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                                                                    EXHIBIT 10.5

                          JOINT DEVELOPMENT AGREEMENT

   This Joint Development Agreement ("Agreement") dated as of the _____day of
November, 1999 ("Effective Date") is by and between ILLUMINA, INC., a California
corporation, located at 9390 Towne Centre Drive, Suite 200, San Diego, CA 92121-
3015 ("Illumina"), and PE CORPORATION, a Delaware corporation, through its PE
Biosystems Group, located at 850 Lincoln Centre Drive, Foster City, CA 94404
("PEB").


                                   Background

     Illumina has certain skills, proprietary technology and know-how related to
the manufacture, design and use of Assembled Arrays.

     PEB has certain skills, proprietary technology and know-how related to the
development of bioanalytical instrumentation systems and associated reagents,
and the marketing, sales and support of products incorporating such systems.

     Illumina and PEB desire to enter into a Joint Development Program with the
objective of developing and commercializing products based on bioanalytical
instrumentation systems incorporating Assembled Arrays.

     Illumina and PEB will enter into a Series C Stock Purchase Agreement as of
the Effective Date, whereby PEB will purchase 1,250,000 shares of Illumina's
stock at a share price of $4.00 per share (the "Equity Agreement").

                                   Agreement

1.   Definitions

     1.1.  "Affiliate" means

          (A)  an organization of which 50% or more of the voting stock is
               controlled or owned directly or indirectly by either Party;

          (B)  an organization that directly or indirectly owns or controls 50%
               or more of the voting stock of a Party;

          (C)  an organization, the majority ownership of which is directly or
               indirectly common to the majority ownership of either Party; or

          (D)  an organization under (A), (B), or (C) immediately above in which
               the amount of the ownership is less than 50% and that amount is
               the maximum amount permitted by law.

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1.2.  "Intellectual Property Rights" means all intellectual property rights
      worldwide arising under statutory or common law, and whether or not
      perfected, including, without limitation, the following:

      (A)  all patents, patent applications and patent rights, including
           divisions, continuations, renewals, reissues, continuing prosecution,
           and extensions of the foregoing (as and to the extent applicable) now
           existing, hereafter filed, issued or acquired;

      (B)  all rights associated with works of authorship including copyrights,
           copyright applications, copyright registrations, mask works, mask
           work applications, and mask work registrations;

      (C)  all rights relating to the protection of trade secrets and
           confidential information; and

      (D)  all know-how.

1.3.  "Pre-Collaboration Illumina Intellectual Property" means all Intellectual
      Property Rights that are owned by, either partially or wholly, or licensed
      to, or otherwise controlled by, Illumina as of the Effective Date.

1.4.  "Collaboration Illumina Intellectual Property" means all Intellectual
      Property Rights arising out of work performed under this Agreement that
      are conceived solely by one or more employees or agents of Illumina or its
      Affiliates.

1.5.  "Collaboration Joint Intellectual Property" means all Intellectual
      Property Rights arising out of work performed under this Agreement, that
      are jointly conceived by one or more employees or agents of Illumina, and
      by one or more employees or agents of PEB or its Affiliates.

1.6.  "Pre-Collaboration PEB Intellectual Property" means all Intellectual
      Property Rights that are owned by, either partially or wholly, or licensed
      to, or otherwise controlled by, PEB or its Affiliates as of the Effective
      Date, and that are necessarily infringed by the manufacture or use of
      Instruments.

1.7.  "Collaboration PEB Intellectual Property" means all Intellectual Property
      Rights arising out of work performed under this Agreement that are
      conceived solely by one or more employees or agents of PEB or its
      Affiliates.

1.8.  "Subject Patent" means any patent or patent application claiming or
      disclosing Pre-Collaboration Illumina Intellectual Property, Collaboration
      Illumina Intellectual Property, Collaboration Joint Intellectual Property,

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      Pre-Collaboration PE Intellectual Property or Collaboration PEB
      Intellectual Property, including any Related Patents.

