, FOR the ratification of J.H. Cohn LLP as Alteon’s independent registered public accounting firm, FOR the amendment to the 2005 Stock Plan to reserve additional shares of common stock for issuance thereunder and FOR any proposal by the Alteon board of directors to adjourn the meeting;
	•	if you are a HaptoGuard stockholder, FOR the adoption of the merger and the merger agreement and FOR adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of adoption of the merger agreement; and

I-17

---

Table of Contents

	•	according to the best judgment of the proxy holders if a proposal comes up for a vote at the annual or special meeting that is not on the proxy card or for the adjournment or postponement of the special meeting.

If you are a stockholder of record of Alteon, you may also vote by telephone at the toll-free number 1-800-PROXIES or on the Internet at www.voteproxy.com. If you are a beneficial owner of Alteon, you may be able to vote electronically as well, if your proxy card or voting instruction form so indicates. See the instructions on your proxy card or voting instruction form. You are strongly encouraged to vote electronically if you are given that option.

A:	Just send in a later-dated, signed proxy or proxy card to your company’s Secretary before your meeting. Or, you can attend your meeting in person and vote. You may also revoke your proxy by sending a notice of revocation to your company’s Secretary at the address under “The Companies” on page I-1. If you voted by the Internet or telephone, you can submit a later vote using those same methods.

Q:	If my shares are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?

A:

If you do not provide your broker, bank or nominee with instructions on how to vote your “street name” shares, your broker, bank or nominee will not be permitted to vote them on the matters that are to be considered by the Alteon stockholders and the HaptoGuard stockholders at their respective meetings relating to the merger. You should therefore be sure to provide your broker with instructions on how to vote your shares.

	If you wish to vote your shares in person, you must bring to the meeting a letter from the broker, bank or nominee confirming your beneficial ownership in the shares to be voted.

A:

If you are a Alteon stockholder the failure to return your proxy card or otherwise provide proxy instructions could be a factor in establishing a quorum for the annual meeting of Alteon stockholders for purposes of approving the merger and merger agreement and the issuance of shares of Alteon common stock and the transfer and conversion of shares of Alteon common stock contemplated thereby, which is required to transact business at the meeting.

	If you are a HaptoGuard stockholder, the failure to return your proxy card or otherwise provide proxy instructions will have the same effect as voting against the adoption of the merger agreement and could be a factor in establishing a quorum for the special meeting of HaptoGuard stockholders, which is required to transact business at the meeting.

A:

Alteon will pay all of the costs of soliciting its proxies. Alteon directors and employees may solicit proxies in person or by telephone, fax or e-mail. Alteon will pay these employees and directors no additional compensation for these services. Alteon will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. Alteon will then reimburse them for their expenses.

	HaptoGuard will pay all of the costs of soliciting its proxies. HaptoGuard directors and employees may solicit proxies in person or by telephone, fax or e-mail. HaptoGuard will not pay these employees additional compensation for these services.

I-18

---

Table of Contents

A:	The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Alteon’s common stock is necessary to constitute a quorum at the meeting. Votes of stockholders of record who are present at the meeting in person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists.

	The presence, in person or by proxy, of the holders of a majority of the outstanding shares of HaptoGuard’s common stock is necessary to constitute a quorum at the meeting. Votes of stockholders of record who are present at the meeting in person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists.

A:	We are working towards completing the merger as quickly as possible. We hope to complete the merger by August 1, 2006. However, the exact timing of completion of the merger cannot be determined yet because completion of the merger is subject to a number of conditions.

Q:	How many authorized but unissued shares of Alteon common stock will exist after the closing of the merger?

A:

Following the closing of the merger, we anticipate that there will be approximately 180,000,000 shares of authorized but unissued Alteon common stock. In addition, Alteon will be required to have reserved for future issuance following the merger approximately 22,000,000 shares, including approximately 18,600,000 shares pursuant to the exercise and/or issuance of Alteon common stock as a result of outstanding Alteon stock options and warrants and approximately 3,400,000 shares for issuance upon the exercise of outstanding HaptoGuard options and warrants to be assumed in connection with the merger.

A:

The companies expect the merger to be treated as a tax-free reorganization pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code. If the merger is treated as a tax-free reorganization, generally the stockholders of HaptoGuard, for federal income tax purposes, will recognize no gain or loss upon their receipt of Alteon common stock to purchase Alteon common stock in the merger, except with respect to cash received by HaptoGuard stockholders instead of fractional shares of Alteon common stock or upon exercise of their dissenters’ rights. A HaptoGuard stockholder who receives cash in lieu of fractional shares will generally recognize capital gain or loss based on the difference between the amount of the cash received and the HaptoGuard stockholder’s aggregate adjusted tax basis in the HaptoGuard stock surrendered.

	Tax matters are very complicated, and the tax consequences of the merger to each HaptoGuard stockholder will depend on the facts of that stockholder’s particular situation. See “— The Merger Transaction — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page I-40.

A:	Alteon stockholders may call Alteon Investor Relations at 201-934-5000. HaptoGuard stockholders may call 201-947-1270.

I-19

---

Table of Contents

	Alteon’s ability to continue as a going concern is dependent on future financing.

	Alteon and HaptoGuard have each historically incurred operating losses and these losses will continue after the merger.

I-20

---

Table of Contents

	The combined company will need additional capital in the future, but its access to such capital is uncertain.

	•	delay, reduce the scope of or eliminate one or more of its development programs;
	•	obtain funds through arrangements with collaboration partners or others that may require it to relinquish rights to some or all of its technologies, product candidates or products that it would otherwise seek to develop or commercialize itself;
	•	license rights to technologies, product candidates or products on terms that are less favorable to it than might otherwise be available; or
	•	seek a buyer for all or a portion of its business, or wind down its operations and liquidate its assets on terms not favorable to it.

	The success of the combined company will also depend on the products and systems under development by HaptoGuard, including ALT-2074, and we cannot assure you that the efforts to commercialize ALT-2074 will succeed.

I-21

---

Table of Contents

	•	we may discover that a product candidate may cause, alone or in combination with another therapy, harmful side effects;
	•	we may discover that a product candidate, alone or in combination with another therapy, does not exhibit the expected therapeutic results in humans;
	•	results from early trials may not be statistically significant or predictive of results that may be obtained from large-scale, advanced clinical trials;
	•	we, the FDA, other similar foreign regulatory agencies or an institutional review board may suspend clinical trials for any reason whatsoever;
	•	patient recruitment may be slower than expected;
	•	patients may drop out of our clinical trials; and
	•	we may be unable to produce sufficient supplies of products in a timely fashion for clinical trials.

I-22

---

Table of Contents

	Failure to integrate the companies’ operations successfully could result in delays and increased expenses in the companies’ clinical trial programs.

	•	improved ability to raise new capital through access to new classes of investors focused on public companies engaged in small molecule drug development;
	•	shared expertise in developing innovative small molecule drug technologies and the potential for technology collaboration;
	•	a broader pipeline of products;
	•	greater ability to attract commercial partners;
	•	larger combined commercial opportunities; and
	•	a broader portfolio of patents and trademarks.

	•	retention of scientific staff;
	•	significant litigation, if any, adverse to Alteon and HaptoGuard, including, particularly, product liability litigation and patent and trademark litigation; and

I-23

---

Table of Contents

	•	the ability of the combined company to continue development of Alteon and HaptoGuard product candidates;
	•	success of our research and development efforts;
	•	increased capital expenditures;
	•	general market conditions relating to small cap biotech investments; and
	•	competition from other drug development companies.

	Integrating Alteon and HaptoGuard may divert management’s attention away from our core research and development activities.

	•	severance;
	•	conversion of information systems;
	•	combining research, development, regulatory, manufacturing and commercial teams and processes;
	•	reorganization of facilities; and
	•	relocation or disposition of excess equipment.

	Completion of, or the failure to complete, the merger could adversely affect Alteon’s stock price and Alteon’s and HaptoGuard’s future business and operations.

I-24

---

Table of Contents

	The combined company will remain dependent on third parties for research and development and manufacturing activities necessary to commercialize certain of our patents.

	If the combined company does not successfully distinguish and commercialize its technology, it may be unable to compete successfully or to generate significant revenues.

	The combined company will have substantial competition, including competitors with substantially greater resources.

	•	attract and retain skilled scientific and research personnel;
	•	develop technologically superior products;
	•	develop competitively priced products;
	•	obtain patent or other required regulatory approvals for the combined company’s products;
	•	be early entrants to the market; and
	•	manufacture, market and sell its products, independently or through collaborations.

I-25

---

Table of Contents

	The success of the combined company is dependent on the extent of third-party reimbursement for its products.

	If the combined company is unable to protect its intellectual property, it may not be able to operate its business profitably.

I-26

---

Table of Contents

	If the combined company is unable to operate its business without infringing upon intellectual property rights of others, it may not be able to operate its business profitably.

	HaptoGuard’s ALT-2074 and other HaptoGuard compounds are licensed to HaptoGuard by third parties and if the combined company is unable to continue licensing this technology our future prospects may be materially adversely affected.

I-27

---

Table of Contents

	If the combined company loses or is unable to hire and retain qualified personnel, it may not be able to develop its products and technology.

	The combined company may face exposure to product liability claims.

	Our stock price is volatile and you may not be able to resell your shares at a profit.

	•	quarterly fluctuations in results of operations;
	•	the announcement of new products or services by the combined company or competitors;
	•	sales of common stock by existing stockholders or the perception that these sales may occur;
	•	adverse judgments or settlements obligating the combined company to pay damages;
	•	negative publicity;
	•	loss of key personnel;
	•	developments concerning proprietary rights, including patents and litigation matters; and
	•	clinical trial or regulatory developments in both the United States and foreign countries.

I-28

---

Table of Contents

	We have a large number of authorized but unissued shares of common stock, which our Board of Directors may issue without further stockholder approval, thereby causing dilution of your holdings of our common stock.

	The sale of a substantial number of shares of our common stock could cause the market price of our common stock to decline and may impair the combined company’s ability to raise capital through additional offerings.

	Anti-takeover provisions may frustrate attempts to replace our current management and discourage investors from buying our common stock.

I-29

---

Table of Contents

I-30

---

Table of Contents

I-31

---

Table of Contents

I-32

---

Table of Contents

I-33

---

Table of Contents

I-34

---

Table of Contents

	Reasons for the Merger Identified by the Alteon Board of Directors

	•	Anticipated improvements in revenue, cash flow and profitability. Alteon believes that the merger will increase the combined company’s future revenues, accelerate profit growth, and improve cash flow.
	•	The strategic fit between Alteon and HaptoGuard in the cardiovascular and diabetes arenas. Alteon’s lead compound alagebrium is being developed for chronic cardiovascular diseases and HaptoGuard’s lead compound, ALT-2074, for acute cardiovascular indications. The development program of both companies is currently focused on cardiovascular disease of diabetic patients. Each of Alteon and HaptoGuard’s lead programs are based on different but complimentary inflammatory mechanisms of action.
	•	The synergy of the board of directors and the management of the combined company. The board of directors and management of the combined company will increase the experience and expertise available to the company.
	•	Anticipated synergies to be achieved by combining the development and commercialization of HaptoGuard and Alteon products. Alteon believes that the respective product development strategies of HaptoGuard and Alteon complement each other, potentially resulting in synergy between the two product development and commercialization efforts of the companies. Alteon believes that the combined products of Alteon and HaptoGuard will result in synergies in the development of such products in the cardiovascular and diabetes arenas.
	•	Anticipated increase in ability to raise capital for development and commercialization of products. Alteon believes that the restructuring of the Genentech preferred stock ownership and combined products of Alteon and HaptoGuard will increase the ability of the combined company to raise capital for the development and commercialization of its products.
	•	The potential to improve Alteon’s strategic position in the markets it serves. Alteon believes that the merger will improve the strategic position of the combined company.

I-35

---

Table of Contents

	Other Factors Considered by the Alteon Board of Directors

	•	historical information concerning HaptoGuard’s and Alteon’s respective businesses, financial performance and condition, operations, management and competitive position, including results of operations during the most recent fiscal year for each company;
	•	Alteon management’s view of the financial condition, results of operations and businesses of HaptoGuard and Alteon before and after giving effect to the merger, based on management due diligence;
	•	current financial market conditions and historical market prices, volatility and trading information with respect to Alteon common stock;
	•	Alteon management’s view as to the potential for other third parties to enter into strategic relationships with or to acquire HaptoGuard;
	•	certain terms of the merger agreement, including the provisions that prohibit HaptoGuard from soliciting other acquisition offers, the provisions that require HaptoGuard to pay Alteon a termination fee if the merger agreement is terminated by HaptoGuard for specified reasons, and the provisions that require Alteon to pay HaptoGuard a termination fee if the merger agreement is terminated by Alteon for specified reasons;
	•	other terms of the merger agreement, including the parties’ respective representations, warranties and covenants, and the conditions to the parties’ respective obligations;
	•	an assessment of alternatives to the merger, including development opportunities and other possible acquisition candidates, and the determination that the merger was a strategic fit and presented a unique opportunity to enhance and expand Alteon’s operations, product and service offerings and position Alteon for future growth; and
	•	the impact of the merger on Alteon’s stockholders and employees.

	Potentially Negative Factors Considered by the Alteon Board of Directors

	•	the risk that the potential benefits sought in the merger might not be fully realized;
	•	the costs and timing of achieving the expected benefits may exceed management’s estimates;
	•	the possibility that the merger might not be completed, and the potential adverse effect of the public announcement of the merger on Alteon’s reputation and ability to obtain financing in the future;
	•	the significant number of shares to be issued to HaptoGuard stockholders; and
	•	other risks described under “Risk Factors” beginning on page I-20 of this Proxy Statement.

I-36

---

Table of Contents

	Reasons for the Merger Identified by the HaptoGuard Board of Directors

	•	Anticipated improvements in the ability to raise capital. Because HaptoGuard does not contemplate generating significant revenues in the near future, HaptoGuard’s board of directors believe HaptoGuard’s ability to raise capital in crucial to its viability. HaptoGuard’s board of directors believes that a company with more potential drug candidates and a larger infrastructure will be more likely to attract capital.
	•	The belief of the HaptoGuard board of directors that the merger represented the best value reasonably available to HaptoGuard’s stockholders for their shares of HaptoGuard. HaptoGuard’s board of directors concluded that the merger represents the best value reasonably available to HaptoGuard’s stockholders. The HaptoGuard board of directors also determined that no other potential strategic partner had expressed an interest in a merger, acquisition or other business combination that would likely be on terms as favorable to HaptoGuard’s stockholders as those of the merger.
	•	The likelihood that the combined company will have better opportunities for future growth through diversification and growth of the number of potential drug candidates. HaptoGuard’s board of directors and management analyzed the technology, business, financial performance and condition, prospects and products of each of Alteon and HaptoGuard as separate entities and on a combined basis, and the HaptoGuard board of directors considers it likely that the merger of Alteon and HaptoGuard will provide the combined company with greater opportunities for growth than are available to HaptoGuard as a stand-alone company. HaptoGuard’s board of directors considers the anticipated revenue growth of the combined company to be greater than that achievable by HaptoGuard alone.
	•	The ability of HaptoGuard’s stockholders to continue to participate in the growth of the business conducted by Alteon and HaptoGuard after the completion of the merger. HaptoGuard’s board of directors believes that HaptoGuard’s stockholders will have the opportunity to participate in the combined company, with the potential to enhance stockholder value through share ownership in a larger, more competitive company, through their receipt of Alteon common stock in the merger, and to benefit from the potential appreciation in value of Alteon common stock.
	•	The strategic fit between Alteon and HaptoGuard. HaptoGuard’s board of directors determined that the combination of Alteon and HaptoGuard represented a good strategic fit. The combined company potentially could take advantage of the complementary nature of its product platforms in cardiovascular diseases, diabetes and other inflammatory diseases. In addition, HaptoGuard’s board of directors believes that the opportunities for the combined company to market its products will exceed those currently available to HaptoGuard.

I-37

---

Table of Contents

	•	The importance of scale in the increasingly competitive market environments in which both Alteon and HaptoGuard operate. HaptoGuard’s board of directors believes that the merger will enhance the ability of the combined company to compete effectively in competitive market environments, because the combined company will have greater financial resources and a wider array of product offerings.
	•	The belief that the combined company will be able to better develop and commercialize its products. Because of the complementary nature of the markets in which Alteon and HaptoGuard historically have focused their efforts, HaptoGuard’s board of directors believes that the opportunity for the combined company to better develop and commercialize products is substantial.

	Other Factors Considered by the HaptoGuard Board of Directors

	•	the strategic and financial alternatives available to HaptoGuard, including the business, financial and execution risks of remaining independent, continuing as a stand-alone entity, seeking to acquire another company, seeking to engage in one or more joint ventures, seeking to engage in a combination with a company other than Alteon, or seeking to complete a private placement of HaptoGuard common stock;
	•	the results of HaptoGuard’s due diligence investigation of Alteon;
	•	historical and current information concerning HaptoGuard’s and Alteon’s respective businesses, financial performance and condition, operations, management, competitive positions, and prospects, both before and after giving effect to the merger;
	•	that, by combining operations, the combined company will likely have enhanced liquidity and access to capital markets;
	•	the terms and conditions of the merger agreement;
	•	the likely impact of the offer and the transaction on HaptoGuard’s employees; and
	•	the qualification of the merger as a tax-free transaction for United States federal income tax purposes.

	Potentially Negative Factors Considered by the HaptoGuard Board of Directors

	•	the fact that under the terms of the merger agreement, HaptoGuard was required to terminate all discussions and negotiations with other parties who might be interested in negotiating a transaction with HaptoGuard, and that HaptoGuard is restricted in its ability to solicit other acquisition proposals;
	•	the challenges and costs of combining the operations of the two companies and the substantial expenses to be incurred in connection with the merger, including the risks that delays or difficulties in completing the integration could adversely affect the combined company’s operating results and preclude or delay the achievement of some or all of the benefits anticipated from the merger;
	•	the potential disruption to partner relationships important to either company as a result of the merger;
	•	the potential disruptions as a result of the integration process;
	•	the possibility that the reactions of existing and potential competitors could adversely affect the competitive environment in which either company currently operates, or the combined company could operate;

I-38

---

Table of Contents

	•	the termination fee payable by HaptoGuard to Alteon if the merger agreement is terminated by HaptoGuard for specified reasons, as well as the potential deterrence of other potential acquirors resulting from the existence of that termination fee;
	•	the risk of diverting management’s attention from other strategic priorities to implement merger integration efforts, as well as the fact that HaptoGuard officers and employees have and will expend considerable efforts attempting to complete the merger and have and will experience significant distractions from their work during the pendency of the merger;
	•	the significant transaction costs that HaptoGuard will have incurred in connection with the merger even if the merger is not consummated;
	•	the interests that certain executive officers and directors of HaptoGuard may have with respect to the merger in addition to their interests as stockholders of HaptoGuard generally, as described in “Interests of Certain Persons in the Merger” on page I-50;
	•	the risk that the merger might not be consummated in a timely manner or at all; and
	•	various other applicable risks associated with the merger and the combined company, including those described under “Risk Factors” beginning on page I-20 of this Proxy Statement.

I-39

---

Table of Contents

	•	financial institutions and mutual funds;
	•	banks;
	•	insurance companies;
	•	investment companies;
	•	retirement plans;
	•	tax-exempt organizations;
	•	dealers in securities;
	•	traders in securities that elect to use a mark-to-market method;
	•	persons that hold their HaptoGuard common stock as part of a straddle, a hedge against a currency risk or a constructive sale or conversion transaction;
	•	persons that are or who hold their HaptoGuard common stock through partnerships or other pass-through entities;
	•	persons who are not citizens or residents of the United States or who are foreign corporations, foreign partnerships or foreign estates or trusts for U.S. federal income tax purposes;
	•	persons whose functional currency is not the U.S. dollar;
	•	persons who hold HaptoGuard stock as qualified small business stock within the meaning of Section 1202 of the Code;
	•	persons who are subject to the alternative minimum tax provisions of the Code; or
	•	persons who acquired their HaptoGuard common stock in connection with stock option or stock purchase plans or in some other compensatory transaction.

I-40

---

Table of Contents

	Tax Treatment of HaptoGuard Stockholders in Merger

	•	Qualification as a Reorganization. The merger will be treated as a reorganization within the meaning of Section 368(a) of the United States federal income tax laws.
	•	No Gain or Loss. Subject to the discussion below regarding cash received in lieu of fractional shares of Alteon common stock, as well as cash received upon exercise of appraisal rights, HaptoGuard stockholders receiving Alteon common stock in the merger in exchange for HaptoGuard common stock will not recognize any gain or loss as a result of the receipt of Alteon common stock in the merger.
	•	Tax Basis and Holding Period. A HaptoGuard stockholder’s aggregate tax basis in the Alteon common stock, including any fractional shares deemed received, as discussed below, will be equal to the aggregate tax basis of the HaptoGuard common stock surrendered in the exchange. A HaptoGuard stockholder’s holding period for the Alteon common stock received will include the holding period for the HaptoGuard common stock surrendered in the exchange.

	Cash Payments Received in Lieu of Fractional Shares and/or Fractional Warrants.

	•	Gain or Loss. Cash payments received by HaptoGuard stockholders in lieu of fractional shares of Alteon common stock will be treated as if such fractional shares had been issued in the merger and then redeemed by Alteon. A HaptoGuard stockholder receiving such cash will generally recognize capital gain or loss with respect to such payment equal to the difference, if any, between such HaptoGuard stockholder’s tax basis in the fractional share, and the amount of cash received. The capital gain or loss will be long-term if the holding period for such HaptoGuard common stock is more than one year as of the date of the exchange.

	Tax Treatment of the Entities.

	•	No Gain or Loss. No gain or loss will be recognized by HaptoGuard, Alteon or Alteon Merger Sub, Inc. as a result of this merger.

I-41

---

Table of Contents

I-42

---

Table of Contents

I-43

---

Table of Contents

											Proforma				Proforma
			Alteon Inc				HaptoGuard				Adjustments				Combined
			Unaudited
			(In 000’s)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	4,469			$	3				2,600	(6)		$	6,972
												(100	)(6)
Other current assets				73				1				—				74
	Total current assets			4,542				4				2,500				7,046
PROPERTY AND EQUIPMENT, NET				41				5								46
RESTRICTED CASH				150				—								150
OTHER ASSETS				424				24				(424	)(4)			20
TOTAL ASSETS			$	5,157			$	33			$	2,076			$	7,266
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Accounts payable			$	190			$	188							$	378
Accrued expenses				596				54				376	(4)			1,026
	Total liabilities			786				242				376				1,404
STOCKHOLDERS EQUITY:
Preferred stock				1				—				(1	)(7)			(7	)
Common stock				580				—				374	(3)			1,199
												110	(6)
												135	(7)
Additional paid in capital				229,400				2,897				(2,897	)(2)			240,401
												8,426	(3)
												2,492	(6)
												(100	)(6)
												(135	)(7)
												318	(5)
Accumulated deficit				(225,610	)			(3,106	)			3,106	(2)			(235,738	)
				—				—				(10,128	)(3)			—
	Total stockholders’ equity			4,371				(209	)			1,700				5,862
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY			$	5,157			$	33			$	2,076			$	7,266

I-44

---

Table of Contents

											Proforma				Proforma
			Alteon Inc				HaptoGuard				Adjustments				Combined
			Unaudited
			(In 000’s except per share amounts)
INCOME:
INVESTMENT INCOME			$	358			$	10							$	368
OTHER INCOME				100				—								100
	TOTAL INCOME		$	458			$	10							$	468
EXPENSES:
RESEARCH AND DEVELOPMENT				9,074				916								9,990
GENERAL AND ADMINISTRATIVE				4,325				749								5,074
	TOTAL EXPENSES			13,399				1,665								15,064
LOSS BEFORE INCOME TAX BENEFIT				(12,941	)			(1,655	)						$	(14,596	)
INCOME TAX BENEFIT				326				—								326
NET LOSS				(12,615	)			(1,655	)							(14,270	)
PREFERRED STOCK DIVIDENDS				4,486				—				(4,486	)(7)			—
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS			$	(17,101	)		$	(1,655	)		$	4,486			$	(14,270	)
NET LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS			$	(0.30	)		$	—							$	(0.12	)
WEIGHTED AVERAGE SHARES				57,639,255				—								119,491,069
Calculation of pro forma adjustment for weighted average shares:
ALTEON INC WEIGHTED AVERAGE SHARES				57,639,255
add:
COMMON SHARES ISSUED TO HAPTOGUARD SHAREHOLDERS				37,399,065
COMMON SHARES ISSUED TO PIPE SHAREHOLDERS				10,340,000
COMMON SHARES ISSUED TO RODMAN AND RENSHAW (PIPE)				620,400
COMMON SHARES ISSUED TO GENENTECH UPON CONVERSION				13,492,349
	TOTAL			119,491,069

I-45

---

Table of Contents

											Proforma				Proforma
			Alteon Inc				HaptoGuard				Adjustments				Combined
			Unaudited
			(In 000’s except per share amounts)
INCOME:
INVESTMENT INCOME			$	60			$	2							$	62
OTHER INCOME				—				—								—
	TOTAL INCOME		$	60			$	2							$	62
EXPENSES:
RESEARCH AND DEVELOPMENT				450				481								931
GENERAL AND ADMINISTRATIVE				1,232				172								1,404
	TOTAL EXPENSES			1,682				653								2,335
LOSS BEFORE INCOME TAX BENEFIT				(1,622	)			(651	)							(2,273	)
INCOME TAX BENEFIT				—				—								—
NET LOSS				(1,622	)			(651	)							(2,273	)
PREFERRED STOCK DIVIDENDS				1,175				—				(1,175	)(7)			—
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS			$	(2,797	)		$	(651	)			(1,175	)		$	(2,273	)
NET LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS			$	(0.05	)		$	—							$	(0.02	)
WEIGHTED AVERAGE SHARES				57,996,711				—								119,848,525
Calculation of pro forma adjustment for weighted average shares:
ALTEON INC WEIGHTED AVERAGE SHARES				57,996,711
add:
COMMON SHARES ISSUED TO HAPTOGUARD SHAREHOLDERS				37,399,065
COMMON SHARES ISSUED TO PIPE SHAREHOLDERS				10,340,000
COMMON SHARES ISSUED TO RODMAN AND RENSHAW (PIPE)				620,400
COMMON SHARES ISSUED TO GENENTECH UPON CONVERSION				13,492,349
	TOTAL			119,848,525

I-46

---

Table of Contents

I-47

---

Table of Contents

Common stock issued		$	8,800
Fair value of HaptoGuard vested options @ 3/31/06			318
Estimated transaction costs			800
			9,918
Net liabilities assumed			210
Total purchase price		$	10,128

I-48

---

Table of Contents

I-49

---

Table of Contents

I-50

---

Table of Contents

	Alteon Management and Board Membership

	Indemnification; Directors’ and Officers’ Insurance

I-51

---

Table of Contents

I-52

---

Table of Contents

I-53

---

Table of Contents

I-54

---

Table of Contents

Restriction		HaptoGuard				Alteon
Amending its organizational documents			*				*
Acquire by merger, consolidation, or otherwise an interest in any corporation, limited liability company or other business			*				*
Issuing or disposing of equity securities, options or other securities convertible into or exercisable for equity securities			*				*
Splitting, combining or reclassifying its capital stock			*				*
Declaring, setting aside or paying dividends			*				*
Selling, transferring, or encumbering assets			*				*
Amending the terms of any outstanding stock options			*				*
Making significant capital expenditures, subject to certain ordinary course exceptions			*				*
Increasing employee compensation or benefits, except for normal ordinary course increases consistent with past practice, or establishing, adopting, entering into or amending any employee benefit plan			*				*
Changing its accounting policies			*				*

	•	organization and qualifications to do business in foreign jurisdictions;
	•	subsidiaries;
	•	corporate authorization to enter into the merger;
	•	board consent to the transaction and stockholder votes required to adoption of the merger agreement or the issuance of Alteon shares pursuant to the merger agreement;
	•	SEC filings and certain compliance matters;

I-55

---

Table of Contents

	•	governmental approvals required in connection with the merger;
	•	absence of any breach of organizational documents, law or certain material agreements as a result of the merger;
	•	capitalization;
	•	absence of certain material changes since a specified balance sheet date;
	•	intellectual property;
	•	tax matters;
	•	finders’ or advisors’ fees;
	•	absence of undisclosed material liabilities;
	•	compliance with laws;
	•	material permits;
	•	restrictions on business activities;
	•	employee benefits matters;
	•	insurance policies;
	•	environmental matters; and
	•	business practices.

	•	information provided by it for inclusion in this Proxy Statement;
	•	financial statements;
	•	litigation;
	•	labor and employment matters;
	•	properties and assets; and
	•	material contracts.

	•	approval of the merger and the merger agreement and the issuance of Alteon stock and transfer and conversion of shares contemplated thereby by the Alteon stockholders;
	•	approval and adoption of the merger agreement by the HaptoGuard stockholders;
	•	absence of legal prohibition on completion of the merger; and
	•	all necessary governmental approvals shall have been obtained;

I-56

---

Table of Contents

	•	accuracy as of closing of the representations and warranties made by Alteon to the extent specified in the merger agreement;
	•	performance by Alteon of the obligations required to be performed by it at or prior to closing to the extent specified in the merger agreement;
	•	all material consents and approvals required to be obtained, and all filings required to be made, by Alteon for the execution and delivery of the merger agreement and the consummation of the transactions contemplated thereby shall have been obtained and made;
	•	no governmental actions or proceedings shall have been instituted, pending or threatened seeking to prohibit or limit HaptoGuard from exercising all material rights and privileges pertaining to its ownership of the surviving corporation in the merger or the ownership or operation by HaptoGuard of all or a material portion of the business or assets of HaptoGuard, or seeking to compel HaptoGuard to dispose of or hold separate all or any material portion of the business or assets of HaptoGuard, as a result of the merger or the transactions contemplated by the merger agreement;
	•	assumption by Alteon of all outstanding vested and unvested options to purchase HaptoGuard Common Stock; and
	•	adoption of an employment agreement for Dr. Berkowitz in form and substance reasonably identical to the proposed employment agreement Dr. Berkowitz would have received from HaptoGuard in the event of an acquisition transaction involving HaptoGuard (where HaptoGuard remains the controlling entity).

	•	accuracy as of closing of the representations and warranties made by HaptoGuard to the extent specified in the merger agreement;
	•	performance by HaptoGuard of the obligations required to be performed by it at or prior to closing to the extent specified in the merger agreement;
	•	all consents and approvals, if any, relating to certain material agreements have been obtained and such agreements are in full force and effect;
	•	no governmental actions or proceedings shall have been instituted, pending or threatened seeking to prohibit or limit Alteon from exercising all material rights and privileges pertaining to its ownership of the surviving corporation in the merger or the ownership or operation by Alteon of all or a material portion of the business or assets of Alteon, or seeking to compel Alteon to dispose of or hold separate all or any material portion of the business or assets of Alteon, as a result of the merger or the transactions contemplated by the merger agreement; and
	•	certain voting agreements and lock-up agreements, as specified, shall have been entered into and be in full force and effect.

	•	Alteon shall have filed an amendment to its Certificate of Designations of its Series G Preferred Stock and Series H Preferred Stock as described herein;
	•	the shares of Alteon common stock issuable to Genentech upon conversion of the shares of Series G Preferred Stock and Series H Preferred Stock held by Genentech shall have been approved for listing on the American Stock Exchange;

I-57

---

Table of Contents

	•	accuracy as of closing of the representations and warranties made by Alteon and HaptoGuard to the extent specified in the merger agreement; and
	•	performance by Alteon and HaptoGuard of the obligations required to be performed by it at or prior to closing to the extent specified in the merger agreement except as would not have a material adverse effect on such party.

	•	By the mutual written consent of Alteon and HaptoGuard.
	•	By Alteon or HaptoGuard if:

	(1) subject to certain exceptions set forth in the merger agreement, the merger has not been completed by August 30, 2006;
	(2) Alteon or HaptoGuard stockholders fail to approve the issuance of shares of Alteon common stock or adopt the merger agreement, respectively, at a duly held meeting, provided that the party terminating may not be the party whose conduct was responsible for the failure to receive such vote;
	(3) certain breaches of covenants of the other party, respectively; or
	(4) if any representation or warranty of the other party or Genentech proves to be untrue prior to the effective time of the merger, if such failure to be true would reasonably be likely to have a material adverse effect, as defined in the merger agreement, if the terminating party is not in material breach of any of its obligation under the merger agreement and such representation or warranty is not made true within ten (10) business days of the date such representation or warranty became untrue.

	•	By either Alteon, HaptoGuard or Genentech if there is a permanent legal prohibition to closing the merger.
	•	By Genentech if:

(1) it is not in material breach of any of its obligations under the merger agreement, if any representation or warranty of Alteon or HaptoGuard set forth in the merger agreement proved to have been untrue prior to the effective time of the merger, if such failure to be true would reasonably be likely to have a material adverse effect as defined in the merger agreement and such representation or warranty is not made true within ten (10) business days of the date such representation or warranty became untrue; or

I-58

---

Table of Contents

(2) upon a breach of any covenant or agreement on the part of HaptoGuard or Alteon set forth in the merger agreement, in either case, such that any of Genentech’s conditions to consummate the transactions contemplated by the merger agreement would not be satisfied, provided that, if such breach is curable prior to the expiration of ten (10) days from its occurrence by Alteon or HaptoGuard, as the case may be, through the exercise of its commercially reasonable efforts and for so long as Alteon or HaptoGuard, as the case may be, continues to exercise such commercially reasonable efforts, Genentech may not terminate unless such 10-day period expires without such breach having been cured.

	Termination Fees Payable by HaptoGuard.

	Termination Fees Payable by Alteon.

I-59

---

Table of Contents

	•	in favor of the adoption and approval of the merger agreement,
	•	against any action or agreement that would reasonably be expected to compete with, prevent, impede, interfere with, attempt to discourage the merger or inhibit the timely consummation of the merger,
	•	against any action or agreement that, to Stockholder’s knowledge, would result in a breach in any material respect of any covenant, representation or warranty or any other obligation of HaptoGuard under the merger agreement, and
	•	except for the merger and the merger agreement, against any merger, consolidation, business combination, reorganization, recapitalization, liquidation or sale or transfer of any material assets of HaptoGuard or its subsidiaries.

I-60

---

Table of Contents

	•	the merger is abandoned;
	•	the shares are transferred prior to their submission for the required endorsement;
	•	the dissenting stockholder fails to make a timely written demand for appraisal;
	•	the dissenting shares are voted in favor of adoption of the merger agreement;
	•	neither Alteon nor the stockholder files a complaint or intervenes in a pending action within 120 days after mailing of the approval notice; or
	•	the stockholder delivers to Alteon a written withdrawal of such stockholder’s demand for appraisal of his, her or its shares.

I-61

---

Table of Contents

		Alteon Annual Meeting		HaptoGuard Special Meeting
Date, Time and Place:		July 19, 2006 10:00 a.m., Eastern Time The Hanover Marriott 1401 Route 10 East Whippany, New Jersey 07981		July 18, 2006 10:00 a.m., Eastern Time Park 80 West Plaza II, Suite 200 Saddle Brook, NJ 07663
Purpose of Meeting is to Vote on the Following Items:		1. the merger and merger agreement and the issuance of shares of Alteon common stock and the transfer and conversion of shares of Alteon common stock contemplated thereby, described under “Chapter One — The Merger — The Merger Transaction — General” on page I-32;		1. adoption of the merger agreement as described under “Chapter One — The Merger — The Merger Transaction — General” on page I- 32; and
		2. the adjournment of the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1;		2. adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1; and
		3. the amendment to Alteon’s Certificate of Designation of Series G Preferred Stock, as described in the attached Proxy Statement; as described under “Chapter Six — Alteon Annual Meeting Proposals — Item 2 — Amendment of Certificates of Designation” beginning on page VI-1;		3. such other matters as may properly come before the HaptoGuard meeting, including the approval of any adjournment of the meeting.
		4. the amendment to Alteon’s Certificate of Designation of Series H Preferred Stock, as described in the attached Proxy Statement; as described under “Chapter Six — Alteon Annual Meeting Proposals — Item 2 — Amendment of Certificates of Designation” beginning on page VI-1;

II-1

---

Table of Contents

		Alteon Annual Meeting		HaptoGuard Special Meeting
		5. the election of two directors to serve until the completion of the merger or, in the event the merger is not complete, the Annual Meeting of Stockholders to be held in 2009 and until their successors have been duly elected and qualified;
		6. the ratification of the appointment by the Audit Committee of the board of directors of J.H. Cohn LLP as the independent registered public accounting firm of Alteon for the fiscal year ending December 31, 2006;
		7. the amendment to the Alteon 2005 Stock Plan to reserve additional shares of Alteon common stock for issuance thereunder; and
		8. such other matters as may properly come before the Alteon meeting, including the approval of any adjournment of the meeting.
Record Date:		The record date for shares entitled to vote is June 9, 2006.		The record date for shares entitled to vote is June 27, 2006.
Outstanding Shares Held on Record Date:		As of June 9, 2006, there were 68,957,111 shares of Alteon common stock outstanding. As of June 9, 2006, there were 11,418,000 shares of Alteon Series G Preferred Stock and 4,261,000 shares of Alteon Series H Preferred Stock outstanding.		As of June 27, 2006, there were 10,464 shares of HaptoGuard common stock outstanding.
Shares Entitled to Vote:		Shares entitled to vote are Alteon common stock held at the close of business on the record date, June 9, 2006.		Shares entitled to vote are HaptoGuard common stock held at the close of business on the record date, June 27, 2006.
		Each share of Alteon common stock that you own entitles you to one vote.		Each share of HaptoGuard common stock that you own entitles you to one vote.
		Shares held by Alteon in its treasury, if any, are not voted.		Shares held by HaptoGuard in its treasury, if any, are not voted.

II-2

---

Table of Contents

		Alteon Annual Meeting		HaptoGuard Special Meeting
Quorum Requirement:		A quorum of stockholders is necessary to hold a valid meeting. This means the holders of at least a majority of our common stock must be represented at the meeting, either by proxy or in person. Votes that are withheld, abstentions and broker non-votes will be counted for purposes of determining the presence or absence of a quorum.		A quorum of stockholders is necessary to hold a valid meeting. This means the holders of at least a majority of our common stock must be represented at the meeting, either by proxy or in person. Votes that are withheld, abstentions and broker non- votes will be counted for purposes of determining the presence or absence of a quorum.
Outstanding Shares Entitled to Vote and Owned by Alteon and HaptoGuard Directors, Executive Officers and their Affiliates as of June 9, 2006:		65,090 shares of Alteon common stock outstanding and entitled to vote at the Alteon annual meeting. These shares represent in total approximately less than 1% of the voting power of Alteon’s common stock outstanding and entitled to vote at the Alteon meeting.		5,846 shares of HaptoGuard common stock outstanding and entitled to vote at the HaptoGuard special meeting. These shares represent in total approximately 56% of the voting power of HaptoGuard’s common stock outstanding and entitled to vote at the HaptoGuard meeting.

		Item		Vote Necessary
I.		Merger Proposal		Alteon: Approval of the merger and merger agreement and the issuance of shares of Alteon common stock and the transfer and conversion of shares of Alteon common stock contemplated thereby described in “Chapter One — The Merger” requires an affirmative vote of a majority of the votes cast. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
				HaptoGuard: Adoption of the merger agreement described in “Chapter One — The Merger” requires an affirmative vote of a majority of the issued and outstanding shares of HaptoGuard common stock.
II.		Adjournment of the meeting, if necessary		Alteon: Approval of the adjournment of Alteon’s annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient vote to approve the issuance of the shares of Alteon common stock pursuant to the merger agreement requires the affirmative vote of a majority of the votes cast, regardless of whether a quorum is present. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
				HaptoGuard: Approval of the adjournment of HaptoGuard’s special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of adoption of the merger agreement requires the affirmative vote of a majority of the votes cast, if a quorum is present.