1.9.  "Subject Intellectual Property" means Pre-Collaboration Illumina
      Intellectual Property, Collaboration Illumina Intellectual Property,
      Collaboration Joint Intellectual Property, Pre-Collaboration PEB
      Intellectual Property, or Collaboration PEB Intellectual Property,
      including Subject Patents.

1.10. "Net Sales" means:

      (A)  with respect to sales by a Party, or an Affiliate of a Party, to non-
           affiliated third party purchasers, the actual amount of gross sales
           of Collaboration Product to a third party, less: trade, cash and
           quantity discounts, if any, actually allowed, amounts refunded for
           faulty or defective product, returns, rejections, freight, insurance
           and other transportation costs, tariffs, duties and similar
           governmental charges paid (except income taxes);

      (B)  with respect to sales by a Party made to any Affiliate, the Net Sales
           will be determined as if such Collaboration Product had been sold to
           a non-affiliated third party purchaser at an average Net Sales for
           such Collaboration Product during the immediately preceding 120 days;
           and

      (C)  with respect to Collaboration Product that is used by a Party, or an
           Affiliate of a Party, to supply services or information to a third
           party for commercial purposes, or are otherwise disposed of,
           excluding demonstration or other marketing activities performed for
           no or de minimis compensation, the Net Sales will be determined as if
           such Collaboration Product had been sold to a non-affiliated third
           party purchaser at the average Net Sales for such Collaboration
           Product during the immediately preceding 120 days.

1.11.  "Manufacturing Cost" means the fully-burdened manufacturing cost of a
       product as determined using a Party's customary practices and procedures
       in accordance with United States generally accepted accounting principles
       ("GAAP") including the following: direct material cost, material overhead
       cost, direct labor cost, fixed manufacturing overhead cost, variable
       manufacturing overhead cost, manufacturing variance cost, and third-party
       royalties (excluding up-front payments).

1.12.  "Gross Margin" means Net Sales less Manufacturing Cost.

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1.13.  "Sales and Marketing Cost" means the fully-burdened cost associated with
       marketing, selling, distributing and supporting a product as determined
       using a Party's customary practices and procedures in accordance with
       GAAP including the following: installation cost, warranty cost,
       distribution cost, direct marketing cost, marketing overhead cost, direct
       selling cost, and selling overhead cost, and subject to Sections 4.1.3
       and 5.1(C).

1.14.  "Ongoing R&D Cost" means the fully-burdened cost associated with ongoing
       research and development to improve or develop new Collaboration Product
       after the New Product Release of a Collaboration Product, and subject to
       Sections 4.1.4 and 5.1 (D).

1.15.  "Residual Gross Margin" means Gross Margin less (A)  Sales and Marketing
       Cost and (B) Ongoing R&D Cost.

1.16.  "Party" means  Illumina or PEB and, when used in the plural, means
       Illumina and PEB.

1.17.  "Related Patent" means any patent or patent application that:

       (A)  claims substantially the same subject matter as a Subject Patent;

       (B)  claims improvements to inventions disclosed or claimed in a Subject
            Patent and requires rights under the Subject Patent to exploit such
            improvements;

       (C)  claims priority to a Subject Patent, including but not limited to
            continuation applications and patents, continuation-in-part
            applications and patents, divisional applications and patents,
            reexamination applications and patents, reissue applications and
            patents, and continuing prosecution applications and patents;

       (D)  is a parent of a  Subject Patent; or

       (E)  any foreign equivalents of a Subject Patent or any patent or patent
            application set forth in (A), (B), (C) or (D) immediately above.

1.18.  "PEB DNA Synthesis and Purification Patents" means U.S. Patent Nos.
       4,997,927 (GBF), 4,458,066, 5,132,418, 5,153,319, 4,973,679 (Caruthers
       Process), and 4,415,732, 4,668,777, 4,500,707 (Caruthers Reagents),
       including any Related Patent.