II-3

---

Table of Contents

		Item		Vote Necessary
III.		Amendment of Alteon’s Certificates of Designation		Alteon: The amendment of Alteon’s certificates of designation as described in “Chapter Six — Alteon Annual Meeting Proposals — Item 2 — Amendment” requires the affirmative vote of a majority of the issued and outstanding common stock and two-thirds of the issued and outstanding Series G Preferred Stock and Series H Preferred Stock, respectively. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
				HaptoGuard: Not Applicable
IV.		Election of two directors to serve until the completion of the merger or, in the event the merger is not completed, until the Annual Meeting of Stockholders to be held in 2009 and until their successors have been duly elected and qualified.		Alteon: The election of two directors to Alteon’s board as described in “Chapter Six — Alteon Annual Meeting Proposals — Item 3 — Election of Directors” requires the affirmative vote of a plurality of the votes cast. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as “Against” votes. Broker non- votes have no effect and will not be counted towards the vote total for any proposal.
				HaptoGuard: Not Applicable
V.		Ratification of the appointment by the Audit Committee of J.H. Cohn LLP as the independent registered public accounting firm of Alteon		Alteon: The ratification of the appointment by the Audit Committee of J.H. Cohn LLP as the independent registered public accounting firm of Alteon as described in “Chapter Six — Alteon Annual Meeting Proposals — Item 4 — Ratification of Selection of Independent Registered Public Accounting Firm” requires the affirmative vote of a majority of the votes cast. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
				HaptoGuard: Not Applicable
VI.		Amendment of Alteon’s 2005 Stock Plan		Alteon: The amendment of Alteon’s 2005 Stock Plan as described in “Chapter Six — Alteon Annual Meeting Proposals — Item 5 — Amendment of 2005 Stock Plan” requires the affirmative vote of a majority of the votes cast. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
				HaptoGuard: Not Applicable

II-4

---

Table of Contents

	How to Vote by Proxy

Alteon		HaptoGuard
Complete, sign, date and return your proxy card in the enclosed envelope. You may also vote electronically by Internet or telephone if your proxy card so indicates. You are encouraged to vote electronically if you have that option.		Complete, sign, date and return your proxy card in the enclosed envelope.

Alteon		HaptoGuard
• “FOR” the merger and merger agreement and the issuance of shares of Alteon common stock and the transfer and conversion of shares of Alteon common stock contemplated thereby;		• “FOR” adoption of the merger agreement;
• “FOR” the adjournment of Alteon’s annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient vote to approve the merger and merger agreement and the issuance of shares of Alteon common stock and the transfer and conversion of shares of Alteon common stock contemplated thereby;		• “FOR” the adjournment of HaptoGuard’s special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of adoption of the merger agreement; and
• “FOR” the amendment of Alteon’s certificates of designation of Series G Preferred Stock and Series H Preferred Stock;		• In its discretion as to any other business that may properly come before the HaptoGuard meeting.
• “FOR” the ratification of J.H. Cohn LLP as the independent registered public accounting firm;
• “FOR” the amendment of Alteon’s 2005 Stock Plan;
• “FOR” any proposal by the Alteon board of directors to adjourn the meeting; and
• In its discretion as to any other business that may properly come before the Alteon meeting.

	•	submitting a new proxy with a later date,
	•	submitting a vote electronically via the Internet or by telephone with a later date, if that was how the original vote was submitted,
	•	notifying your company’s Secretary in writing before the meeting that you have revoked your proxy, or
	•	voting in person at the meeting.

II-5

---

Table of Contents

II-6

---

Table of Contents

III-1

---

Table of Contents

	The A.G.E. Pathway

III-2

---

Table of Contents

III-3

---

Table of Contents

III-4

---

Table of Contents

III-5

---

Table of Contents

III-6

---

Table of Contents

III-7

---

Table of Contents

III-8

---

Table of Contents

III-9

---

Table of Contents

III-10

---

Table of Contents

III-11

---

Table of Contents

	Daniel Burkhoff, M.D., PhD, Adjunct Associate Professor, Medicine/ Cardiology, Columbia University and Cardiovascular Research Foundation, Chief Medical Officer, Impulse Dynamics.
	Norman K. Hollenberg, M.D., Ph.D., Professor of Medicine, Harvard Medical School; Director of Physiologic Research, Brigham and Women’s Hospital, Boston; served as an Editor of the New England Journal of Medicine.
	Dalane Kitzman, M.D., Professor, Cardiology, Wake Forest University Baptist Medical Center.

III-12

---

Table of Contents

	Peter R. Kowey, M.D., Full Professor, Medicine and Clinical Pharmacology, Jefferson Medical College; President and Chief of the Division of Cardiovascular Diseases, Main Line Health Heart Center, Lankenau Hospital; Fellow of the American Heart Association, the American College of Cardiology, the American College of Physicians, the College of Physicians of Philadelphia, the American College of Chest Physicians and the American College of Clinical Pharmacology.
	William Little, M.D., Section Head, Professor, Cardiology, Wake Forest University Baptist Medical Center.
	Craig M. Pratt, M.D., Professor of Medicine, Baylor College of Medicine; Director of Research, Methodist DeBakey Heart Center; Director, Coronary Intensive Care Unit, The Methodist Hospital; Member, Continuing Medical Education Advisory Board, Discovery International; Fellow, American College of Cardiology.
	Vinay Thohan, M.D., Assistant Professor of Medicine, Methodist DeBakey Heart Center.
	Guillermo Torre, MD, PhD, Assistant Professor of Medicine/ Medical Director, Heart Transplant Service, Methodist DeBakey Heart Center.
	Susan Zieman, M.D., PhD, Assistant Professor, Dept. of Medicine/ Cardiovascular, John Hopkins School of Medicine.

III-13

---

Table of Contents

III-14

---

Table of Contents

	•	Alagebrium chloride (formerly ALT-711), Alteon’s lead compound, is an Advanced Glycation End-product Crosslink Breaker being developed for heart failure. Data presented from two Phase 2 clinical studies at the American Heart Association meeting in November 2005 demonstrated the ability of alagebrium to improve overall cardiac function, including measures of diastolic and endothelial function. In these studies, alagebrium also demonstrated the ability to significantly reduce left ventricular mass. The compound has been tested in approximately 1,000 patients, which represents a sizeable human safety database, in a number of Phase 2 clinical trials.
	•	ALT-2074 (formerly BXT-51072), HaptoGuard’s licensed lead compound, is a glutathione peroxidase mimetic in development for reduction of mortality in post-myocardial infarction patients with diabetes. The compound has shown the ability to reduce infarct size by approximately 85% in a mouse model of heart attack called ischemia reperfusion injury.

III-15

---

Table of Contents

	Three Months ended March 31, 2006 and 2005

	Revenues

	Operating Expenses

	Net Loss

III-16

---

Table of Contents

	LIQUIDITY AND CAPITAL RESOURCES

III-17

---

Table of Contents

	Years Ended December 2005, 2004, and 2003

	Revenues

	Operating Expenses

III-18

---

Table of Contents

	Net Loss

	LIQUIDITY AND CAPITAL RESOURCES

III-19

---

Table of Contents

			Payments Due by Period
							Within												After
			Total				1 Year				1-3 Years				4-5 Years				5 Years
Contractual Obligations:
	Employment agreements(1)		$	1,717,668			$	1,717,668			$	—			$	—			$	—
	Operating lease commitments			345,464				336,727				8,737				—				—
	Total contractual obligations		$	2,063,132			$	2,054,395			$	8,737			$	—			$	—

(1)	We have employment agreements with key executives, which provide severance and/or change in control benefits. If we terminate all of the agreements, we are subject to obligations totaling $1,717,668.

III-20

---

Table of Contents

III-21

---

Table of Contents

	Overview

	Market Opportunity

IV-1

---

Table of Contents

	•	The Strong Heart Study — This longitudinal survey of the healthcare of PIMA Indians focuses on CVD and diabetes, and is particularly informative because of the high incidence of diabetes in this patient population. An examination of blood samples from several thousand patients enrolled in this study revealed that haptoglobin type predicts cardiovascular risk among diabetics but not non diabetics and the presence of a Haptoglobin 2 allele seemed to be associated with risk in a dose dependent fashion, such that Hp 2 2 diabetics were at higher risk than Hp 2 1 diabetics who were at still higher risk than Hp l 1 diabetics.

IV-2

---

Table of Contents

	•	The Munich Stent Study — A group in Munich followed 935 diabetic patients after an angioplasty and stent placement for one year. When patients were segregated based on haptoglobin type, it became apparent that the risk of MI and death was highest in the Hp 2 2 and lowest in Hp l l.
	•	The Rambam MI Study — Dr. Andrew Levy, a consultant to HaptoGuard, led a study at the Rambam Medical Center in Haifa, Israel in which over 500 consecutive diabetics who presented to the emergency room with a MI were followed for at least 30 days. This study demonstrated that the risk of 30 day mortality in Hp 2 2 diabetics was 16%, while the risk of mortality in the Hp l 1 group was less than 1%. The risk of clinical heart failure was also much higher for diabetics with Hp 2 2 as compared to those with other Hp types.
	•	The HOPE Study — The Heart Outcomes Prevention Study compared the ability of Ramipril (an ACE inhibitor), or vitamin E, to prevent cardiovascular events in patients at high risk for CVD. The study results were first reported in 2000. Ramipril was noted to reduce incidence of MI and death. Vitamin E was ineffective. These findings were reported in diabetics and non diabetics. In a 2003 collaboration, Hp type predicted event rate in diabetics but not non diabetics, confirming the Strong and Framingham observations.

IV-3

---

Table of Contents

	Technology

	•	inhibition of ICAM1, VCAM-1, p-selectin;
	•	inhibition of neutrophil attachment to endothelium, while maintaining endothelial integrity; and
	•	inhibition of neoiintimal formation in pig models of balloon-inflation, endothelial injury.

	Target Markets

	•	be most effective in preventing or delaying serious vascular complications;
	•	reduce the number of diabetics who are also diagnosed with vascular disease;
	•	improve the recovery rate for diabetics with vascular disease; and
	•	significantly reduce healthcare costs.

IV-4

---

Table of Contents

IV-5

---

Table of Contents

	Overview

IV-6

---

Table of Contents

	Oxis Exclusive License and Supply Agreement

	BlO-RAP License and Research Agreement

	UTI (University of Calgary) License Agreement

IV-7

---

Table of Contents

	•	Pre clinical laboratory and animal tests;
	•	Submission of an IND, which must become effective before human clinical trials may begin;
	•	Adequate and well controlled human clinical trials to establish the safety and efficacy of the product candidate for its intended use;
	•	Submission to the FDA of a NDA; and
	•	FDA review and approval of a NDA.

IV-8

---

Table of Contents

	•	Phase 1: The drug is initially introduced into healthy human subjects or patients and tested for safety, dosage tolerance, absorption, metabolism, distribution, and excretion.
	•	Phase 2: The drug is studied in a limited patient population to identify possible adverse effects and safety risks, to determine the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.
	•	Phase 3: When Phase 2 evaluations demonstrate that a dosage range of the drug is effective and has an acceptable safety profile, Phase 3 trials are undertaken to further evaluate dosage and clinical efficacy and to further test for safety in an expanded patient population, often at geographically dispersed clinical study sites.

IV-9

---

Table of Contents

(a)	Market Information

(b)	Holders

IV-10

---

Table of Contents

(c)	Dividends

(d)	Securities Authorized for Issuance Under Equity Compensation Plans

Number of Securities

Weighted-Average

Number of Securities

to be Issued Upon

Exercise Price of

Remaining Available

Exercise of

Outstanding

for Future Issuance

Outstanding Options,

Options, Warrants

Under Existing Equity

Plan Category

Warrants and Rights

and Rights

Compensation Plans

Equity compensation plans approved by security holders

800

$

572.08

718

Equity compensation plans not approved by security holders

509

$

572.08

0

Total

1,309

$

572.08

718

IV-11

---

Table of Contents

	Three months ended March 31, 2006 and 2005

	Income

	Operating Expenses

	Net Loss

IV-12

---

Table of Contents

	Subsequent Events

	Year Ended December 31, 2005 and Period from July 19, 2004 (Inception) to December 31, 2004

	Income

	Operating Expenses

	Net Loss

IV-13

---

Table of Contents

IV-14

---

Table of Contents

IV-15

---

Table of Contents

		Alteon Stockholder Rights		HaptoGuard Stockholder Rights
Corporate Governance:		The rights of Alteon stockholders are currently governed by Delaware law and the certificate of incorporation and by-laws of Alteon.		The rights of HaptoGuard stockholders are currently governed by Delaware law and the certificate of incorporation and by-laws of HaptoGuard.
		Upon consummation of the merger, the rights of Alteon stockholders will continue to be governed by Delaware law and the certificate of incorporation and by-laws of Alteon.		Upon consummation of the merger, the rights of HaptoGuard stockholders will continue to be governed by Delaware law. They will also be governed by the certificate of incorporation and by-laws of Alteon.
Authorized Capital Stock:		The authorized capital stock of Alteon consists of 300,000,000 shares of Alteon common stock and 1,993,329 shares of Alteon preferred stock.		The authorized capital stock of HaptoGuard consists of 100,000 shares of HaptoGuard common stock.
Number of Directors:		Alteon’s by-laws provide that the number of directors shall be determined by the board of directors and shall be no less than four (4) and no more than ten (10).		HaptoGuard’s by-laws provide that the number of directors shall be determined by the board of directors.
Classification of Board of Directors:		Alteon’s certificate of incorporation and by-laws provide that the board of directors shall be divided into three classes, with each class serving a staggered three-year term.		None.
Stockholder Action by Written Consent:		According to Alteon’s by-laws, stockholders may take any action by written consent.		According to HaptoGuard’s by- laws, stockholders may take any action by written consent.
Notice of Business at Annual Meetings:		Under Alteon’s by-laws, written notice of stockholder meetings, including annual meetings, must include a statement of the purposes for which the meeting is called. Also, stockholder-proposed business may only be transacted if the proposing stockholder provides timely written notice to an officer of the corporation.		Under HaptoGuard’s by-laws, all notices of meetings with stockholders shall be in writing and shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting.

V-1

---

Table of Contents

		Alteon Stockholder Rights		HaptoGuard Stockholder Rights
Liquidation Rights:		Under Alteon’s certificate of incorporation, holders of Alteon common stock are entitled to share ratably in the remaining assets of the corporation, after payment to the preferred stock holders of all amounts to which such preferred holders are entitled.		None.
Voting Rights:		Each holder of Alteon common stock is entitled to one vote for each share of Alteon common stock held of record on the applicable record date on all matters submitted to a vote of stockholders. There are no cumulative voting rights.		Each holder of HaptoGuard common stock is entitled to one vote for each share of HaptoGuard common stock held of record on the applicable record date on all matters submitted to a vote of stockholders. There are no cumulative voting rights.
Dividend Rights:		Under Alteon’s certificate of incorporation, holders of common stock are not entitled to receive dividends.		Under HaptoGuard’s bylaws, holders of HaptoGuard common stock are entitled to dividends if, as and when declared by the HaptoGuard board of directors.
Appraisal Rights:		Alteon stockholders are not entitled to appraisal rights Delaware law in connection with the merger.		HaptoGuard stockholders are entitled to appraisal rights under the under the Delaware law in connection with the merger.

V-2

---

Table of Contents

V-3

---

Table of Contents

V-4

---

Table of Contents

VI-1

---

Table of Contents

						Served as a
Name		Age				Director Since				Positions with Alteon
Kenneth I. Moch			51				1998			Chairman of the Board, President and Chief Executive Officer
Edwin D. Bransome, Jr., M.D.			72				1999			Director
Marilyn G. Breslow			61				1988			Director
Alan J. Dalby			69				1994			Director
David K. McCurdy(1)			55				1997			Director
Thomas A. Moore			55				2001			Director
George M. Naimark, Ph.D.			81				1999			Director
Mark Novitch, M.D.(1)			73				1994			Director

(1)	A nominee for election to the Board of Directors.

VI-2

---

Table of Contents

VI-3

---

Table of Contents

VI-4

---

Table of Contents

ITEM 4 —	RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

VI-5

---

Table of Contents

			Fiscal Year Ended
Type of Fees			December 31, 2005
Audit Fees			$	288,966
Audit-Related Fees				7,150
Tax Fees				—
All Other Fees				—
	Total Fees		$	296,116

			Fiscal Year Ended
Type of Fees			December 31, 2005
Audit Fees			$	7,500
Audit-Related Fees				3,500
Tax Fees				—
All Other Fees				3,325
	Total Fees		$	14,325

			Fiscal Year Ended
Type of Fees			December 31, 2004
Audit Fees			$	47,667
Audit-Related Fees				1,500
Tax Fees				—
All Other Fees				—
	Total Fees		$	49,167

			Fiscal Year Ended
Type of Fees			December 31, 2004
Audit Fees			$	83,000
Audit-Related Fees				—
Tax Fees				12,150
All Other Fees				26,828
	Total Fees		$	121,978

VI-6

---

Table of Contents

SHARES SUBJECT TO PLAN		Upon stockholder approval at the Annual Meeting, awards with respect to a maximum of 10,000,000 shares of common stock may be made under the Plan, as amended. Of that number of shares, the proposed amendment would add 5,000,000 shares to the 5,000,000 shares already approved, of which only approximately 4,833,000 remain available for the grant of new options.
PLAN ADMINISTRATION		The Plan is administered by the Board of Directors of Alteon, or a committee, as delegated by the Board of Directors. The administrator will have authority, subject to the terms of the Plan, to determine when and to whom to make grants under the Plan, the number of shares to be covered by the grants, the types and terms of options and other stock-based award granted, the exercise price of the shares of common stock covered by options granted and to prescribe, amend and rescind rules and regulations relating to the Plan. New options granted to non-employee directors are governed by the formula discussed below.
ELIGIBILITY		Certain of our directors, officers, employees, consultants and advisors may be granted options to purchase shares of our common

VI-7

---

Table of Contents

		stock under the Plan. The number of persons eligible to receive awards under the Plan is not presently determinable.
TRANSFER OF AWARDS		Generally, awards may not be transferred to another person except by will or the laws of descent and distribution, or as approved by the administrator.
TERMINATION		Options expire ten years from the option grant date, except that an incentive stock option granted to an employee who is the holder of 10% of our outstanding shares expires five years from the option grant date.
INITIAL DIRECTOR OPTIONS		Each director who is not an employee of the Company is granted an option to purchase 20,000 shares on the date of each annual meeting of shareholders, whether or not such director is up for election or reelection, so long as on such date, the director is serving as a director of Alteon. The per share exercise price of an option will be equal to the fair market value of a share of common stock on the grant date. Each option will vest, and be exercisable, upon completion of one full year of service on the Board of Directors so long as on such date, the director is serving as a director of Alteon.
GENERAL OPTIONS		Under the Plan, incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code, nonqualified stock options (“NQSOs”) and other stock-based award may be granted by the administrator to directors, employees and consultants of the Company and any of its Affiliates (as defined in the Plan), except that ISOs may be granted only to employees of the Company and any of its subsidiaries. The per share purchase price (or “option price”) under each option is established by the committee at the time the option is granted. However, the per share option price of an ISO granted to a participant must be at least 100% of the fair market value of a share on the date the ISO is granted (110% in the case of an ISO granted to a holder of 10% of our outstanding shares). Options will be exercisable at such times and in such installments as determined by the administrator.
EXERCISABILITY		Options generally may not be exercised more than three months after the option holder ceases to provide services to the Company or an affiliate, except that in the event of the death or disability of the option holder, the option may be exercised by the holder (or the holder’s estate), for a period of up to one year after the date of death or disability. The agreements evidencing the grant of an option (other than an option to a non-employee director) may, in the discretion of the committee, set forth additional or different terms and conditions applicable to such option upon a termination or change in status of the employment or service of the optionee. Options terminate immediately if the option holder’s service was terminated for cause.
PAYMENT OF EXERCISE PRICE		The shares purchased upon the exercise of an option must be paid for in cash (including cash that may be received from the Company at the time of exercise as additional compensation) or through the delivery of other shares of Common Stock with a value equal to the total Option Price or in a combination of cash and

VI-8

---

Table of Contents

		such shares, subject to the power of the administrator to vary the payment arrangement, including delivery of a personal recourse note, to meet the tax needs of an individual non-U.S. recipient if such variance does not change the substance of the arrangement set forth herein insofar as it affects the Company. In addition, the option holder may have the Option Price paid by a broker or dealer and the shares issued upon exercise of the option delivered directly to the broker or dealer.
AMENDMENT OR TERMINATION		Our Board of Directors has the power to terminate or amend the Plan at any time. If the Board of Directors does not take action to earlier terminate the Plan, it will terminate on April 19, 2015. Certain amendments may require stockholder approval, and no amendment may adversely affect options that have previously been granted.

Incentive Stock Options:		Incentive stock options are intended to qualify for treatment under Section 422 of the Code. An incentive stock option does not result in taxable income to the optionee or deduction to Alteon at the time it is granted or exercised, provided that no disposition is made by the optionee of the shares acquired pursuant to the option within two years after the date of grant of the option nor within one year after the date of issuance of shares to the optionee (referred to as the “ISO holding period”). However, the difference between the fair market value of the shares on the date of exercise and the option price will be an item of tax preference includible in “alternative minimum taxable income.” Upon disposition of the shares after the expiration of the ISO holding period, the optionee will generally recognize long-term capital gain or loss based on the difference between the disposition proceeds and the option price paid for the shares. If the shares are disposed of prior to the expiration of the ISO holding period, the optionee generally will recognize taxable compensation, and Alteon will have a corresponding deduction, in the year of the disposition, equal to the excess of the fair market value of the shares on the date of exercise of the option over the option price. Any additional gain realized on the disposition will normally constitute capital gain. If the amount realized upon such a disqualifying disposition is less than fair market value of the shares on the date of exercise, the amount of compensation income will be limited to the excess of the amount realized over the optionee’s adjusted basis in the shares.
Non-Qualified Options:		Options otherwise qualifying as incentive stock options, to the extent the aggregate fair market value of shares with respect to which such options are first exercisable by an individual in any calendar year exceeds $100,000, and options designated as non-qualified options will be treated as options that are not incentive stock options.

VI-9

---

Table of Contents

		A non-qualified option ordinarily will not result in income to the optionee or deduction to Alteon at the time of grant. The optionee will recognize compensation income at the time of exercise of such non-qualified option in an amount equal to the excess of the then value of the shares over the option price per share. Such compensation income of the optionee may be subject to withholding taxes, and a deduction may then be allowable to Alteon in an amount equal to the optionee’s compensation income.
		An optionee’s initial basis in shares so acquired will be the amount paid on exercise of the non-qualified option plus the amount of any corresponding compensation income. Any gain or loss as a result of a subsequent disposition of the shares so acquired will be capital gain or loss.
Stock Grants:		With respect to stock grants under the 2005 Stock Plan that result in the issuance of shares that are either not restricted as to transferability or not subject to a substantial risk of forfeiture, the grantee must generally recognize ordinary income equal to the fair market value of shares received. Thus, deferral of the time of issuance will generally result in the deferral of the time the grantee will be liable for income taxes with respect to such issuance. Alteon generally will be entitled to a deduction in an amount equal to the ordinary income recognized by the grantee.
		With respect to stock grants involving the issuance of shares that are restricted as to transferability and subject to a substantial risk of forfeiture, the grantee must generally recognize ordinary income equal to the fair market value of the shares received at the first time the shares become transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier. A grantee may elect to be taxed at the time of receipt of shares rather than upon lapse of restrictions on transferability or substantial risk of forfeiture, but if the grantee subsequently forfeits such shares, the grantee would not be entitled to any tax deduction, including as a capital loss, for the value of the shares on which he previously paid tax. The grantee must file such election with the Internal Revenue Service within 30 days of the receipt of the shares. Alteon generally will be entitled to a deduction in an amount equal to the ordinary income recognized by the grantee.

								In Current
Name		Age				Capacities in Which Served		Positions Since
Kenneth I. Moch			51			Chairman of the Board President and Chief Executive Officer		June 2001 December 1998
Mary Phelan(1)(2)			43			Director of Finance and Financial Reporting		May 2005

VI-10

---

Table of Contents

(1)	Mary Phelan has served as Alteon’s Director of Finance and Financial Reporting since May 2005. Prior to that, she served as Alteon’s Controller since October 2003. From July 2000 to September 2003, Ms. Phelan served as Alteon’s Assistant Controller. Prior to joining Alteon, Ms. Phelan was accounting manager at Medicom Communications Corporation from August 1999 to July 2000. Ms. Phelan is a Certified Public Accountant who has held several accounting positions, including Senior Accountant at KPMG, LLP. Ms. Phelan received a BBA in Certified Public Accounting from Pace University.
(2)	Mary Phelan has resigned from her position as Director of Finance and Financial Reporting effective May 31, 2006.

															Long-Term
															Compensation
															Awards
			Annual Compensation												Securities
															Underlying				All Other
							Salary				Bonus				Options				Compensation
Name and Principal Position			Year				($)				($)				(#)				($)
Kenneth I. Moch				2005				382,454				—				150,000				15,930	(1)
	President and Chief			2004				367,744				100,000	(2)			600,000				13,619	(3)
	Executive Officer			2003				353,600				200,000	(4)			100,000				3,000	(5)
Judith S. Hedstrom(6)				2005				300,000				—				—				3,500	(5)
	Chief Operating Officer			2004				250,000				75,000	(2)			400,000				3,250	(5)
				2003				223,600				78,333	(7)			150,000				3,000	(5)
Elizabeth A. O’Dell(8)				2005				101,667				—				—				3,500	(5)
	Vice President, Finance, Secretary and			2004				183,872				30,000	(2)			63,000				3,250	(5)
	Treasurer			2003				176,800				30,000	(9)			150,000				3,000	(5)
Mary T. Phelan(10)				2005				131,667				32,500				44,000				2,400	(5)
	Director of Finance and Financial Reporting

	(1)	Represents expenses for a car allowance of $11,430 and matching 401(k) contributions of $4,500.
	(2)	Represents a deferred performance bonus relating to the year ended December 31, 2004, paid in 2005.
	(3)	Represents expenses for a car allowance of $9,619 and matching 401(k) contributions of $4,000.
	(4)	Includes a $100,000 deferred performance bonus relating to the year ended December 31, 2003, paid in 2004.
	(5)	Represents matching 401(k) contributions.
	(6)	Ms. Hedstrom resigned effective January 31, 2006.
	(7)	Includes a $45,000 deferred performance bonus relating to the year ended December 31, 2003, paid in 2004.
	(8)	Ms. O’Dell resigned effective May 18, 2005.
	(9)	Includes a $20,000 deferred performance bonus relating to the year ended December 31, 2003, paid in 2004.

VI-11

---

Table of Contents

(10)	Ms. Phelan became our Director of Finance and Financial Reporting in May 2005. Ms. Phelan has resigned from her position as Director of Finance and Financial Reporting effective May 31, 2006.

Potential Realizable

Value at Assumed

Number of

Percent of

Annual Rates of

Securities

Total Options

Stock Price

Underlying

Granted to

Appreciation For

Options

Employees in

Exercised

Option Term(1)

Granted

Fiscal Year

or Base

Name

(#)

(%)

Price ($/SH)

Expiration Date

5% ($)

10% ($)

Kenneth I. Moch

150,000

64.7

0.75

02/28/10

31,082

68,682

Mary T. Phelan

20,000

8.6

0.58

05/02/15

7,295

18,487

24,000

10.3

0.35

07/25/15

5,283

13,387

Judith S. Hedstrom

—

—

N/A

N/A

N/A

N/A

Mary T. Phelan

—

—

N/A

N/A

N/A

N/A

(1)	The dollar amounts under these columns are the result of calculations assuming that the price of Alteon common stock on the date of the grant of the option increases at the hypothetical 5% and 10% rates set by the Securities and Exchange Commission and therefore are not intended to forecast possible future appreciation, if any, of our stock price over the option term of 10 years.

										Number of Securities
		Shares								Underlying Unexercised								Value of Unexercised In-
		Acquired								Options at December 31,								The-Money Options
		on				Value				2005 (#)								December 31, 2005(1) ($)
		Exercise				Realized
Name		(#)				($)				Exercisable				Unexercisable				Exercisable				Unexercisable
Kenneth I. Moch			—				—				1,150,000				—				—				—
Judith S. Hedstrom			—				—				825,000				—				—				—
Elizabeth A. O’Dell			—				—				576,167				—				—				—
Mary T. Phelan			—				—				81,730				—				—				—

(1)	No values are shown in these columns because none of the reported exercisable options were in-the-money at December 31, 2005.

VI-12

---

Table of Contents

Weighted-

Number of Securities

Average Exercise

to be Issued Upon

Price of

Number of Securities

Exercise of

Outstanding

Remaining Available

Outstanding

Options,

For Future Issuance

Options, Warrants

Warrants and

Under Existing Equity

Plan Category

and Rights

Right

Compensation Plans

Equity compensation plans approved by security holders(1)

6,486,665

$

2.12

4,807,978

Equity compensation plans not approved by security holders

—

—

—

Total

6,486,665

$

2.12

4,807,978

(1)	These plans consist of our Amended and Restated 1987 Stock Option Plan, our Amended 1995 Stock Option Plan and our 2005 Stock Option Plan.

VI-13

---

Table of Contents

VI-14

---

Table of Contents

VI-15

---

Table of Contents

			31-Dec-00					31-Dec-01					31-Dec-02					31-Dec-03					29-Dec-04					31-Dec-05
ALTEON				100.00					520.00					234.29					179.43					149.71					20.57
AMEX US				100.00					86.34					70.57					95.52					110.38					119.47
AMEX HP&S				100.00					112.77					77.94					136.53					140.45					121.47
NASDAQ Biotech				100.00					103.06					56.35					82.12					87.16					89.63

VI-16

---

Table of Contents

	Compensation of the Chief Executive Officer

VI-17

---

Table of Contents

	Compensation Committee
	Alan J. Dalby
	Edwin D. Bransome, Jr., M.D.
	Marilyn G. Breslow
	David K. McCurdy
	Thomas A. Moore
	George M. Naimark, Ph.D.
	Mark Novitch, M.D.

VI-18

---

Table of Contents

	Audit Committee
	Marilyn G. Breslow
	Edwin D. Bransome, Jr., M.D.
	Alan J. Dalby
	David K. McCurdy
	Thomas A. Moore
	George M. Naimark, Ph.D.
	Mark Novitch, M.D.

VI-19

---

Table of Contents

		Amount and Nature
		of Beneficial				Percent of
Name of Beneficial Owner(1)		Ownership(1)				Class(2)
Kenneth I. Moch			1,152,123	(3)			1.64	%
Edwin D. Bransome, Jr., M.D			132,500	(4)			*
Marilyn G. Breslow			154,867	(5)			*
Alan J. Dalby			154,867	(6)			*
David K. McCurdy			166,067	(7)			*
Thomas A. Moore			119,000	(8)			*
George M. Naimark, Ph.D			142,337	(9)			*
Mark Novitch, M.D			421,067	(10)			*
Mary T. Phelan			82,590	(11)			*
Judith S. Hedstrom			825,000	(12)			1.18	%
Elizabeth A. O’Dell			613,667	(13)			*
All current directors and officers as a group (9 persons)			2,525,418	(14)			3.54	%

	*	Less than one percent.

	(1)	Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and generally includes voting or investment power with respect to securities. Shares of common stock subject to stock options and warrants currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage ownership of the person holding such options and the percentage ownership of any group of which the holder is a member, but are not deemed outstanding for computing the percentage ownership of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
	(2)	Applicable percentage of ownership is based on 68,957,111 shares of common stock outstanding.
	(3)	Includes 2,023 shares of common stock and 1,150,000 shares of common stock subject to options which were exercisable as of June 9, 2006, and 100 shares held by Mr. Moch’s sons. Does not include options to purchase 1,652,000 shares of common stock held in trust for Mr. Moch’s minor children, for which Mr. Moch’s wife is the trustee and Mr. Moch disclaims beneficial ownership.
	(4)	Includes 10,000 shares of common stock held directly by Dr. Bransome, 2,500 shares held by his wife and 120,000 shares of common stock subject to options that were exercisable as of June 9, 2006.
	(5)	Includes 154,867 shares of common stock subject to options that were exercisable as of June 9, 2006.
	(6)	Includes 12,467 shares of common stock held directly by Mr. Dalby and 142,400 shares of common stock subject to options which were exercisable as of June 9, 2006.
	(7)	Includes 166,067 shares of common stock subject to options which were exercisable as of June 9, 2006.
	(8)	Includes 24,000 shares of common stock held directly by Mr. Moore and 95,000 shares of common stock subject to options which were exercisable as of June 9, 2006.
	(9)	Includes 5,000 shares of common stock held directly by Dr. Naimark, 4,000 shares held jointly by Dr. Naimark and his wife and 133,337 shares of common stock subject to options which were exercisable as of June 9, 2006.

VI-20

---

Table of Contents

(10)	Includes 5,000 shares of common stock held jointly by Dr. Novitch and his wife and 416,067 shares of common stock subject to options that were exercisable as of June 9, 2006.
(11)	Includes 860 shares of common stock held directly by Ms. Phelan and 81,730 shares of common stock subject to options which were exercisable as of June 9, 2006.
(12)	Includes 825,000 shares of common stock subject to options that were exercisable as of June 9, 2006.
(13)	Includes 37,500 shares of common stock held directly by Ms. O’Dell and 576,167 shares of common stock subject to options which were exercisable as of June 9, 2006.
(14)	Includes 2,459,468 shares of common stock subject to options which were exercisable as of June 9, 2006.

VI-21

---

Table of Contents

VI-22

---

Table of Contents

VII-1

---

Table of Contents

VIII-1

---

Table of Contents

F-1

---

Table of Contents

				March 31,				December 31,
				2006				2005
				(Unaudited)
ASSETS
Current Assets:
	Cash and cash equivalents			$	4,469,170			$	6,582,958
	Other current assets				72,742				216,290
		Total current assets			4,541,912				6,799,248
Property and equipment, net					40,681				55,154
Restricted cash					150,000				150,000
Other assets					424,111				129,195
Total assets				$	5,156,704			$	7,133,597
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
	Accounts payable			$	190,055			$	351,232
	Accrued expenses				596,316				790,705
		Total liabilities			786,371				1,141,937
Stockholders’ Equity:
	Preferred Stock, $0.01 par value, 1,993,329 shares authorized, and 1,418 and 1,389 shares of Series G and 4,261 and 4,172 shares of Series H issued and outstanding, as of March 31, 2006 and December 31, 2005, respectively. The liquidation value at March 31, 2006 and December 31, 2005 was $56,789,227 and $55,613,905 respectively				57				56
	Common Stock, $0.01 par value, 300,000,000 shares authorized, and 57,996,711 shares issued and outstanding, as of March 31, 2006 and December 31, 2005, respectively				579,967				579,967
	Additional paid-in capital				229,400,403				228,225,082
	Accumulated deficit				(225,610,094	)			(222,813,445	)
		Total stockholders’ equity			4,370,333				5,991,660
Total liabilities and stockholders’ equity				$	5,156,704			$	7,133,597

F-2

---

Table of Contents

				Three Months Ended March 31,
				2006				2005
				(Unaudited)
Income:
	Investment income			$	60,364			$	99,149
		Total income			60,364				99,149
Expenses:
	Research and development				449,840				3,641,100
	General and administrative				1,231,851				1,100,348
		Total expenses			1,681,691				4,741,448
Net loss					(1,621,327	)			(4,642,299	)
	Preferred stock dividends				1,175,322				1,071,578
Net loss applicable to common stockholders				$	(2,796,649	)		$	(5,713,877	)
Basic/diluted net loss per share applicable to common stockholders				$	(0.05	)		$	(0.10	)
Weighted average common shares used in computing basic/diluted net loss per share applicable to common stockholders					57,996,711				56,547,028

F-3

---

Table of Contents

			Preferred Stock								Common Stock								Additional								Total
																			Paid-In				Accumulated				Stockholders’
			Shares				Amount				Shares				Amount				Capital				Deficit				Equity
			(Unaudited)
Balance, December 31, 2005				5,561			$	56				57,996,711			$	579,967			$	228,225,082			$	(222,813,445	)		$	5,991,660
	Net loss			—				—				—				—				—				(1,621,327	)			(1,621,327	)
	Issuance of Series G and H preferred stock dividends			118				1				—				—				1,175,321				(1,175,322	)			—
Balance, March 31, 2006				5,679			$	57				57,996,711			$	579,967			$	229,400,403			$	(225,610,094	)		$	4,370,333

F-4

---

Table of Contents

				Three Months Ended March 31,
				2006				2005
				(Unaudited)
Cash flows from operating activities:
	Net loss			$	(1,621,327	)		$	(4,642,299	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization				14,473				17,269
	Stock compensation expense				—				65,707
Changes in operating assets and liabilities:
	Other current assets				143,548				(332,194	)
	Accounts payable and accrued expenses				(448,566	)			(399,992	)
		Net cash used in operating activities			(1,911,872	)			(5,291,509	)
Cash flows from investing activities:
	Capital expenditures				—				(760	)
	Other assets				(201,916	)			—
		Net cash used in investing activities			(201,916	)			(760	)
Cash flows from financing activities:
	Net proceeds from issuance of common stock				—				9,532,295
		Net cash provided by financing activities			—				9,532,295
Net (decrease)/increase in cash and cash equivalents					(2,113,788	)			4,240,026
Cash and cash equivalents, beginning of period					6,582,958				11,175,762
Cash and cash equivalents, end of period				$	4,469,170			$	15,415,788
Supplemental disclosure of cash flow information:
		Accrual of deferred merger costs		$	93,000			$	—

F-5

---

Table of Contents

F-6

---

Table of Contents

F-7

---

Table of Contents

			Three Months Ended
			March 31, 2005
Net loss, as reported			$	(4,642,299	)
Less: Total stock-based employee and director compensation expense determined under fair value method				(464,128	)
Pro forma net loss				(5,106,427	)
Preferred stock dividends				1,071,578
Pro forma net loss applicable to common stockholders			$	(6,178,005	)
Net loss per share applicable to common stockholders:
	Basic/diluted, as reported		$	(0.10	)
	Basic/diluted, pro forma		$	(0.11	)

	Proposed merger with HaptoGuard

F-8

---

Table of Contents

F-9

---

Table of Contents

	Private Placement

F-10

---

Table of Contents

F-11

---

Table of Contents

	/s/ J. H. Cohn LLP

F-12

---

Table of Contents

	/s/ KPMG LLP

F-13

---

Table of Contents

				December 31,				December 31,
				2005				2004
ASSETS
Current Assets:
	Cash and cash equivalents			$	6,582,958			$	11,175,762
	Other current assets				216,290				159,364
		Total current assets			6,799,248				11,335,126
Property and equipment, net					55,154				107,269
Restricted cash					150,000				200,000
Other assets					129,195				—
		Total assets		$	7,133,597			$	11,642,395
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
	Accounts payable			$	351,232			$	593,094
	Accrued expenses				790,705				2,002,381
		Total liabilities			1,141,937				2,595,475
Commitments and Contingencies
Stockholders’ Equity:
	Preferred stock, $0.01 par value, 1,993,329 shares authorized, and 1,389 and 1,277 shares of Series G and 4,172 and 3,836 shares of Series H issued and outstanding, as of December 31, 2005 and December 31, 2004, respectively. The liquidation value at December 31, 2005 and December 2004 was $55,613,905 and $51,127,569, respectively				56				51
	Common stock, $0.01 par value, 300,000,000 and 175,000,000 shares authorized, and 57,996,711 and 48,472,898 shares issued and outstanding, as of December 31, 2005 and December 31, 2004, respectively				579,967				484,729
	Additional paid-in capital				228,225,082				214,274,790
	Accumulated deficit				(222,813,445	)			(205,712,650	)
		Total stockholders’ equity			5,991,660				9,046,920
Total liabilities and stockholders’ equity				$	7,133,597			$	11,642,395

F-14

---

Table of Contents

				Year Ended December 31,
				2005				2004				2003
Income:
	Investment income			$	358,446			$	182,574			$	179,006
	Other income				100,000				151,821				—
		Total income			458,446				334,395				179,006
Expenses:
	Research and development				9,074,244				10,147,298				9,929,704
	General and administrative				4,325,225				4,531,953				5,046,357
		Total expenses			13,399,469				14,679,251				14,976,061
Loss before income tax benefit					(12,941,023	)			(14,344,856	)			(14,797,055	)
	Income tax benefit				326,564				386,210				344,637
Net loss					(12,614,459	)			(13,958,646	)			(14,452,418	)
	Preferred stock dividends				4,486,336				4,135,145				3,790,847
Net loss applicable to common stockholders				$	(17,100,795	)		$	(18,093,791	)		$	(18,243,265	)
Basic/diluted net loss per share applicable to common stockholders				$	(0.30	)		$	(0.41	)		$	(0.50	)
Weighted average common shares used in computing basic/diluted net loss per share applicable to common stockholders					57,639,255				44,349,015				36,189,655