1.19.  "Start Development Checkpoint" means that point in a project at which,
       under PEB's  ISO 9001 procedures, a report is produced which documents

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       that the following parameters have been established with respect to a
       Collaboration Product:

       (A)  technical feasibility;

       (B)  determination of funding and staffing levels required to effect New
            Product Release;

       (C)  product definition and specifications, including a target minimum
            sales price; and

       (D)  a schedule for New Product Release.

1.20.  "New Product Release" means that stage in the development of a
       Collaboration Product at which, under PEB's ISO 9001 procedures,
       unrestricted sale of the Collaboration Product to unaffiliated third-
       party customers is authorized.

1.21.  "Quarter" means a three month period beginning on or about the first day
       of January, April, July or October next following the Effective Date, and
       each three month period thereafter, except that the first Quarter will
       include the period from the Effective Date to the first day of the
       nearest such three month period after the Effective Date. Precise dates
       for the beginning and ending of Quarters may vary in accordance with
       PEB's customary accounting practices and procedures in accordance with
       GAAP. Upon Illumina's request, PEB will provide Illumina with a schedule
       of PEB's fiscal Quarters.

1.22.  "Assembled Array" means an array of microspheres having chemical
       functionality attached thereto distributed on a patterned substrate, as
       generally described in U.S Patent Application No.08/818,199.

1.23.  "Zip Code Chemistry" means a nucleic acid sequence detection method
       employing a sequence-specific hybridization pull-out step subsequent to a
       chemical or enzymatic polynucleotide ligation reaction, as generally
       described in International Patent Application No. WO 97/31256.

1.24.  "Instrument" means a device, including software required to operate the
       device and image assembly software, designed to perform assays in
       combination with an Assembled Array, and that is developed under the
       Joint Development Program.

1.25.  "Reagent" means a composition comprising enzymes, probes, PCR primers, or
       buffers necessary to effect Zip Code Chemistry used in combination with
       an Assembled Array, and that is developed under the Joint Development
       Program.

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1.26.  "Early Access Program" means a program in which one or more third parties
       or Affiliates are given access to Beta Prototype Collaboration Product
       prior to New Product Release in return for a fee, including the providing
       of service or information to a third party by Illumina.

1.27.  "Beta Prototype" means a prototype Instrument that is assembled during
       the development of a Collaboration Product under the Joint Development
       Program for the purpose of design verification. Beta Prototype units are
       built by hand by the manufacturing department in consultation with the
       research department in limited numbers using few or no tooled parts. With
       respect to PEB's ISO 9001 procedures, the terms "Beta Prototype" and VTS
       Instrument" may be used interchangeably.

1.28.  "Collaboration Product" means Instrument, Reagent, or Assembled Array.

1.29.  "Collaboration Field" means the field of Zip Code Chemistry used in
       combination with Assembled Arrays.

1.30.  "Nucleic Acid Analysis Field" means the field of characterization of a
       nucleic acid sample including but not limited to the determination of the
       relative abundance of the nucleic acid, all or part of a sequence of the
       nucleic acid, or variations in the sequence of the nucleic acid. The
       Nucleic Acid Analysis Field excludes the Collaboration Field.

1.31.  "Joint Development Program" means the collaborative development and
       commercialization program to be conducted by Illumina and PEB as defined
       herein.

1.32.  "Confidential Information" means confidential knowledge, know-how,
       practices, processes, equipment, or other information that:

       (A)  is disclosed by a Party in a tangible form and is clearly labeled as
            confidential or proprietary at the time of disclosure; or,

       (B)  is disclosed by a Party in nontangible form, and is summarized in a
            writing that is delivered to the other Party within 30 days after
            disclosure; or,

       (C)  is disclosed by a Party under circumstances in which a reasonable
            person would understand that such information is confidential and
            proprietary to the disclosing Party.

       Notwithstanding (A), (B), and (C) immediately above, Confidential
       Information will not include, and nothing in Section 7 will in any way
       restrict the rights of either Illumina or PEB to use, disclose or
       otherwise

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       deal with, any information that:

       (A)  was in the public domain as of the Effective Date or comes into the
            public domain during the term of this Agreement through no act of
            the receiving Party; or,

       (B)  was independently known to the receiving Party prior to the receipt
            thereof, or made available to the receiving Party as a matter of
            lawful right by a third party; or,

       (C)  is independently conceived, invented or acquired by the receiving
            Party by persons who were not exposed to the information.

2.  Exclusivity; Costs; Diligence

    2.1.  Exclusivity. Except as may be expressly permitted herein, during the
          -----------
          term of this Agreement neither Party nor its Affiliates will design,
          develop, manufacture, market, sell, distribute or service any
          Collaboration Product within the Collaboration Field except in
          accordance with the terms and conditions of this Agreement.

    2.2.  Responsibility for Costs. Except as provided in Section 3.7, each
          ------------------------
          Party will be responsible for its own costs and expenses in connection
          with its activities in furtherance of the Joint Development Program.

    2.3.  Diligence. The Parties will use commercially reasonable efforts to
          ---------
          conduct the Joint Development Program in accordance with the terms and
          conditions of this Agreement.

3.  Development of Collaboration Product

    3.1.  Responsibilities. In consultation with Illumina, PEB will have primary
          ----------------
          responsibility for definition of Collaboration Product, and
          development of Instruments and Reagents. In consultation with PEB,
          Illumina will have primary responsibility for development of Assembled
          Arrays. Illumina and PEB will share responsibility for development of
          particular assays to be used in conjunction with Collaboration
          Product. Primary responsibilities may be reallocated by the Joint
          Steering Committee.

    3.2.  Information Exchange. The Parties will keep each other informed with
          --------------------
          respect to all activities directly related to the Joint Development
          Program, including without limitation access to design plans and
          drawings, specifications, engineering change orders, software,
          supplier information, nucleic acid sequences, processes, materials,
          and chemistries directly related to Collaboration Product. Both
          Parties will participate in engineering milestone reviews for
          Collaboration Product.

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    3.3.  Work Plan. Development of Collaboration Product may be conducted by
          ---------
          the Parties in accordance with a Work Plan The Work Plan may be
          modified as required from time to time by the Joint Steering
          Committee.

    3.4.  Development Teams.  Each Party will assign personnel to its
          -----------------
          development team with the appropriate skills and experience to
          accomplish the work established in the Work Plan. It is expected that
          such teams will work together to accomplish the objectives of the
          Joint Development Program including, if appropriate, conducting
          efforts at the same facility.

    3.5.  Exchange of Instruments, Reagents and Assembled Arrays for Internal
          -------------------------------------------------------------------
          Use Within the Collaboration Field.
          ----------------------------------

          3.5.1. Provision of Instruments and Reagents to Illumina. PEB will
                 -------------------------------------------------
                 provide Instruments and Reagents to Illumina, as such
                 Instruments and Reagents become available to PEB, for
                 Illumina's internal use in furtherance of the Joint Development
                 Program and not for resale, services, or other use except as
                 provided in Section 3.6. The number of Instruments and the
                 quantity of Reagents so provided will be determined by the
                 Joint Steering Committee.

          3.5.2. Provision of Assembled Arrays to PEB. Illumina will provide
                 ------------------------------------
                 Assembled Arrays to PEB, as such Assembled Arrays become
                 available to Illumina, for PEB's internal use in furtherance of
                 the Joint Development Program and not for resale, services, or
                 other use except as provided in Section 3.6. The number of
                 Assembled Arrays so provided will be determined by the Joint
                 Steering Committee.