F-15

---

Table of Contents

																											Accumulated
			Preferred Stock								Common Stock								Additional								Other				Total
																			Paid-In				Accumulated				Comprehensive				Stockholders’
			Shares				Amount				Shares				Amount				Capital				Deficit				Income/(Loss)				Equity
Balances at DECEMBER 31, 2002				4,320			$	43				33,600,841			$	336,008			$	183,341,416			$	(169,375,594	)		$	1,364			$	14,303,237
	Net loss			—				—				—				—				—				(14,452,418	)			—				(14,452,418	)
	Change in unrealized gains/ (losses)			—				—				—				—				—				—				(1,364	)			(1,364	)
	Comprehensive loss																															(14,453,782	)
	Issuance of Series G and H preferred stock dividends			379				4				—				—				3,790,843				(3,790,847	)			—				—
	Exercise of employee stock options			—				—				51,688				517				54,937				—				—				55,454
	Public offerings of common stock			—				—				6,757,146				67,571				15,360,705				—				—				15,428,276
	Exercise of warrants			—				—				57,473				575				(575	)			—				—				—
	Compensation expense related to variable plan employee stock options			—				—				—				—				20,019				—				—				20,019
	Compensation expense in connection with the issuance of non-qualified stock options granted to non-employees			—				—				—				—				31,228				—				—				31,228
DECEMBER 31, 2003				4,699				47				40,467,148				404,671				202,598,573				(187,618,859	)			—				15,384,432
	Net loss			—				—				—				—				—				(13,958,646	)			—				(13,958,646	)
	Issuance of Series G and H preferred stock dividends			414				4				—				—				4,135,141				(4,135,145	)			—				—
	Exercise of employee stock options			—				—				5,750				58				5,027				—				—				5,085
	Public offerings of common stock			—				—				8,000,000				80,000				7,501,318				—				—				7,581,318
	Compensation expense in connection with the issuance of non-qualified stock options granted to non-employees			—				—				—				—				34,731				—				—				34,731
DECEMBER 31, 2004				5,113				51				48,472,898				484,729				214,274,790				(205,712,650	)			—				9,046,920
	Net loss			—				—				—				—				—				(12,614,459	)			—				(12,614,459	)
	Issuance of Series G and H preferred stock dividends			448				5				—				—				4,486,331				(4,486,336	)			—				—
	Public offerings of common stock			—				—				9,523,813				95,238				9,437,057				—				—				9,532,295
	Compensation expense in connection with the issuance of non-qualified stock options granted to non-employees			—				—				—				—				26,904				—				—				26,904
DECEMBER 31, 2005				5,561			$	56				57,996,711			$	579,967			$	228,225,082			$	(222,813,445	)		$	—			$	5,991,660

F-16

---

Table of Contents

				Year Ended December 31,
				2005				2004				2003
Cash flows from operating activities:
	Net loss			$	(12,614,459	)		$	(13,958,646	)		$	(14,452,418	)
Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization			65,223				74,870				502,826
		Stock compensation expense			26,904				34,731				31,228
		Gain on sale of laboratory equipment			—				(51,821	)			—
		Non-cash compensation expense related to variable plan employee stock options			—				—				20,019
Changes in operating assets and liabilities:
	Other assets				(56,926	)			66,075				(82,315	)
	Accounts payable and accrued expenses				(1,453,538	)			724,922				(1,925,570	)
		Net cash used in operating activities			(14,032,796	)			(13,109,869	)			(15,906,230	)
Cash flows from investing activities:
	Capital expenditures				(13,108	)			(81,175	)			(86,167	)
	Proceeds from sale of laboratory equipment				—				51,821				—
	Purchases of marketable securities				—				—				(3,015,164	)
	Maturities of marketable securities				—				—				6,000,000
	Restricted cash				50,000				50,000				(250,000	)
	Deferred acquisition costs				(129,195	)			—				—
		Net cash (used in)/provided by investing activities			(92,303	)			20,646				2,648,669
Cash flows from financing activities:
	Net proceeds from issuance of common stock				9,532,295				7,581,318				15,428,276
	Net proceeds from exercise of employee stock options				—				5,085				55,454
		Net cash provided by financing activities			9,532,295				7,586,403				15,483,730
Net (decrease)/increase in cash and cash equivalents					(4,592,804	)			(5,502,820	)			2,226,169
Cash and cash equivalents, beginning of year					11,175,762				16,678,582				14,452,413
Cash and cash equivalents, end of year				$	6,582,958			$	11,175,762			$	16,678,582

F-17

---

Table of Contents

	Organization and Business (unaudited)

F-18

---

Table of Contents

	Use of Estimates

	Cash and Cash Equivalents

	Financial Instruments

	Property and Equipment

	Impairment of Long-Lived Assets

F-19

---

Table of Contents

	Research and Development

	Stock-Based Compensation

			Year Ended December 31,
			2005				2004				2003
Net loss, as reported			$	(12,614,459	)		$	(13,958,646	)		$	(14,452,418	)
Add: Variable non-cash stock compensation expense recognized in the statements of operations				—				—				20,019
Less: Total stock-based compensation expense determined under fair value method				(1,701,681	)			(868,390	)			(1,316,721	)
Pro forma net loss				(14,316,140	)			(14,827,036	)			(15,749,120	)
Preferred stock dividends				4,486,336				4,135,145				3,790,847
Pro forma net loss applicable to common stockholders			$	(18,802,476	)		$	(18,962,181	)		$	(19,539,967	)
Net loss per share applicable to common stockholders:
	Basic/diluted, as reported		$	(0.30	)		$	(0.41	)		$	(0.50	)
	Basic/diluted, pro forma		$	(0.33	)		$	(0.43	)		$	(0.54	)

F-20

---

Table of Contents

	Income Taxes

	Net Loss Per Share Applicable to Common Stockholders

F-21

---

Table of Contents

F-22

---

Table of Contents

		December 31,
		2005				2004
Laboratory equipment		$	24,650			$	24,650
Furniture and equipment			218,627				218,627
Computer equipment			155,067				141,959
			398,344				385,236
Less: Accumulated depreciation & amortization			(343,190	)			(277,967	)
		$	55,154			$	107,269

		December 31,
		2005				2004
Clinical trial expense		$	282,854			$	1,326,175
Professional fees			195,375				255,756
Payroll and related expenses			238,344				293,813
Other			74,132				126,637
		$	790,705			$	2,002,381

	Commitments

F-23

---

Table of Contents

		Operating
		Leases
2006		$	336,727
2007			8,737
Thereafter			—
		$	345,464

	Contingencies

	Common/ Preferred Stock Issuances

F-24

---

Table of Contents

Warrants Outstanding at December 31,								Warrants Outstanding at December 31,
2005								2004
				Exercise Price								Exercise Price
Warrants				per Warrant				Warrants				per Warrant
	312,381			$	1.37				272,500			$	1.30
	272,500				1.30				953,890				1.00
	953,890				1.00				46,142				2.93
	46,142				2.93				46,142				2.92
	46,142				2.92				1,318,674
	1,631,055

	Stock Option Plan

F-25

---

Table of Contents

						Weighted				Weighted
						Average				Average
						Exercise				Grant Date
		Options				Price				Fair Value
Balance, December 31, 2002			5,436,279			$	3.08
Granted at market price			812,465				2.41			$	1.99
Exercised			(51,688	)			1.07
Canceled			(217,738	)			5.13
Balance, December 31, 2003			5,979,318				2.93
Granted at market price			1,663,409				1.09			$	0.89
Exercised			(5,750	)			0.88
Canceled			(1,087,670	)			4.39
Balance, December 31, 2004			6,549,307				2.22
Granted at market price			375,022				0.47			$	0.39
Exercised			—				—
Canceled			(437,664	)			2.24
Balance, December 31, 2005			6,486,665			$	2.12

		Options Outstanding at December 31, 2005												Options Exercisable at
														December 31, 2005
						Weighted
						Average				Weighted								Weighted
						Remaining				Average								Average
		Number				Contractual Life				Exercise				Number				Exercise
Range of Exercise Prices		Outstanding				(Years)				Price				Exercisable				Price
$0.200 - $  0.875			1,222,427				4.29			$	0.75				1,222,427			$	0.75
0.930 -     1.000			21,500				8.21				0.93				21,500				0.93
1.030 -     1.030			1,306,219				8.93				1.03				1,306,219				1.03
1.063 -     1.560			1,309,663				5.17				1.28				1,309,663				1.28
1.625 -     2.600			1,073,460				6.15				2.24				1,073,460				2.24
2.875 -     4.380			939,792				4.56				3.83				939,792				3.83
4.406 -   15.000			613,604				4.16				6.20				613,604				6.20
$0.200 - $15.000			6,486,665				5.75			$	2.12				6,486,665			$	2.12

F-26

---

Table of Contents

		December 31,
		2005				2004
Net operating loss carryforwards		$	57,600,000			$	57,700,000
Research and development credits			8,600,000				8,400,000
Capitalized research and development expenses			13,800,000				11,800,000
Other temporary differences			100,000				700,000
Gross deferred tax assets			80,100,000				78,600,000
Valuation allowance			(80,100,000	)			(78,600,000	)
Net deferred tax assets		$	—			$	—

			December 31,
			2005				2004				2003
Statutory federal income tax rate				(34.0	)%			(34.0	)%			(34.0	)%
State income tax rate (net of federal)				(6.0	)%			(6.0	)%			(6.0	)%
Certain nondeductible expenses				0.1	%			0.1	%			0.0	%
Effect of net operating loss carryforwards and valuation allowance				37.4	%			37.2	%			37.7	%
	Effective tax rate			(2.5	)%			(2.7	)%			(2.3	)%

F-27

---

Table of Contents

ANNEX A — Agreement and Plan of Merger by and among Alteon Inc., Alteon Merger Sub, Inc., HaptoGuard, Inc. and Genentech, Inc., dated as of April 19, 2006			Page A-1 to A-50
ANNEX B — Voting Agreement by and between the stockholders named therein, HaptoGuard, Inc. and Alteon Inc., dated as of April 19, 2006			Page B-1 to B-6
ANNEX C — Form of HaptoGuard Lock-Up Agreement dated as of April 19, 2006			Page C-1 to C-4
ANNEX D — Certificate of Amendment to the Corrected Certificate of Designations of Series G Preferred Stock of Alteon Inc.			Page D-1
ANNEX E — Certificate of Amendment to the Corrected Certificate of Designations of Series H Preferred Stock of Alteon Inc.			Page E-1
ANNEX F — Section 262 of the Delaware General Corporation Law			Page F-1 to F-6
ANNEX G — HaptoGuard unaudited balance sheets as of March 31, 2006 and December 31, 2005 and unaudited Statement of Operations, Statement of Changes in Stockholders’ Equity and Statement of Cash Flows for the Quarters ended March 31, 2006 and March 31, 2005 and each of the three month periods then ended, and HaptoGuard audited balance sheet as of December 31, 2003 and December 31, 2004 and audited Statement of Operations, Statement of Changes in Stockholders’ Equity and Statement of Cash Flows for the Year ended December 31, 2005 and for the Period from July 19, 2004 (date of inception) to December 31, 2004, together with notes thereto			Page G-1 to G-23
ANNEX H — Proxy for Annual Meeting of Stockholders			Page H-1 to H-2

---

Table of Contents

---

Table of Contents

					Page
ARTICLE I THE MERGER						A-3
	1.1.		THE MERGER			A-3
	1.2.		EFFECTIVE TIME			A-3
	1.3.		EFFECT OF THE MERGER			A-3
	1.4.		CERTIFICATE OF INCORPORATION; BYLAWS			A-4
	1.5.		DIRECTORS AND OFFICERS			A-4
	1.6.		CONVERSION OF MERGER SUB COMMON STOCK			A-4
	1.7.		EFFECT ON CAPITAL STOCK			A-4
	1.8.		ROYALTY AND MILESTONE PAYMENTS AND RIGHT OF FIRST NEGOTIATION			A-5
	1.9.		EXCHANGE OF CERTIFICATES			A-7
	1.10.		STOCK TRANSFER BOOKS			A-8
	1.11.		NO FURTHER OWNERSHIP RIGHTS IN ALTEON PREFERRED STOCK OR HAPTOGUARD COMMON STOCK			A-8
	1.12.		LOST, STOLEN OR DESTROYED CERTIFICATES			A-8
	1.13.		TAX CONSEQUENCES			A-8
	1.14.		APPRAISAL RIGHTS			A-8
	1.15.		TAKING OF NECESSARY ACTION; FURTHER ACTION			A-9
	1.16.		MATERIAL ADVERSE EFFECT			A-9
	1.17.		WAIVER OF COMMON STOCK RESERVE REQUIREMENT			A-9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF HAPTOGUARD AND THE STOCKHOLDERS						A-9
	2.1.		ORGANIZATION OF HAPTOGUARD			A-10
	2.2.		CAPITAL STRUCTURE			A-10
	2.3.		OBLIGATIONS WITH RESPECT TO CAPITAL STOCK			A-10
	2.4.		AUTHORITY			A-10
	2.5.		HAPTOGUARD FINANCIAL STATEMENTS			A-11
	2.6.		ABSENCE OF CERTAIN CHANGES OR EVENTS			A-11
	2.7.		TAXES			A-12
	2.8.		INTELLECTUAL PROPERTY			A-12
	2.9.		COMPLIANCE; PERMITS; RESTRICTIONS			A-13
	2.10.		LITIGATION			A-14
	2.11.		BROKERS’ AND FINDERS’ FEES			A-14
	2.12.		EMPLOYEE BENEFIT PLANS			A-14
	2.13.		ABSENCE OF LIENS AND ENCUMBRANCES; CONDITION OF EQUIPMENT			A-15
	2.14.		ENVIRONMENTAL MATTERS			A-16
	2.15.		LABOR MATTERS			A-16
	2.16.		AGREEMENTS, CONTRACTS AND COMMITMENTS			A-17
	2.17.		CHANGE OF CONTROL PAYMENTS			A-18
	2.18.		PROXY STATEMENT			A-18
	2.19.		BOARD APPROVAL			A-18
	2.20.		BOOKS AND RECORDS			A-18
	2.21.		RESTRICTIONS ON BUSINESS ACTIVITIES			A-18

A-i

---

Table of Contents

					Page
	2.22.		REAL PROPERTY LEASES			A-18
	2.23.		INSURANCE			A-19
	2.24.		ACCOUNTS RECEIVABLE			A-19
	2.25.		CERTAIN BUSINESS PRACTICES			A-19
	2.26.		SUPPLIERS; EFFECT OF TRANSACTION			A-19
	2.27.		GOVERNMENT CONTRACTS			A-19
	2.28.		INTERESTED PARTY TRANSACTIONS			A-20
	2.29.		DISCLOSURE			A-20
	2.30.		VOTING REQUIREMENTS			A-20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ALTEON AND MERGER SUB						A-20
	3.1.		ORGANIZATION OF ALTEON AND MERGER SUB			A-20
	3.2.		OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES			A-20
	3.3.		ALTEON AND MERGER SUB CAPITAL STRUCTURE			A-20
	3.4.		OBLIGATIONS WITH RESPECT TO CAPITAL STOCK			A-21
	3.5.		AUTHORITY			A-21
	3.6.		ALTEON SEC REPORTS			A-22
	3.7.		ABSENCE OF CERTAIN CHANGES OR EVENTS			A-22
	3.8.		TAXES			A-23
	3.9.		COMPLIANCE; PERMITS; RESTRICTIONS			A-23
	3.10.		EMPLOYEE BENEFIT PLANS			A-24
	3.11.		INTERESTED PARTY TRANSACTIONS			A-25
	3.12.		BROKERS’ AND FINDERS’ FEES			A-25
	3.13.		BOARD APPROVAL			A-25
	3.14.		VALID ISSUANCE			A-26
	3.15.		VOTING REQUIREMENTS			A-26
	3.16.		INTELLECTUAL PROPERTY			A-26
	3.17.		ENVIRONMENTAL MATTERS			A-26
	3.18.		CHANGE OF CONTROL PAYMENTS			A-27
	3.19.		RESTRICTIONS ON BUSINESS ACTIVITIES			A-27
	3.20.		INSURANCE			A-27
	3.21.		CERTAIN BUSINESS PRACTICES			A-27
	3.22.		GOVERNMENT CONTRACTS			A-27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GENENTECH						A-28
	4.1.		ORGANIZATION OF GENENTECH			A-28
	4.2.		AUTHORITY			A-28
	4.3.		TITLE; ABSENCE OF CERTAIN AGREEMENTS			A-28
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER						A-28
	5.1.		CONDUCT OF BUSINESS BY HAPTOGUARD			A-28
	5.2.		NO SOLICITATION BY HAPTOGUARD			A-30
	5.3.		CONDUCT OF BUSINESS BY ALTEON			A-30

A-ii

---

Table of Contents

					Page
ARTICLE VI ADDITIONAL AGREEMENTS						A-32
	6.1.		PROXY STATEMENT			A-32
	6.2.		MEETINGS OF STOCKHOLDERS			A-32
	6.3.		ACCESS TO INFORMATION; CONFIDENTIALITY			A-32
	6.4.		CONSENTS; APPROVALS			A-33
	6.5.		STOCK OPTIONS AND WARRANTS			A-33
	6.6.		HAPTOGUARD LOCK-UP AGREEMENT			A-34
	6.7.		INDEMNIFICATION AND INSURANCE			A-34
	6.8.		NOTIFICATION OF CERTAIN MATTERS			A-35
	6.9.		FURTHER ACTION			A-35
	6.10.		PUBLIC ANNOUNCEMENTS			A-35
	6.11.		LISTING OF ALTEON COMMON STOCK			A-35
	6.12.		CONVEYANCE TAXES			A-35
	6.13.		TAX-FREE REORGANIZATION			A-36
	6.14.		BOARD OF DIRECTORS AND OFFICERS OF THE RESULTING CORPORATION			A-36
	6.15.		RE-SALE REGISTRATION STATEMENT			A-36
	6.16.		EMPLOYEE BENEFITS			A-36
	6.17.		STOCKHOLDERS’ REPRESENTATIVE			A-36
	6.18.		INTERIM PAYMENTS TO HAPTOGUARD			A-37
ARTICLE VII CONDITIONS TO THE MERGER						A-38
	7.1.		CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER			A-38
	7.2.		ADDITIONAL CONDITIONS TO OBLIGATIONS OF ALTEON			A-39
	7.3.		ADDITIONAL CONDITIONS TO OBLIGATIONS OF HAPTOGUARD			A-40
	7.4.		CONDITIONS TO OBLIGATIONS OF GENENTECH			A-40
ARTICLE VIII TERMINATION						A-41
	8.1.		TERMINATION			A-41
	8.2.		NOTICE OF TERMINATION; EFFECT OF TERMINATION			A-42
	8.3.		FEES AND EXPENSES			A-43
ARTICLE IX INDEMNIFICATION						A-43
	9.1.		DEFINITIONS			A-43
	9.2.		INDEMNIFICATION GENERALLY			A-44
	9.3.		LIMITATIONS ON INDEMNIFICATION			A-44
	9.4.		ASSERTION OF CLAIMS			A-44
	9.5.		NOTICE AND DEFENSE OF THIRD PARTY CLAIMS			A-45
	9.6.		SURVIVAL OF REPRESENTATIONS AND WARRANTIES			A-45
ARTICLE X GENERAL PROVISIONS						A-46
	10.1.		EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS			A-46
	10.2.		NOTICES			A-46
	10.3.		CERTAIN DEFINITIONS			A-47
	10.4.		AMENDMENT			A-47

A-iii

---

Table of Contents

				Page
10.5.		WAIVER			A-47
10.6.		HEADINGS			A-47
10.7.		SEVERABILITY			A-48
10.8.		ENTIRE AGREEMENT			A-48
10.9.		ASSIGNMENT			A-48
10.10.		PARTIES IN INTEREST			A-48
10.11.		FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE			A-48
10.12.		GOVERNING LAW			A-48
10.13.		COUNTERPARTS			A-48
10.14.		ARBITRATION			A-48
10.15.		NO LIABILITY TO STOCKHOLDERS			A-49

Exhibit A		Voting Agreement
Exhibit B		Form of Certificate of Merger
Exhibit C		Form of HaptoGuard Lock-Up Agreement
Exhibit D		Amendments to Certificates of Designations
Schedule 1		List of HaptoGuard Stockholders
Schedule 2		List of HaptoGuard Management for purpose of knowledge qualifiers
Schedule 3		List of Key HaptoGuard Employees under Section 2.15
Schedule 4		List of Alteon Management for purpose of knowledge qualifiers
Schedule 6		List of consents to be obtained by HaptoGuard as a condition to closing
Schedule 6.5(b) Option Vesting Schedule Examples
HaptoGuard Disclosure Schedule
Alteon Disclosure Schedule