    3.6.  Early Access Program. Illumina and PEB may manage the release of Beta
          --------------------
          Prototype Instrument through an Early Access Program. Illumina will,
          in consultation with PEB, have the primary responsibility for
          identifying participants in the Early Access Program. Illumina will
          receive any income derived from the Early Access Program. Illumina
          will reimburse PEB for PEB's direct manufacturing and support costs
          relating to the provision of Beta Prototype Instrument and any
          associated Reagents used in the Early Access Program to the extent
          that PEB's expenses do not exceed Illumina's income. No more than [*]
          Beta Prototype Instruments will be provided for use in the Early
          Access Program. At the conclusion of the Early Access Program, all
          Beta Prototype Instruments will be returned to PEB. Unless otherwise
          agreed to by the Parties in writing, the term of the Early Access
          Program will end upon the New Product Release of the relevant
          Instrument. Except, in no event will the term of the Early Access
          Program be less than 6 months from the time at which each Beta
          Prototype Instrument first become available.

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    3.7.  Development Funding to Illumina. PEB [*] to Illumina [*] in
          -------------------------------
          development funding to be used by Illumina to partially finance
          Illumina's activities in furtherance of the Joint Development Program.
          The [*] will be paid out to Illumina according to the schedule and
          conditions set forth in Exhibit 1. If the conditions are not achieved
          by Illumina on schedule as set forth in Exhibit 1, development funding
          will accrue according to the schedule. At such time as Illumina
          achieves the conditions set forth in Exhibit 1 and provided that the
          Agreement has not been terminated, PEB will pay Illumina all accrued
          development funding and continue paying future development funding
          according to the schedule set forth in Exhibit 1. PEB [*] for such
          development funding [*] for a given Quarter as set forth in Section
          4.3.

4.  Commercialization of Collaboration Product

    4.1.  Responsibilities.
          ----------------

          4.1.1.  Manufacture of Assembled Arrays. Assembled Arrays will be
                  -------------------------------
                  exclusively manufactured by Illumina or its designate in
                  consultation with PEB and transferred to PEB as provided under
                  Section 4.2.

          4.1.2.  Manufacture of Instruments and Reagents. Instruments and
                  ---------------------------------------
                  Reagents will be exclusively manufactured by PEB or its
                  designate in consultation with Illumina. Subject to any
                  required licenses, Illumina may manufacture oligonucleotides
                  for its internal use within the Collaboration Field. For the
                  avoidance of doubt, it is understood by Illumina that no
                  rights under PEB DNA Synthesis and Purification Patents are
                  granted by this Agreement, either expressly, impliedly, or by
                  estoppel.

          4.1.3.  Marketing, Sales and Support. Collaboration Product will be
                  ----------------------------
                  exclusively marketed, sold and supported (including service,
                  customer training and application support) through the
                  marketing, sales and service organizations of PEB, its
                  Affiliates and distributors, in accordance with a marketing
                  plan to be developed by PEB in consultation with Illumina.
                  Budgets for marketing, sales, and support activities relating
                  to Collaboration Product will be subject to the approval of
                  the Joint Steering Committee. Unless decided otherwise by the
                  Joint Steering Committee, Sales and Marketing Cost will be at
                  least 15% of annual Net Sales but no more than 30% of annual
                  Net Sales. Marketing literature dedicated to Collaboration
                  Product will be marked so as to indicate that the

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                  Collaboration Product is a product of both PEB and Illumina,
                  and PEB and Illumina will be referenced in the dedicated
                  marketing literature with equal prominence.

          4.1.4.  Ongoing Research and Development. After the New Product
                  --------------------------------
                  Release of a Collaboration Product, the Joint Steering
                  Committee may elect to support ongoing research and
                  development to improve the Collaboration Product. The
                  allocation of such research and development between Parties
                  will be decided by the Joint Steering Committee and reimbursed
                  to each Party pro rata to each Party's share of the research
                  and development expenses for such year.

     4.2  Transfer of Assembled Arrays to PEB for Resale by PEB.
          -----------------------------------------------------

          4.2.1.  Supply Agreement. Illumina will transfer to PEB Assembled
                  ----------------
                  Arrays for use in Collaboration Product used to generate Net
                  Sales. Prior to 90 days before a New Product Release of a
                  Collaboration Product, the Parties will enter into a supply
                  agreement to be negotiated in good faith between the Parties
                  which, consistent with this Agreement, will govern the
                  transfer of Assembled Arrays from Illumina to PEB. The supply
                  agreement will contain provisions which, in addition to
                  customary warranty, representations and indemnification
                  provisions, will set forth a commercially reasonable plan for
                  Illumina to supply Assembled Arrays to PEB in satisfaction of
                  PEB's reasonable requirements as to volume, cost, physical
                  specifications, regulatory requirements and schedule, and
                  obligate Illumina to provide technical support to PEB (but not
                  directly to PEB's customers).

          4.2.2.  Forecasts. Within 90 days prior to the date of a New Product
                  ---------
                  Release, and prior to the end of each calendar month
                  thereafter, PEB will submit to Illumina a 6 month rolling
                  forecast of PEB's estimated requirements for Assembled Arrays.
                  The forecast is an estimate only, and does not constitute an
                  order by PEB or any commitment by PEB to purchase the amount
                  of Assembled Arrays shown in the forecast. Any order of
                  Assembled Arrays by PEB will be in the form of a purchase
                  order. The Joint Steering Committee will determine an
                  appropriate level of inventory for Assembled Arrays based upon
                  forecasts and Illumina's demonstrated manufacturing capacity.
                  If the Joint Steering Committee elects to maintain more than 3
                  months of inventory of Assembled Arrays ("Excess Inventory"),
                  PEB will assume the financial burden for the Excess Inventory
                  by reimbursing Illumina for its Manufacturing Cost associated
                  with the Excess Inventory within 30 days of the date of
                  delivery by Illumina to PEB of the Excess Inventory.

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         4.2.3.  Illumina Unwilling or Unable to Supply Assembled Arrays. If
                 -------------------------------------------------------
                 Illumina is unwilling or unable to supply Assembled Arrays to
                 PEB in accordance with this Section 4.2, or, if Illumina
                 refuses to negotiate in good faith with respect to entering
                 into such an agreement, the Assembled Arrays may be
                 manufactured by PEB or its designate, under the conditional no
                 exclusive license set forth in Section 6.3.3, and subject to
                 the payment obligations of Section 4.3. Illumina will provide
                 PEB reasonable assistance with respect to PEB's or its
                 designate's manufacture of Assembled Arrays, including the
                 transfer of know-how and documentation directly related to
                 manufacture of Assembled Arrays.

     4.3.  Value Sharing. After first reimbursing each Party's Manufacturing
           -------------
           Cost, next reimbursing each Party's Sales and Marketing Costs and
           then reimbursing each Party's Ongoing R&D Costs, PEB will pay
           Illumina [*] of Residual Gross Margin of Collaboration Product sold
           by PEB, its Affiliates, and distributors ("Illumina Share"), less
           monies owed to PEB for reimbursement of development funding provided
           to Illumina under Section 3.7. The balance of Gross Margin will be
           retained by PEB. If Residual Gross Margin becomes negative in any
           Quarter, PEB will accrue such losses. These accrued losses will be
           repaid to PEB from future Illumina Share before any future Residual
           Gross Margin is paid to Illumina. Illumina Share will be paid to
           Illumina as set forth in Sections 4.3.1, 4.3.2, 4.3.3, and 13.4.

           4.3.1.  Payment to Illumina of Actual Illumina Share. At the end of
                   --------------------------------------------
                   each Quarter in which Net Sales are realized ("Revenue
                   Quarter"), PEB will pay to Illumina the actual Illumina Share
                   earned for that Quarter.