A-iv

---

Table of Contents

A-2

---

Table of Contents

A-3

---

Table of Contents

	(a) Conversion of Alteon Preferred Stock owned by Genentech. Pursuant to the terms of Alteon’s certificate of incorporation and the terms hereof, Genentech will convert into shares of Alteon Common Stock a portion of the Series G and Series H Preferred Stock that it holds, such that the number of such shares of Alteon Common Stock to be issued will, when added to the shares of Alteon Common Stock already owned by Genentech, equal 19.99% of Alteon’s outstanding common stock as calculated after the conversion of such Alteon Preferred Stock but prior to (i) the conversion of any Alteon Preferred Stock to be transferred to HaptoGuard, (ii) before the issuance by Alteon of any Alteon Common Stock in the Financing or (iii) the issuance of Alteon Common Stock by Alteon to HaptoGuard in the Merger, it being understood that Genentech shall direct the conversion of the shares of Preferred Stock held by Genentech by identifying which series of Preferred Stock will be converted first, and if necessary to reach the above-referenced percentage (19.99%), which shares of Preferred Stock will be converted second.
	(b) Transfer to HaptoGuard of Alteon Preferred Stock owned by Genentech and Conversion Thereof. Genentech will transfer to HaptoGuard a portion of Alteon Preferred Stock held by it (which to the extent possible, will consist of shares of the Genentech’s Preferred Stock identified by Genentech for the transfer), in such an amount that will convert to a number of shares of Alteon Common Stock, in accordance with the terms of Alteon’s certificate of incorporation and the terms hereof, equal in value as nearly as practicable to $3,500,000, such shares when added to the value of the shares of Alteon Common Stock issued pursuant to subsection (x) of Section 1.7(d), shall equal $8,800,000. The price per share of the Alteon Common Stock for determination of value herein shall be based on the VWAP (as defined in Section 1.7(j)) of Alteon Common Stock. HaptoGuard shall distribute such shares of Alteon Common Stock to its stockholders on a pro rata basis as part of the Merger Consideration.
	(c) Transfer of Alteon Preferred Stock owned by Genentech and Conversion Thereof. Genentech will transfer to Alteon the shares of Alteon Preferred Stock held by Genentech which are not either converted pursuant to Section 1.7(a) or transferred pursuant to Section 1.7(b). Pursuant to this

A-4

---

Table of Contents

	Agreement, such shares of Alteon Preferred Stock shall cease to be outstanding, be canceled and retired without payment of any consideration therefor other than pursuant to the terms herein and cease to exist.
	(d) Conversion of HaptoGuard Securities. Every share of HaptoGuard Common Stock (the “Shares”) issued and outstanding immediately prior to the Effective Time (other than the Dissenting Shares as defined in Section 1.14) shall be converted, into the right to receive a number of shares of Alteon Common Stock equal to the Exchange Ratio of validly issued, fully paid and nonassessable Alteon Common Stock (the “Merger Consideration”). The Exchange Ratio is equal to the quotient of (i) the sum of (x) a number of shares of Alteon Common Stock to be issued by Alteon to HaptoGuard stockholders at the Effective Time with a value of $5.3 million, plus (y) the number of shares of Alteon Common Stock to be issued pursuant to Section 1.7(b) at the Effective Time, the market value of (x) and (y) to be equal to $8,800,000, the price per share pursuant to this section to be based on the VWAP of Alteon Common Stock, divided by (ii) the sum of (x) the number of outstanding Shares at the Effective Time, and (y) the number of Share Equivalents (as defined in Section 6.5).
	(e) Cancellation. Each Share held in the treasury of HaptoGuard and each Share owned by Alteon or by any direct or indirect wholly owned subsidiary of HaptoGuard or Alteon immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding, be canceled and retired without payment of any consideration therefor other than pursuant to the terms herein and cease to exist.
	(f) Stock Options. All options to purchase HaptoGuard Common Stock then outstanding under HaptoGuard’s 2005 Employee, Director and Consultant Stock Plan (the “HaptoGuard Stock Option Plan”) shall be assumed by Alteon in accordance with Section 6.5.
	(g) Warrants. All warrants to purchase HaptoGuard Common Stock (the “HaptoGuard Warrants”) then outstanding shall be canceled and exchanged for the right to receive the consideration in accordance with Section 6.5.
	(h) Adjustments. The Exchange Ratio shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities exercisable for or convertible into Alteon Common Stock or Shares), reorganization, recapitalization or other like change with respect to Alteon Common Stock or Shares occurring after the date hereof and prior to the Effective Time.
	(i) Fractional Shares. No fraction of a share of Alteon Common Stock will be issued, but in lieu thereof each holder of HaptoGuard Common Stock who would otherwise be entitled to a fraction of a share of Alteon Common Stock (after aggregating all fractional shares of Alteon Common Stock to be received by such holder) shall receive from Alteon an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of (i) such fraction, multiplied by (ii) the applicable price per share calculated in accordance with Section 1.7(d).
	(j) Volume Weighted Average Price. Volume Weighted Average Price (“VWAP”) means the volume-weighted average of the per share selling prices on the American Stock Exchange (“AMEX”) for the twenty (20) trading days immediately preceding the signing of this Agreement, with a trading day meaning any day on which AMEX is open and available for at least five (5) hours for the trading of securities. In the event that the VWAP is lower than $.18, then the VWAP shall be $.18. In the event that the VWAP is higher than $.28, then the VWAP shall be $.28.

(i) Pay Genentech royalty payments of four percent (4%) of Net Sales (as defined herein) of alagebrium (“Products”). “Net Sales” means the gross amount billed by the Resulting Corporation or its affiliates to third parties worldwide for sales of Products, less (A) allowances for normal and customary trade, quantity and cash discounts actually taken, (B) transportation, insurance and postage charges, if

A-5

---

Table of Contents

	prepaid by the Resulting Corporation or any affiliate or sublicensee of the Resulting Corporation and billed on any such party’s invoices as a separate item, (C) credits, rebates, returns (including, but not limited to, wholesaler and retailer returns), to the extent actually allowed, and (D) sales, use and other taxes similarly incurred to the extent stated on the invoice as a separate item, such royalty payments to extend for a ten year period commencing on the date of the first commercial sale of any Product (the “Royalty Period”); and
	(ii) Pay Genentech a one time milestone payment of $1,000,000 upon the dosing with the Product of the first patient in a pivotal trial for the Product’s first indication; and
	(iii) Pay Genentech a one time milestone payment of $4,000,000 upon the filing of the first New Drug Application with respect to the Product on the first indication; and
	(iv) Use commercially reasonably efforts, consistent with efforts used to develop and commercialize products of like potential, to develop and commercialize the Product; and
	(v) In the event a Product is sold in combination with one or more other active pharmaceutical ingredients (as used in this definition of Net Sales, a “Combination”), then Net Sales for that Product shall be calculated by multiplying the Net Sales of such Combination by the fraction A/(A+B), where A is the gross selling price of the Product sold separately and B is the gross selling price of the other active ingredient sold separately. In the event that the other active ingredient is not sold separately, then Net Sales for that Product shall be calculated by multiplying the amount of Net Sales of the Combination Product by the fraction A/C, where A is the invoice price of the Product, if sold separately, and C is the invoice price of the Combination Product. In the event that no such separate sales are made, Net Sales for royalty determination shall be determined by the Resulting Corporation and Genentech in good faith.

A-6

---

Table of Contents

A-7

---

Table of Contents

A-8

---

Table of Contents

A-9

---

Table of Contents

A-10

---

Table of Contents

A-11

---

Table of Contents

	(a) HaptoGuard: (i) has paid all HaptoGuard Taxes it is obligated to pay as reflected on the Tax Returns or otherwise; and (ii) has withheld all federal, state, local and foreign HaptoGuard Taxes required to be withheld with respect to its employees or otherwise.
	(b) There is no HaptoGuard Tax deficiency outstanding, proposed or assessed against HaptoGuard that is not accurately reflected as a liability on the HaptoGuard Balance Sheet, nor has HaptoGuard executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any HaptoGuard Tax.
	(c) HaptoGuard does not have any liability for unpaid HaptoGuard Taxes that has not been properly accrued for under GAAP and reserved for on the HaptoGuard Balance Sheet, whether asserted or unasserted, contingent or otherwise.
	(d) HaptoGuard is not a party to any agreement, plan, arrangement or other contract covering any employee or independent contractor or former employee or independent contractor that, individually or collectively with any other such contracts, would reasonably be expected to give rise directly or indirectly to the payment of any amount that would not be deductible pursuant to Section 280G or Section 162(m) of the Code (or any comparable provision of state or foreign tax laws).
	(e) HaptoGuard is not, nor has ever been, a party to or bound by any tax indemnity agreement, tax sharing agreement, tax allocation agreement or similar contract or agreement.

A-12

---

Table of Contents

A-13

---

Table of Contents

A-14

---

Table of Contents

A-15

---

Table of Contents

A-16

---

Table of Contents

	(a) any bonus, deferred compensation, incentive compensation, pension, profit-sharing or retirement plans, or any other employee benefit plans or arrangements;
	(b) any employment or consulting agreement, contract or commitment with any officer or director level employee, not terminable by HaptoGuard on thirty (30) days notice without liability, except to the extent general principles of wrongful termination law may limit HaptoGuard’s ability to terminate employees at will;
	(c) any agreement or plan, including, without limitation, any stock option plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement;
	(d) any agreement of indemnification or guaranty not entered into in the ordinary course of business other than indemnification agreements between HaptoGuard and any of its officers or directors;
	(e) any agreement, contract or commitment containing any covenant limiting the freedom of HaptoGuard to engage in any line of business or compete with any person;
	(f) any agreement, contract or commitment relating to capital expenditures and involving future obligations in excess of $50,000 and not cancelable without penalty;
	(g) any agreement, contract or commitment currently in force relating to the disposition or acquisition of assets not in the ordinary course of business or any ownership interest in any corporation, partnership, joint venture or other business enterprise;
	(h) any mortgages, indentures, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit in excess of $50,000;
	(i) any joint marketing or development agreement;
	(j) any distribution agreement (identifying any that contain exclusivity provisions); or
	(k) any other agreement, contract or commitment (excluding real and personal property leases) which involve payment by HaptoGuard under any such agreement, contract or commitment of $100,000 or more in the aggregate and is not cancelable without penalty within thirty (30) days.

A-17

---

Table of Contents

	(a) As to HaptoGuard, the lease or sublease is legal, valid, binding, enforceable and in full force and effect, except as enforceability may be limited by bankruptcy and other similar laws and by general principles of equity;
	(b) HaptoGuard is not in breach or violation of, or default under, any such lease or sublease, and no event has occurred, is pending or, to the knowledge of HaptoGuard, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by HaptoGuard or, to the knowledge of HaptoGuard, any other party under such lease or sublease, except as would not reasonably be expected to have a Material Adverse Effect;

A-18

---

Table of Contents

	(c) HaptoGuard has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in any lease or sublease except in the ordinary course of business; and
	(d) there are no liens, easements, covenants or other restrictions applicable to the real property subject to such lease, except for Permitted Liens.

A-19

---

Table of Contents

A-20

---

Table of Contents

A-21

---

Table of Contents

A-22

---

Table of Contents

	(a) Alteon: (i) has paid all Alteon Taxes it is obligated to pay as reflected on such Tax Returns or otherwise; and (ii) has withheld all federal, state, local and foreign Alteon Taxes required to be withheld with respect to its employees or otherwise.
	(b) There is no Alteon Tax deficiency outstanding, proposed or assessed against Alteon that is not accurately reflected as a liability on the Alteon Balance Sheet, nor has Alteon executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Alteon Tax.
	(c) Alteon does not have any liability for unpaid Alteon Taxes that has not been properly accrued for under GAAP and reserved for on the Alteon Balance Sheet, whether asserted or unasserted, contingent or otherwise.
	(d) Alteon is not a party to any agreement, plan, arrangement or other contract covering any employee or independent contractor or former employee or independent contractor that, individually or collectively with any other such contracts, would reasonably be expected to give rise directly or indirectly to the payment of any amount that would not be deductible pursuant to Section 280G or Section 162(m) of the Code (or any comparable provision of state or foreign tax laws).
	(e) Alteon is not, nor has ever been, a party to or bound by any tax indemnity agreement, tax sharing agreement, tax allocation agreement or similar contract or agreement.

A-23

---

Table of Contents

A-24

---

Table of Contents

A-25

---

Table of Contents

A-26

---

Table of Contents

A-27

---

Table of Contents

	(a) amend or otherwise change its Certificate of Incorporation or Bylaws, or otherwise alter its corporate structure through merger, liquidation, reorganization or otherwise;

A-28

---

Table of Contents

	(b) sell, pledge, dispose of or encumber any assets except in the ordinary course of business;
	(c) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, without limitation, any phantom interest) except for the issuance of shares of common stock issuable pursuant to employee stock options under the HaptoGuard Employee Stock Option Plan, or the HaptoGuard Warrants, as the case may be, which options, warrants or rights, as the case may be, are outstanding on the date hereof and except for actions taken by HaptoGuard in furtherance of the merger or the other transactions contemplated hereby, as to which actions HaptoGuard shall first consult with and obtain approval from, Alteon;
	(d) redeem, repurchase or otherwise acquire, directly or indirectly, any shares of capital stock of HaptoGuard except for transactions in furtherance of the merger or the other transactions contemplated hereby, as to which actions HaptoGuard shall first consult with and obtain approval from, Alteon and except for repurchases from employees and consultants of HaptoGuard under existing agreements;
	(e) accelerate, amend or change the period (or permit any acceleration, amendment or change) of exercisability of options granted under the HaptoGuard Stock Option Plan or the HaptoGuard Warrants or authorize cash payments in exchange for any options granted under any of such plans, except as contemplated by this Agreement;
	(f) (i) declare, set aside, make or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock, except that a wholly owned subsidiary may declare and pay a dividend to its parent, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (iii) amend the terms of, repurchase, redeem or otherwise acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire, any of its securities, or propose to do any of the foregoing;
	(g) sell, transfer, license, sublicense or otherwise dispose of any HaptoGuard IP Rights, or amend or modify any existing agreements with respect to any HaptoGuard IP Rights;
	(h) (i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans or advances in excess of $100,000 except in the ordinary course of business consistent with past practice; (iii) enter into or amend any material contract or agreement other than in the ordinary course of business; (iv) authorize any capital expenditures or purchase of fixed assets which are, in the aggregate, in excess of $100,000, taken as a whole (except pursuant to a capital expenditure budget approved in writing by both parties); or (v) enter into or amend any contract, agreement, commitment or arrangement to effect any of the matters prohibited by this Section 5.1(h);
	(i) increase the compensation payable or to become payable to its officers or employees, except for increases in salary or wages of employees who are not officers in accordance with past practices, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any director, officer (except for officers who are terminated on an involuntary basis) or other employee, or establish, adopt, enter into or amend any employee benefit plan;
	(j) take any action, other than as required by GAAP, to change accounting policies or procedures;
	(k) make any material tax election inconsistent with past practices or settle or compromise any material federal, state, local or foreign tax liability or agree to an extension of a statute of limitations for any assessment of any tax;
	(l) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary

A-29

---

Table of Contents

	course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements of HaptoGuard, or incurred in the ordinary course of business and consistent with past practice;
	(m) enter into any material partnership arrangements, joint development agreements or strategic alliances; or
	(n) take, or agree in writing or otherwise take, any of the actions described in Sections 5.1(a) through (m) above.

A-30

---

Table of Contents

	(a) amend or otherwise change its Certificate of Incorporation or Bylaws, or otherwise alter its corporate structure through merger, liquidation, reorganization or otherwise;
	(b) sell, pledge, dispose of or encumber any assets (except in the ordinary course of business);
	(c) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, without limitation, any phantom interest) (except for the issuance of options or shares of common stock issuable pursuant to the exercise of employee stock options under the Alteon Employee Stock Option Plans or pursuant to the Alteon Employee Stock Purchase Plan, provided that the Alteon Board of Directors may grant rights under the Alteon Employee Stock Purchase Plan for subsequent offering periods consistent with past practice);
	(d) (i) declare, set aside, make or pay any dividend or other distribution (whether in case, stock or property or any combination thereof) in respect of any of its capital stock, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (iii) amend the terms of, repurchase, redeem or otherwise acquire, any of its securities, or propose to do any of the foregoing;
	(e) redeem, repurchase or otherwise acquire, directly or indirectly, any shares of capital stock of Alteon (except for transactions in furtherance of the merger or the other transactions contemplated hereby, as to which actions Alteon shall first consult with and obtain approval from, HaptoGuard);
	(f) accelerate, amend or change the period (or permit any acceleration, amendment or change) of exercisability of options granted under the Alteon Stock Option Plan or authorize cash payments in exchange for any options granted under any of such plans, except as contemplated by this Agreement;
	(g) sell, transfer, license, sublicense or otherwise dispose of any Alteon IP Rights, or amend or modify any existing agreements with respect to any Alteon IP Rights;
	(h) (i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans or advances in excess of $100,000 except in the ordinary course of business consistent with past practice; (iii) enter into or amend any material contract or agreement other than in the ordinary course of business; (iv) authorize any capital expenditures or purchase of fixed assets which are, in the aggregate, in excess of $100,000, taken as a whole (except pursuant to a capital expenditure budget approved in writing by both parties); or (v) enter into or amend any contract, agreement, commitment or arrangement to effect any of the matters prohibited by this Section 5.3(h);
	(i) increase the compensation payable or to become payable to its officers or employees, except for increases in salary or wages of employees who are not officers in accordance with past practices, or grant any severance or termination pay to, or enter into any employment or severance agreement with, any director, officer (except for officers who are terminated on an involuntary basis) or other employee, or establish, adopt, enter into or amend any employee benefit plan;
	(j) take any action, other than as required by GAAP, to change accounting policies or procedures;
	(k) make any material tax election inconsistent with past practices or settle or compromise any material federal, state, local or foreign tax liability or agree to an extension of a statute of limitations for any assessment of any tax;
	(l) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary

A-31

---

Table of Contents

	course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements of HaptoGuard, or incurred in the ordinary course of business and consistent with past practice;
	(m) enter into any material partnership arrangements, joint development agreements or strategic alliances; or
	(n) take, or agree in writing or otherwise to take, any of the actions described in Sections 5.3(a) through (m) above.

A-32

---

Table of Contents

A-33

---

Table of Contents

A-34

---

Table of Contents

A-35

---

Table of Contents

A-36

---

Table of Contents

	(i) Alteon shall be able to rely conclusively on the instructions and decisions of the Stockholders’ Representative as to any actions required or permitted to be taken by the HaptoGuard stockholders or the Stockholders’ Representative hereunder, and no party hereunder shall have any cause of action against Alteon for any action taken by Alteon in reliance upon the instructions or decisions of the Stockholders’ Representative;
	(ii) all actions, decisions and instructions of the Stockholders’ Representative shall be conclusive and binding upon all of the HaptoGuard stockholders and no HaptoGuard stockholder shall have any cause of action against the Stockholders’ Representative for any action taken, decision made or instruction given by the Stockholders’ Representative under this Agreement, except for fraud or willful breach of this Agreement by the Stockholders’ Representative; and
	(iii) the provisions of this Section 6.17 are independent and severable, shall constitute an irrevocable power of attorney, coupled with an interest and surviving death, dissolution or liquidation, to the extent permitted by law, granted by HaptoGuard and the HaptoGuard stockholders to the Stockholders’ Representative and shall be binding upon the executors, heirs, legal representatives and successors of each HaptoGuard stockholder.

A-37

---

Table of Contents

	(a) Governmental Approvals. All approvals of, declarations or filings, with any Governmental Authority necessary for the consummation of the Merger, if any, shall have been obtained or made, with “Governmental Authority” defined as any governmental agency, authority, department, commission, board, bureau, court or arbitration tribunal of the United States, any domestic state, locality or any foreign country, and any political subdivision or agency thereof, and includes any authority having governmental or quasi-governmental powers, including any administrative agency or commission, and any Self-Regulatory Organization, as defined in Section 3(a)(26) of the Exchange Act;
	(b) Stockholder Approval. This Agreement shall have been approved and adopted, and the Merger shall have been approved and adopted, by the requisite vote, under applicable law, by the stockholders of both HaptoGuard and Alteon; and the issuance of shares of Alteon Common Stock by virtue of the Merger shall have been approved by the requisite vote under the AMEX rules by the stockholders of Alteon;
	(c) No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order (whether temporary, preliminary or permanent) issued by any court of competent jurisdiction or other legal restraint or prohibition (an “Injunction”) preventing the consummation of the Merger on substantially identical terms and conferring upon Alteon substantially all the rights and benefits as contemplated herein, shall be in effect, nor shall any proceeding brought by any administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, seeking any of the foregoing be pending; and there shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Merger, which makes the

A-38

---

Table of Contents

	consummation of the Merger on substantially identical terms and conferring upon Alteon substantially all the rights and benefits as contemplated herein, illegal;

	(a) Representations and Warranties. The representations and warranties of HaptoGuard contained in this Agreement (together with the HaptoGuard Disclosure Schedule) shall be true and correct in all respects on and as of the Effective Time, with the same force and effect as if made on and as of the Effective Time, except for those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date); and Alteon shall have received a certificate to such effect signed by the President and Chief Financial Officer of HaptoGuard;
	(b) Agreements and Covenants. HaptoGuard shall have performed or complied with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time, and Alteon shall have received a certificate to such effect signed by the President and Chief Financial Officer of HaptoGuard;
	(c) Consents Obtained. Alteon shall have received evidence, in form and substance satisfactory to it, that all material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings to be made, by HaptoGuard, as listed on Schedule 6 hereto, shall have been obtained and made by HaptoGuard;
	(d) Governmental Actions. There shall not have been instituted, pending or threatened any action or proceeding (or any investigation or other inquiry that might result in such an action or proceeding) by any governmental authority or administrative agency before any governmental authority, administrative agency or court of competent jurisdiction, nor shall there be in effect any judgment, decree or order of any governmental authority, administrative agency or court of competent jurisdiction, in either case, seeking to prohibit or limit Alteon from exercising all material rights and privileges pertaining to its ownership of the Surviving Corporation or the ownership or operation by Alteon of all or a material portion of the business or assets of Alteon, or seeking to compel Alteon or any of its subsidiaries to dispose of or hold separate all or any material portion of the business or assets of Alteon as a result of the Merger or the transactions contemplated by this Agreement;
	(e) Lock-Up Agreements. Alteon shall have received from each person who is identified in Section 6.6 of the HaptoGuard Disclosure Schedule as a HaptoGuard Lock-Up Person, a Lock-Up Agreement, and such agreement shall be in full force and effect;
	(f) Material Agreements. HaptoGuard shall have received all consents and approvals to the Merger, if any, under the Exclusive License and Supply Agreement dated September 28, 2004, as amended, between Oxis International and HaptoGuard, Inc. and such agreement shall be in full force and effect and duly enforceable with no defaults or breaches existing or asserted, and no basis for any default or breach existing, thereunder, as determined by Alteon in its sole reasonable discretion.
	(g) Other Deliveries. Alteon shall have received such other certificates and instruments (including without limitation certificates of good standing of HaptoGuard in its jurisdiction of organization and the various foreign jurisdictions in which it is qualified, certified charter documents, certificates as to the incumbency of officers and the adoption of authorizing resolutions) as it shall reasonably request in connection with the Closing.
	(h) Voting Agreement. Noah Berkowitz and Noah Berkowitz as trustee for the NB Family Trust shall have entered into Voting Agreements, substantially in the form of Exhibit A hereto, and such agreement shall be in full force and effect.

A-39

---

Table of Contents

	(a) Representations and Warranties. The representations and warranties of Alteon contained in this Agreement (together with the Alteon Disclosure Schedule) shall be true and correct in all respects on and as of the Effective Time, with the same force and effect as if made on and as of the Effective Time, except for those representations and warranties which address matters only as of a particular date (which shall remain true and correct as of such date); and HaptoGuard shall have received a certificate to such effect signed by the President and Chief Financial Officer of Alteon;
	(b) Agreements and Covenants. Alteon shall have performed or complied with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time, except to the extent any such non-performance or non-compliance would not have a Material Adverse Effect on Alteon, and HaptoGuard shall have received a certificate to such effect signed by the President and Chief Financial Officer of Alteon;
	(c) Consents Obtained. HaptoGuard shall have received evidence, in form and substance satisfactory to it, that all material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by Alteon for the authorization, execution and delivery of this Agreement and the consummation by them of the transactions contemplated hereby shall have been obtained and made by Alteon;
	(d) Governmental Actions. There shall not have been instituted, pending or threatened any action or proceeding (or any investigation or other inquiry that might result in such an action or proceeding) by any governmental authority or administrative agency before any governmental authority, administrative agency or court of competent jurisdiction, nor shall there be in effect any judgment. decree or order of any governmental authority, administrative agency or court of competent jurisdiction, in either case, seeking to prohibit or limit HaptoGuard from exercising all material rights and privileges pertaining to its ownership of the Surviving Corporation or the ownership or operation by HaptoGuard of all or a material portion of the business or assets of HaptoGuard, or seeking to compel HaptoGuard to dispose of or hold separate all or any material portion of the business or assets of HaptoGuard, as a result of the Merger or the transactions contemplated by this Agreement;
	(e) Other Deliveries. HaptoGuard shall have received such other certificates and instruments (including without limitation certificates of good standing of Alteon in its jurisdiction of organization and the various foreign jurisdictions in which it is qualified, certified charter documents, certificates as to the incumbency of officers and the adoption of authorizing resolutions) as it shall reasonably request in connection with the Closing.
	(f) Options. All options to purchase HaptoGuard Common Stock then outstanding under the HaptoGuard Stock Option Plan shall be assumed by Alteon in accordance with Section 6.5.
	(g) Employment Agreement. Alteon shall have assumed HaptoGuard’s obligations under HaptoGuard’s employment agreement with Noah Berkowitz dated March 1, 2005.

A-40

---

Table of Contents

	(a) by mutual written consent duly authorized by the Boards of Directors of Alteon and HaptoGuard; or

A-41

---

Table of Contents

	(b) by either Alteon or HaptoGuard if the Merger shall not have been consummated by August 30, 2006 (provided that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of the Merger to occur on or before such date); or
	(c) by any of Alteon, HaptoGuard or Genentech if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued a non-appealable final order, decree or ruling or taken any other action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger; or
	(d) by either Alteon or HaptoGuard, if the required approvals of the stockholders of Alteon or HaptoGuard contemplated by this Agreement shall not have been obtained by reason of the failure to obtain the requisite vote upon a vote taken at a meeting of stockholders convened therefor or at any adjournment thereof (provided that the right to terminate this Agreement under this Section 8.1(d) shall not be available to any party where the failure to obtain stockholder approval of such party shall have been caused by the action or failure to act of such party in breach of this Agreement); or
	(e) by Alteon or HaptoGuard, upon a breach of any covenant or agreement on the part of HaptoGuard or Alteon, respectively, set forth in this Agreement, in either case, such that the conditions set forth in Section 7.2(b) or Section 7.3(b), would not be satisfied (a “Terminating Breach”), provided that, if such Terminating Breach is curable prior to the expiration of ten (10) days from its occurrence by Alteon or HaptoGuard, as the case may be, through the exercise of its commercially reasonable efforts and for so long as Alteon or HaptoGuard, as the case may be, continues to exercise such commercially reasonable efforts, neither HaptoGuard nor Alteon, respectively, may terminate this Agreement under this Section 8.1(e) unless such 10-day period expires without such Terminating Breach having been cured; or
	(f) by either Alteon or HaptoGuard, if either is not in material breach of any of its obligations under this Agreement, if any representation or warranty on the part of the other party set forth in this Agreement or Genentech proves to have been untrue prior to the Effective Time, if such failure to be true would reasonably be likely to have a Material Adverse Effect and such representation or warranty is not made true within ten (10) business days of the date such representation or warranty became untrue.
	(g) by Genentech if it is not in material breach of any of its obligations under this Agreement, if any representation or warranty on the part of Alteon or HaptoGuard set forth in this Agreement proves to have been untrue prior to the Effective Time, if such failure to be true would reasonably be likely to have a Material Adverse Effect with respect to either Alteon or HaptoGuard and such representation or warranty is not made true within ten (10) business days of the date such representation or warranty became untrue; or
	(h) by Genentech upon a breach of any covenant or agreement on the part of HaptoGuard or Alteon set forth in this Agreement, in either case, such that any of the conditions set forth in Section 7.4 would not be satisfied, provided that, if such Terminating Breach is curable prior to the expiration of ten (10) days from its occurrence by Alteon or HaptoGuard, as the case may be, through the exercise of its commercially reasonable efforts and for so long as Alteon or HaptoGuard, as the case may be, continues to exercise such commercially reasonable efforts, Genentech may not terminate this Agreement under this Section 8.1(h) unless such 10-day period expires without such breach having been cured.

A-42

---

Table of Contents

	(a) “Event of Indemnification” shall mean the untruth, inaccuracy or breach of any representation or warranty by HaptoGuard or by Alteon contained in Article III hereof, including any Third Party Claims (as defined below) based on the foregoing or willful breach by Alteon of any covenant contained in Sections 1.8 or 8.3(e).
	(b) “Indemnified Persons” shall mean and include (i) with respect to an Event of Indemnification arising under Article II, Alteon and the Surviving Corporation and their respective Affiliates, successors and assigns, and the respective officers and directors of each of the foregoing (the “Stockholder Indemnified Persons”), (ii) with respect to an Event of Indemnification arising under Article III, each of the Stockholders and their respective Affiliates, successors and assigns, and the respective officers and directors of each of the foregoing (the “Alteon Indemnified Persons”), and (iii) with respect to an Event of Indemnification arising under Sections 1.8 or 8.3(e), Genentech and each of its Affiliates, successors and assigns, and the respective officers and directors of each of the foregoing.
	(c) “Indemnifying Persons” shall mean and include (i) with respect to an Event of Indemnification arising under Article II, each of the Stockholders and its or his respective successors, assigns, heirs and

A-43

---

Table of Contents

	legal representatives and estate (the “Stockholder Indemnifying Persons”) and (ii) with respect to an Event of Indemnification arising under Article III and Sections 1.8 and 8.3(e), the Surviving Corporation and its successors and assigns (the “Alteon Indemnifying Persons”).
	(d) “Losses” shall mean any and all losses, claims, shortages, damages, liabilities, expenses (including reasonable attorneys’ and accountants’ fees), assessments, HaptoGuard Taxes or Alteon Taxes, as applicable (including interest or penalties thereon), sustained, suffered or incurred by any Indemnified Person arising from or in connection with any such matter that is the subject of indemnification under Section 9.2 hereof.

	(a) No indemnification shall be payable pursuant to Section 9.2 to any Indemnified Person other than Genentech unless and until the amount of all Losses incurred pursuant to Article II or Article III, as the case may be, exceed $100,000 in the aggregate, whereupon indemnification pursuant to such Event of Indemnification shall be payable for such claims without any deduction.
	(b) The aggregate liability of the Indemnifying Persons for indemnification pursuant to Section 9.2 shall not exceed 10% of the aggregate Merger Consideration, other than in the case of an Event of Indemnification pursuant to Section 1.8, which shall not be limited.
	(c) No indemnification shall be payable pursuant to Section 9.2 to any Indemnified Person other than Genentech for claims asserted other than as set forth in Section 9.4.
	(d) All indemnification claims by Alteon Indemnified Persons may be satisfied, at the option of the Stockholder who is the Indemnifying Person with respect to such claim, by either (i) cash or (ii) surrender of shares of Alteon Common Stock, valued at the fair market value of such shares at such time, based on the average closing price of a share of Alteon Common Stock on AMEX over the 20 trading days ending on the trading day prior to the transfer to Alteon Indemnified Persons. Except in the case of Losses arising from fraud or intentional misrepresentation, the Alteon Indemnified Persons’ sole recourse for claims for Losses shall be to the shares of Alteon Common Stock received by the Stockholder Indemnifying Persons in the Merger unless a Stockholder, in its sole discretion, shall otherwise agree in writing to make payment of its indemnification liability by other means.
	(e) No Stockholder (nor any of such Stockholder’s successors, assigns, heirs and legal representatives or estates) shall be liable for the fraud or willful, intentional or reckless misrepresentation or willful omission of a material fact by another Stockholder.
	(f) A Stockholder Indemnifying Person’s indemnification obligations for Losses shall not be in excess of the value of the Merger Consideration received by such Stockholder, valued as set forth in Section 9.3(d). Other than with respect to an Event of Indemnification arising from a breach of a covenant by Alteon under Section 1.8, the Alteon Indemnifying Persons’ indemnification obligations for Losses shall not be in excess of the value of the Merger Consideration delivered to the Stockholders, valued as set forth in Section 9.3(d).
	(g) Other than with respect to an Event of Indemnification arising from a breach of a covenant by Alteon under Sections 1.8 and 8.3(e), in determining the amount of any indemnity, there shall be taken into account any tax benefit, insurance proceeds or other similar recovery or offset realized, directly or indirectly, by the party to be indemnified.

A-44

---

Table of Contents

	(a) The Indemnified Persons shall promptly give written notice to the applicable Indemnifying Persons and the Stockholder Representative of any Third Party Claim that might give rise to any Loss by the Indemnified Persons, stating the nature and basis of such Third Party Claim, and the amount thereof to the extent known. Such notice shall be accompanied by copies of all relevant documentation with respect to such Third Party Claim, including, without limitation, any summons, complaint or other pleading that may have been served, any written demand or any other document or instrument. Notwithstanding the foregoing, the failure to provide notice as aforesaid to the applicable Indemnifying Persons and the Stockholder Representative will not relieve the Indemnifying Persons from any liability which they may have to the Indemnified Persons under this Agreement or otherwise (unless and only to the extent that such failure directly results in the loss or compromise of any rights or defenses of the Indemnifying Person and they were not otherwise aware of such action or claim).
	(b) The Indemnified Persons shall defend any Third Party Claims with counsel of their own choosing, and shall act reasonably and in accordance with their good faith business judgment in handling such Third Party Claims, provided that no Third Party Claim may be settled without the consent of the Indemnifying Persons. The Stockholder and the Indemnifying Persons, on the one hand, and the Indemnified Persons, on the other hand, shall make available to each other and their counsel and accountants all books and records and information relating to any Third Party Claims, keep each other fully apprised as to the details and progress of all proceedings relating thereto and render to each other such assistance as may be reasonably required to ensure the proper and adequate defense of any and all Third Party Claims.

A-45

---

Table of Contents

	Alteon Inc.
	6 Campus Drive
	Parsippany, NJ 07054
	Attn: President
	With a copy to:
	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
	One Financial Center
	Boston, MA 02111
	Attn: William T. Whelan, Esq.

	HaptoGuard, Inc.
	2050 Center Avenue, Suite 200
	Fort Lee, NJ 07024
	Attn: President

A-46

---

Table of Contents

	With a copy to:
	Torys LLP
	79 Wellington Street W
	Toronto, Ontario M5K 1N2
	Attn.: Cheryl Reicin, Esq.

	Genentech, Inc.
	1 DNA Way
	South San Francisco, CA 94080
	Attn: Stephen G. Juelsgaard and Thomas T. Thomas, II

	(a) “affiliates” means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned person, including, without limitation, any partnership or joint venture in which HaptoGuard or Alteon, as the case may be, (either alone, or through or together with any other subsidiary) has, directly or indirectly, an interest of 10 percent or more;
	(b) “business day” means any day other than a day on which banks in Boston are required or authorized to be closed;
	(c) “person” means a person, corporation, partnership, association, trust, unincorporated organization, other entity or group (as defined in Section 13(d)(3) of the Exchange Act); and
	(d) “subsidiary” or “subsidiaries” of the Surviving Corporation, Alteon or any other person means any corporation, partnership, joint venture or other legal entity of which the Surviving Corporation, Alteon or such other person, as the case may be (either alone or through or together with any other subsidiary), owns, directly or indirectly, more than 50% 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 or other legal entity.

A-47

---

Table of Contents

A-48

---

Table of Contents

A-49

---

Table of Contents

	ALTEON INC.

	By:

	Kenneth I. Moch
	Its: President and Chief Executive Officer
	HAPTOGUARD, INC.

	By:

	Noah Berkowitz
	Its: President and Chief Executive Officer
	GENENTECH, INC.

	By:

	[NAME]
	Its: [TITLE]
	ALTEON MERGER SUB, INC.

	By:

	Kenneth I. Moch
	Its: President

A-50

---

Table of Contents

B-1

---

Table of Contents

B-2

---

Table of Contents

	Alteon Inc.
	6 Campus Drive
	Parsippany, NJ 07054
	Attention: President
	Facsimile No.: (908) 934-8880

	With a copy to:

	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
	One Financial Center
	Boston, MA 02111
	Attention: William T. Whelan, Esq.
	Facsimile No.: (617) 542-2241

	Torys LLP
	79 Wellington Street W
	Toronto, Ontario M5K 1N2
	Attention: Cheryl Reicin, Esq.
	Facsimile No.: (416) 865-7380

B-3

---

Table of Contents

B-4

---

Table of Contents

		ALTEON INC
		By:    Name: Title:
No. of Shares Held Under Option:		STOCKHOLDER
No. of Shares Beneficially
Beneficially Owned:		Name: Stockholder Address:
Acknowledged and Agreed to:
HAPTOGUARD , INC.
By:    President and Chief Executive Officer

B-5

---

Table of Contents

	1. The undersigned has full power to execute and deliver this Lock-up Agreement and to make the representations and warranties herein and to perform its obligations hereunder.
	2. The undersigned has carefully read this letter and the Agreement and discussed its requirements and other applicable limitations upon its ability to sell, transfer or otherwise dispose of Alteon Common Stock, to the extent the undersigned felt necessary, with its counsel or counsel for HaptoGuard.
	3. The undersigned shall not make any sale, transfer or other disposition of Alteon Common Stock in violation of the Act or the Rules and Regulations for such time as the undersigned is an affiliate of HaptoGuard pursuant to Rule 145.
	4. The undersigned has been advised that the Alteon Common Stock to be issued to the undersigned in connection with the Merger will be registered with the Commission under the Act on a “Re-Sale” Registration Statement pursuant to Rule 415 promulgated under the Act. However, the undersigned has also been advised that, since at the time the Merger was submitted for a vote of the Shareholders of HaptoGuard the undersigned may be deemed to have been an affiliate of HaptoGuard and the distribution by the undersigned of any Alteon Common Stock has not yet been registered, and is not exempt, under the Act, the undersigned may not sell, transfer or otherwise dispose of Alteon Common Stock issued to the undersigned in the Merger until such time as (i) such sale, transfer or other disposition has been registered under the Act pursuant to Section 5 below, (ii) such sale, transfer or other disposition is made in conformity with the requirements of Rule 145 promulgated by the Commission under the Act, or (iii) in the opinion of counsel reasonably acceptable to Alteon, such sale, transfer or other disposition is otherwise exempt from registration under the Act; provided, however, that transfers

C-1

---

Table of Contents

	by partnerships made by way of a pro rata distribution to all partners pursuant to the terms of the partnership’s partnership agreement and without the receipt of consideration by the partnership (other than as contemplated by the partnership agreement of such partnership) shall not require an opinion of counsel. As set forth in Section 6.15 of the Agreement and stated above, Alteon has agreed to file with the SEC, within 45 days after the effective time of the Merger, and thereafter to use its commercially reasonable efforts to have declared effective as soon as practicable, a “Re-sale” Registration Statement pursuant to Rule 415 promulgated under the Act covering the resale by former affiliates of HaptoGuard, including the undersigned, of their shares of Alteon Common Stock issued pursuant to the Agreement.
	5. Until such time as the registration statement referenced in Section 4 hereof has been declared effective by the Commission, stop transfer instructions will be given to the transfer agent of Alteon with respect to the shares of Alteon Common Stock the undersigned will receive (provided, however, that such stop transfer instructions will not preclude transfers by partnerships made by way of a pro rata distribution to all partners pursuant to the terms of the partnership’s partnership agreement and without the receipt of consideration by the partnership (other than as contemplated by the partnership agreement of such partnership)), and there will be placed on the certificate representing such stock, or any certificates delivered in substitution therefor, a legend stating in substance:
	“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH RULE 145(D) OR AN EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE ACT.”
	6. Unless the transfer by the undersigned of the shares of Alteon Common Stock is a sale made in conformity with the provisions of Rule 145(d), Rule 144 under the Act or made pursuant to a registration statement under the Act, Alteon reserves the right to put an appropriate legend on the certificates issued to a transferee.
	7. Alteon represents and agrees that for so long and to the extent necessary to permit the undersigned to sell the shares of Alteon Common Stock pursuant to Rule 145 and, to the extent applicable, Rule 144, Alteon shall use its best efforts to file, on a timely basis, all reports and data required to be filed with the SEC by it pursuant to Section 13 of the Securities Exchange Act of 1934 (the “1934 Act”) so long as it is subject to such requirement, and otherwise use its reasonable best efforts to permit such sales pursuant to Rule 145 and Rule 144. Alteon has filed all reports required to be filed with the SEC under Section 13 of the 1934 Act during the preceding 12 months.
	8. The undersigned is the beneficial owner of (i.e., has sole or shared voting or investment power with respect to) all the shares of HaptoGuard Capital Stock and options to purchase HaptoGuard Capital Stock indicated on the last page hereof (the “HaptoGuard Securities”). The undersigned is the lawful and record and beneficial owner of, and has good and marketable title to such HaptoGuard Securities, with the full power and authority to vote such HaptoGuard Securities and transfer and otherwise dispose of such HaptoGuard Securities, and any and all rights and benefits incident to the ownership thereof free and clear of all liens, restrictions or encumbrances of any nature whatsoever; and except as set forth on the last page hereof, there are no agreements or understandings between the undersigned and HaptoGuard and/or any other Stockholder or any other person with respect to the voting, sale or other disposition of such HaptoGuard Securities after such securities become Alteon Common Stock pursuant to the Merger or any other matter relating to the HaptoGuard Securities. Except for the HaptoGuard Securities, the undersigned does not beneficially own any shares of HaptoGuard Common Stock, or any other equity securities of HaptoGuard or any options, warrants or other rights to acquire any equity securities of HaptoGuard.
	9. This Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement.