           4.3.2.  Pre-payment to Illumina of Estimated Illumina Share.
                   ---------------------------------------------------
                   Beginning with the second Revenue Quarter, and for each
                   Quarter thereafter, in addition to payment to Illumina of the
                   actual Illumina Share for the previous Quarter under Section
                   4.3.1, PEB will pay to Illumina an estimated Illumina Share
                   for the Quarter. The amount of the estimated Illumina Share
                   will be equal to the actual Illumina Share for the previous
                   Quarter. The estimated Illumina Share will be paid to
                   Illumina in equal monthly installments during the Quarter.

           4.3.3.  Reconciliation. At the end of the second Revenue Quarter, and
                   --------------
                   at the end of each Quarter thereafter, PEB will determine the
                   difference between the actual Illumina Share for that Quarter
                   and the estimated Illumina Share for that Quarter. Illumina
                   will be charged or credited depending on whether the
                   estimated Illumina Share represents an overpayment or an
                   underpayment, respectively, for that Quarter.

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     4.4.  Supply of Instruments to Illumina for Use by Illumina Outside of the
           --------------------------------------------------------------------
           Collaboration Field. PEB will supply Instruments to Illumina for use
           -------------------
           by Illumina outside of the Collaboration Field ("OEM Instruments")
           under a supply agreement to be negotiated in good faith between the
           Parties. Except as otherwise provided for in Section 4.4.1 or in the
           supply agreement, Illumina or its designate will be solely
           responsible for all marketing, sales and support (including without
           limitation service, customer training and application support) of OEM
           Instruments. The transfer price for OEM Instrument will be the lower
           of (i) [*] below the then-current list price or (ii) [*] below the
           average selling price charged for Instruments sold to non-affiliated
           third party purchasers during the preceding Quarter.

           4.4.1.  OEM Instrument for Use Inside the Nucleic Acid Field.
                   ----------------------------------------------------
                   [*]

           4.4.2.  PEB Unwilling or Unable to Supply OEM Instruments. If PEB is
                   -------------------------------------------------
                   unwilling or unable to supply OEM Instrument to Illumina in
                   accordance with this Section 4.4, or, if PEB refuses to
                   negotiate in good faith with respect to entering into such an
                   agreement [*] and subject to the royalty obligations of
                   Section 6.3.8. PEB will provide Illumina reasonable
                   assistance with respect to Illumina's or its designate's
                   manufacture of OEM Instruments, including the transfer of
                   know-how and documentation directly related to manufacture of
                   OEM Instruments.

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5.   Joint Steering Committee

     5.1.  Purpose. A joint steering committee will be established to oversee
           -------
           the Joint Development Program established by this Agreement ("Joint
           Steering Committee"). The duties of the Joint Steering Committee will
           include, but not be limited to, the following:

           (A)  oversight of all aspects of the Joint Development Program,
                including definition, development, manufacturing (supply),
                marketing, sales, and support of Collaboration Product;

           (B)  implementation of changes to the Work Plan;

           (C)  approval of annual sales and marketing budgets for Sales and
                Marketing Cost;

           (D)  approval and allocation of annual budgets for Ongoing R&D Cost;

           (E)  allocation of Instruments, Assembled Arrays, and Reagents to
                Affiliates should either be in limited supply;

           (F)  organization of development teams and oversight of their
                activities;

           (G)  review of forecasts for Net Sales of Collaboration Products
                provided by PEB at least 90 days prior to New Product Release
                and Quarterly thereafter; and

           (H)  resolution of disputes arising under this Agreement as set forth
                in Section 5.4.


     5.2.  Membership. The Joint Steering Committee will be comprised of 3
           ----------
           employees from Illumina and 3 employees from PEB, appointed at the
           sole discretion of the respective Parties. Substitute employees may
           be appointed at any time. The Joint Steering Committee will be
           chaired in the first year by a senior representative from PEB, and
           thereafter on a rotating annual basis, by a senior representative
           from Illumina or PEB. The initial composition of the Joint Steering
           Committee will be as follows:

           For Illumina:   John R. Stuelpnagel
                           Mark S. Chee
                           Richard J. Pytelewski

           For PEB:        J. William Efcavitch
                           Dawn E. Madden

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                           Elaine J. Heron

     5.3.  Meetings. The Joint Steering Committee will meet as often as is
           --------
           reasonably necessary to accomplish its purpose but at least
           quarterly, on a mutually agreeable date and at a place selected
           initially by PEB and then by each Party in turn thereafter.
           Representatives of Illumina or PEB, or both, in addition to members
           of the Joint Steering Committee, may attend such meetings at the
           invitation of either Party.