C-2

---

Table of Contents

	10. This Agreement shall be enforceable by, and shall inure to the benefit of and be binding upon, the parties and their respective successors and assigns. As used herein, the term “successors and assigns” shall mean, where the context so permits, heirs, executors, administrators, trustees and successor trustees and personal and other representatives.
	11. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed therein (without giving effect to the conflicts of law principles thereunder). Any controversy, dispute or claim arising out of or in connection with this Agreement among the parties hereto or the breach, termination or validity hereof, shall be settled by final and binding arbitration to be conducted by an arbitration tribunal in New York, New York pursuant to the rules of the American Arbitration Association. The arbitration tribunal shall consist of three arbitrators. The party initiating arbitration shall nominate one arbitrator in the request for arbitration and the other party shall nominate a second in the answer thereto within thirty (30) days of receipt of the request. The two arbitrators so named will then jointly appoint the third arbitrator. If the answering party fails to nominate its arbitrator within the thirty (30) day period, or if the arbitrators named by the parties fail to agree on the third arbitrator within sixty (60) days, the office of the American Arbitration Association in New York, New York shall make the necessary appointments of such arbitrator(s). The arbitration tribunal shall have no power to award (i) damages inconsistent with this Agreement or (ii) punitive damages or any other damages not measured by the prevailing party’s actual damages, and the parties expressly waive their right to obtain such damages in arbitration or in any other forum. The decision or award of the arbitration tribunal (by a majority determination, or if there is no majority, then by the determination of the third arbitrator, if any) shall be final, and judgment upon such decision or award may be entered in any competent court or application may be made to any competent court for judicial acceptance of such decision or award and an order of enforcement. In the event of any procedural matter not covered by the aforesaid rules, the procedural law of the State of New York shall govern.
	12. Counsel to and accountants for the parties shall be entitled to rely upon this Agreement.

C-3

---

Table of Contents

	Shares beneficially owned by Affiliate:
	shares of HaptoGuard Common Stock
	[                 shares of HaptoGuard                    Preferred Stock]
	shares of HaptoGuard Common Stock issuable upon exercise of outstanding options and warrants
	List of applicable voting agreements:
	Very truly yours,
	(print name of Shareholder above)

	By:

	Name:

	Title:	(if applicable)

Accepted this     day of
, 2006, by
ALTEON INC.

By:

Name:
Title:

C-4

---

Table of Contents

	1. The following sections of the Corrected Certificate of Designations of Series G Preferred Stock of Alteon Inc. are amended as follows:

	a. Section 5(a) is amended by deleting the phrase “at least seventy (70) days” in the first sentence thereof.
	b. Section 5(c) is amended by deleting the phrase “at least seventy (70) days prior to the intended date of the conversion” in the first sentence thereof. In addition, the following sentence shall be added to Section 5(c) following the last sentence of Section 5(c): “Notwithstanding anything herein to the contrary, no Conversion Notice shall be required for any conversion of the Series G Preferred Stock if such conversion is made in accordance with that certain Agreement and Plan of Merger by and among the Corporation, Alteon Merger Sub, Inc., HaptoGuard, Inc. and Genentech, Inc. dated as of April      , 2006, as such agreement may be amended from time to time (the “Merger Agreement”). Such conversion shall be deemed effective for all purposes hereof and of the Merger Agreement upon the Effective Time (as defined in the Merger Agreement).”
	c. Section 5(d) is amended by adding the following:

	“(C) The Board of Directors of the Corporation or any officer designated by the Board of Directors of the Corporation may waive the provisions of this Section 5(d).”

	d. Section 5(e) is amended by adding the following at the end thereof:

	“The Board of Directors of the Corporation or any officer designated by the Board of Directors of the Corporation may waive the provisions of this Section 5(e) for any one transaction or for any series of transactions.”

	2. The foregoing amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

	ALTEON INC.

	By:

D-1

---

Table of Contents

	1. The Corrected Certificate of Designation of Series H Preferred Stock of Alteon Inc. is hereby amended as follows:

	a. Section 5(a) is amended by deleting the phrase “at least seventy (70) days prior” in the first sentence thereof.
	b. Section 5(c) is amended by deleting the phrase “at least seventy (70) days prior to the intended date of conversion” in the first sentence thereof. In addition, the following sentence shall be added to Section 5(c) following the last sentence of Section 5(c): “Notwithstanding anything herein to the contrary, no Conversion Notice or notice of transfer shall be required for any conversion or transfer of the Series H Preferred Stock if such conversion or transfer is made in accordance with that certain Agreement and Plan of Merger by and among the Corporation, Alteon Merger Sub, Inc., HaptoGuard, Inc. and Genentech, Inc. dated as of April      , 2006, as such agreement may be amended from time to time (the “Merger Agreement”). Such conversion or transfer shall be deemed effective for all purposes hereof and of the Merger Agreement upon the Effective Time (as defined in the Merger Agreement).”
	c. Section 5(d) is amended by adding the following:

	“(C) The Board of Directors of the Corporation or any officer designated by the Board of Directors of the Corporation may waive the provisions of this Section 5(d).”

	d. Section 5(e) is amended by adding the following at the end thereof:

	“The Board of Directors of the Corporation or any officer designated by the Board of Directors of the Corporation may waive the provisions of this Section 5(e).”

	2. The foregoing amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

	ALTEON INC.

	By:

E-1

---

Table of Contents

	(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title.
	(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

	a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
	b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders;
	c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or
	d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

	(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

F-1

---

Table of Contents

	(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
	(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

F-2

---

Table of Contents

F-3

---

Table of Contents

F-4

---

Table of Contents

G-1

---

Table of Contents

			March 31,				December 31,
			2006				2005
			(Unaudited)				(Note 1)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	2,805			$	101,090
	Prepaid expenses			1,444				6,043
Total Current Assets				4,249				107,133
PROPERTY AND EQUIPMENT, Net				4,769				5,076
OTHER ASSETS				24,046				2,490
TOTAL ASSETS			$	33,064			$	114,699
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
CURRENT LIABILITIES:
	Accounts payable and accrued expenses		$	188,637			$	113,411
	Due to related party			54,000				54,000
	Deposits for common stock purchased			—				206,618
TOTAL LIABILITIES				242,637				374,029
STOCKHOLDERS’ DEFICIENCY:
	Common Stock, $0.01 par value, 100,000 shares authorized, and 10,465 and 9,669 shares issued and outstanding, as of March 31, 2006 and December 31, 2005, respectively			105				96
	Additional paid-in capital			2,909,452				2,196,180
	Unearned compensation			(23,845	)			(30,348	)
	Accumulated deficit during development stage			(3,095,285	)			(2,425,258	)
TOTAL STOCKHOLDERS’ DEFICIENCY				(209,573	)			(259,330	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY			$	33,064			$	114,699

G-2

---

Table of Contents

				Three Months Ended
				March 31,								Cumulative from
												Inception (July 19,
				2006				2005				2004)
INCOME:
	Interest income			$	1,774			$	3,006			$	14,302
		Total income			1,774				3,006				14,302
EXPENSES:
	Research and development				(491,824	)			(375,458	)			2,010,406
	General and administrative				(179,977	)			(306,870	)			1,099,181
		Total expenses			(671,801	)			(682,328	)			3,109,587
NET LOSS				$	(670,027	)		$	(679,322	)		$	3,095,285

G-3

---

Table of Contents

			Common Stock								Additional												Total
											Paid-In				Unearned				Accumulated				Stockholders’
			Shares				Amount				Capital				Compensation				Deficit				Deficiency
BALANCE, December 31, 2005				9,669			$	96			$	2,196,180			$	(30,348	)		$	(2,425,258	)		$	(259,330	)
	Net loss			—				—				—				—				(670,027	)			(670,027	)
	Amortization of unearned compensation			—				—				—				6,503								6,503
	Value assigned to options issued to consultants			—				—				12,900				—								12,900
	Shares returned and cancelled			(500	)			(5	)			—				—				—				(5	)
	Issuance of common stock			1,282				13				692,806				—								692,820
	Issuance of common stock for accounts payable and accrued expenses			14				—				7,566				—				—				7,566
	Rounding			—				1				—				—				—
BALANCE, March 31, 2006				10,465			$	105			$	2,909,452			$	(23,845	)		$	(3,095,285	)		$	(209,573	)

G-4

---

Table of Contents

				Three Months Ended
				March 31,								Cumulative
												Since Inception
				2006				2005				(July 19, 2004)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(670,027	)		$	(679,322	)		$	(3,095,285	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization			307				145				1,374
		Stock compensation expense			19,403				304,121				343,034
	Changes in operating assets and liabilities:
		Prepaid expenses			4,601				(35,805	)			(1,085	)
		Increase in other assets			—				—				(2,490	)
		Increase in due to related party			—				—				54,000
		Accounts payable and accrued expenses			82,785				37,378				230,608
		NET CASH USED IN OPERATING ACTIVITIES			(562,931	)			(373,483	)			(2,469,844	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Other assets				( —	)			(6,143	)			(6,143	)
	Net cash used in investing activities				( —	)			(6,143	)			(6,143	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net proceeds from sale of common stock				692,820				631,231				2,119,571
	Net proceeds from deposits for common stock				(228,174	)			—				359,221
		NET CASH PROVIDED BY FINANCING ACTIVITIES			464,646				631,231				2,478,792
		NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS			(98,285	)			251,605				2,805
CASH AND CASH EQUIVALENTS, beginning of period					101,090				581,573				—
CASH AND CASH EQUIVALENTS, end of period				$	2,805			$	833,178			$	2,805
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Shares of common stock issued in payment of accrued expenses and accounts payable			$	7,566			$	19,451			$	41,978

G-5

---

Table of Contents

NOTE 1 —	Basis of Presentation

G-6

---

Table of Contents

NOTE 3 —	Summary of Selected Significant Accounting Policies

		Three Months Ended
		March 31, 2005
Net loss, as reported		$	(679,322	)
Less: Total stock-based employee and director compensation expense determined under fair value method			(3,415	)
Pro forma net loss		$	(682,737	)

G-7

---

Table of Contents

NOTE 4 —	Related Party Transactions

NOTE 5 —	Stockholders’ Deficiency

										Weighted
						Weighted				Average
						Average				Remaining				Weighted
						Grant Date				Contractual life				Average
		2005				Fair Value				(yrs)				Exercise Price
Granted			800			$	318.42				9.00			$	572.08
Exercised			—				—				—				—
Outstanding at March 31, 2006			800			$	318.42				9.00			$	572.08
Exercisable at March 31, 2006			366			$	417.16				9.17			$	572.08

G-8

---

Table of Contents

										Weighted
						Weighted				Average
						Average				Remaining				Weighted
						Grant Date				Contractual life				Average
		Number				Fair Value				(yrs)				Exercise Price
Granted			509			$	381.33				1.5			$	572.08
Exercised			—				—				—				—
Outstanding at March 31, 2006			509			$	381.33				1.5			$	572.08
Exercisable at March 31, 2006			509			$	381.33				1.5			$	572.08

NOTE 6 —	Subsequent Events

G-9

---

Table of Contents

G-10

---

Table of Contents

			Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM				G-12
FINANCIAL STATEMENTS
	Balance Sheets			G-13
	Statements of Operations			G-14
	Statement of Changes in Stockholders’ Equity (Deficiency)			G-15
	Statements of Cash Flows			G-16
NOTES TO FINANCIAL STATEMENTS				G-17 to G-23

G-11

---

Table of Contents

G-12

---

Table of Contents

			December 31,
			2005				2004
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	101,090			$	581,573
	Prepaid expenses			6,043				4,357
Total Current Assets				107,133				585,930
PROPERTY AND EQUIPMENT, Net				5,076				—
OTHER ASSETS				2,490				1,395
TOTAL ASSETS			$	114,699			$	587,325
LIABILITIES AND STOCKHOLDERS’ (DEFICIENCY) EQUITY
CURRENT LIABILITIES
	Accrued expenses and accounts payable		$	113,411			$	151,273
	Due to related party			54,000				15,000
	Deposits for common stock purchased			206,618				380,777
TOTAL LIABILITIES				374,029				547,050
STOCKHOLDERS’ (DEFICIENCY) EQUITY
	Common stock, $.01 par value; 100,000 shares authorized; issued and outstanding — 9,669 and 7,866 shares, respectively			96				78
	Additional paid-in capital			2,196,180				810,760
	Unearned compensation			(30,348	)			—
	Deficit accumulated during development state			(2,425,258	)			(770,563	)
TOTAL STOCKHOLDERS’ (DEFICIENCY) EQUITY				(259,330	)			40,275
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIENCY) EQUITY			$	114,699			$	587,325

G-13

---

Table of Contents

						For the				For the
						Period from				Period from
		For the Year				July 19, 2004				July 19, 2004
		Ended				(Inception) to				(Inception) to
		December 31,				December 31,				December 31,
		2005				2004				2005
OPERATING INCOME (EXPENSES)
Research and development expenses		$	(915,409	)		$	(603,173	)		$	(1,518,582	)
General and administrative expenses			(749,171	)			(170,033	)			(919,204	)
Interest income			9,885				2,643				12,528
NET LOSS		$	(1,654,695	)		$	(770,563	)		$	2,425,258	)

G-14

---

Table of Contents

																			Deficit
																			Accumulated				Total
			Common Stock								Additional								During				Stockholders’
											Paid-In				Unearned				Development				Equity
			Shares				Amount				Capital				Compensation				Stage				(Deficiency)
BALANCE — July 19, 2004 (Inception)				—			$	—			$	—			$	—			$	—			$	—
	Issuance of common stock for cash at $0.01 per share			5,000				50				—				—				—				50
	Issuance of common stock for cash at $0.30 per share			1,024				10				297				—				—				307
	Issuance of common stock for cash at $440.00 per share			1,808				18				795,502				—				—				795,520
	Issuance of common stock in payment of accrued expenses and accounts payable at $440.00 per share			34				—				14,961				—				—				14,961
	Net loss			—				—				—				—				(770,563	)			(770,563	)
BALANCE — December 31, 2004				7,866				78				810,760				—				(770,563	)			40,275
	Issuance of common stock for cash at $572.08 per share			1,769				18				1,011,990				—				—				1,012,008
	Issuance of common stock in payment of accrued expenses and accounts payable at $572.08 per share			34				—				19,451				—				—				19,451
	Value assigned to options issued to consultants			—				—				159,882				(54,192	)			—				105,690
	Amortization of unearned compensation			—				—				—				23,844				—				23,844
	Value assigned to warrants issued to consultant			—				—				194,097				—				—				194,097
	Net loss			—				—				—				—			$	(1,654,695	)		$	(1,654,695	)
BALANCE — December 31, 2005				9,669			$	96			$	2,196,180			$	(30,348	)		$	(2,425,258	)		$	(259,330	)

G-15

---

Table of Contents

								For the				For the
								Period from				Period from
				For the Year				July 19, 2004				July 19, 2004
				Ended				(Inception) to				(Inception) to
				December 31,				December 31,				December 31,
				2005				2004				2005
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss			$	(1,654,695	)		$	(770,563	)		$	(2,425,258	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation			1,067				—				1,067
		Stock based compensation			323,631				—				323,631
	Changes in operating assets and liabilities:
		Increase in prepaid expenses			(1,686	)			(4,000	)			(5,686	)
		Increase in other assets			(1,095	)			(1,395	)			(2,490	)
		Increase in due to related party			39,000				15,000				54,000
		(Decrease) increase in accrued expenses and accounts payable			(18,411	)			166,234				147,823
		TOTAL ADJUSTMENTS			342,506				175,839				518,345
		NET CASH USED IN OPERATING ACTIVITIES			(1,312,189	)			(594,724	)			(1,906,913	)
CASH USED IN INVESTING ACTIVITIES
	Purchases of property and equipment				(6,143	)			—				(6,143	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from the sale of common stock				631,231				795,520				1,426,751
	Proceeds from deposits for common stock purchased				206,618				380,777				587,395
		NET CASH PROVIDED BY FINANCING ACTIVITIES			837,849				1,176,297				2,014,146
		(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(480,483	)			581,573				101,090
CASH AND CASH EQUIVALENTS — Beginning					581,573				—				—
CASH AND CASH EQUIVALENTS — Ending				$	101,090			$	581,573			$	101,090
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
	Cash paid during the periods for:
		Interest		$	—			$	—			$	—
		Taxes		$	—			$	—			$	—
	Shares of common stock issued in payment of accrued expenses and accounts payable			$	19,451			$	14,961			$	34,412

G-16

---

Table of Contents

G-17

---

Table of Contents

G-18

---

Table of Contents

	The change in the valuation allowance for deferred tax assets are summarized as follows:

						Period from
						July 19, 2004
		Year Ended				(Inception) to
		December 31,				December 31,
		2005				2004
Beginning balance		$	308,000			$	—
Change in allowance			662,000				308,000
Ending balance		$	970,000			$	308,000

G-19

---

Table of Contents

							For the Period				For the Period
							From				From
			For the Year				July 19, 2004				July 19, 2004
			Ended				(Inception) to				(Inception) to
			December 31,				December 31,				December 31,
			2005				2004				2005
Net loss			$	(1,654,695	)		$	(770,563	)		$	(2,425,258	)
Add: total stock based compensation, as reported				—				—				—
Deduct: total stock based compensation determined under fair value based method for all awards				(23,145	)			—				(23,145	)
	Pro Forma Net Loss		$	(1,677,840	)		$	(770,563	)		$	(2,448,403	)

Risk-free rate			4.02 – 4.15%
Annual rate of dividends			—
Volatility range			0 – 117%
Average life			10 years

G-20

---

Table of Contents

G-21

---

Table of Contents

							Estimated
			Amount				Useful Life
Computer Equipment			$	6,143				5 years
Less: accumulated depreciation				(1,067	)
	Property and Equipment, Net		$	5,076

G-22

---

Table of Contents

						Weighted				Weighted
						Average				Average				Weighted
						Grant Date				Remaining				Average
		2005				Fair Value				Contractual Life				Exercise Price
Granted			800			$	318.42				9.25			$	572.08
Exercised			—				—				—				—
Outstanding at December 31, 2005			800			$	318.42				9.25			$	572.08
Exercisable at December 31, 2005			366			$	417.16				9.42			$	572.08

						Weighted				Weighted
						Average				Average				Weighted
						Grant Date				Remaining				Average
		2005				Fair Value				Contractual Life				Exercise Price
Granted			509			$	381.33				1.74			$	572.08
Exercised			—				—				—				—
Outstanding at December 31, 2005			509			$	381.33				1.74			$	572.08
Exercisable at December 31, 2005			509			$	381.33				1.74			$	572.08

G-23

---

Table of Contents

---

Table of Contents