     5.4.  Joint Steering Committee Decisions and Dispute Resolution. Decisions
           ---------------------------------------------------------
           by the Joint Steering Committee will be made by consensus. If the
           Joint Steering Committee is unable to reach agreement, within 10
           business days the matter will be submitted for resolution to the
           President of Illumina and the President of the PE Biosystems Group.
           In the event that the Presidents of each Party cannot reach agreement
           within 10 business days after receiving notice from the Joint
           Steering Committee, which period may be extended by mutual agreement
           of the Parties, then either Party may initiate arbitration in
           accordance with the rules and procedures set forth in Exhibit 2.

     5.5.  Expenses. The Parties will each bear all expenses of their respective
           --------
           members related to their participation on the Joint Steering
           Committee.

6.  Intellectual Property; Patent Prosecution and Litigation; Licenses;
    Trademarks

     6.1.  Ownership of Intellectual Property.
           ----------------------------------

           6.1.1.  Pre-Collaboration Illumina Intellectual Property and
                   ----------------------------------------------------
                   Collaboration Illumina Intellectual Property. All rights and
                   --------------------------------------------
                   title to Pre-Collaboration Illumina Intellectual Property and
                   Collaboration Illumina Intellectual Property, whether
                   patentable or copyrightable or not, will belong to Illumina
                   and will be subject to the terms and conditions of this
                   Agreement.

           6.1.2.  Collaboration Joint Intellectual Property. All rights and
                   -----------------------------------------
                   title to Collaboration Joint Intellectual Property, whether
                   patentable or copyrightable or not, will belong jointly to
                   PEB and Illumina and will be subject to the terms and
                   conditions of this Agreement. Each Party will have the right
                   to independently practice the Collaboration Joint
                   Intellectual Property, without accounting to the other Party,
                   only to the extent that the practice of the Collaboration
                   Joint Intellectual Property by PEB does not require rights
                   under Pre-Collaboration Illumina Intellectual Property,
                   Collaboration Illumina Intellectual Property, or any other
                   Intellectual Property Rights owned by, either partially or
                   wholly, or licensed to Illumina

                                       14
<PAGE>

                   (subject to Sections 6.3.1, 6.3.2, and 6.3.3), and that
                   practice of the Collaboration Joint Intellectual Property by
                   Illumina does not require rights under Pre-Collaboration PEB
                   Intellectual Property, Collaboration PEB Intellectual
                   Property, or any other Intellectual Property Rights owned by,
                   either partially or wholly, or licensed to PEB (subject to
                   Sections 6.3.5, 6.3.6 and 6.3.7). Additionally, each Party
                   will have the right but not the obligation to bring, at its
                   own expense, an infringement action against any third party
                   under its interest in Joint Collaboration Intellectual
                   Property, subject to the same limitations set forth above
                   with respect to the practice of the Joint Collaboration
                   Intellectual Property by Illumina or PEB. The Parties will
                   assist one another and cooperate in any such litigation at
                   the other's reasonable request, and, if a Party is necessary
                   in order to institute or maintain an infringement suit by the
                   other Party as defined by law, that Party agrees to be joined
                   in the suit.

           6.1.3.  Pre-Collaboration PEB Intellectual Property and Collaboration
                   -------------------------------------------------------------
                   PEB Intellectual Property. All rights and title to Pre-
                   -------------------------
                   Collaboration PEB Intellectual Property and Collaboration PEB
                   Intellectual Property, whether patentable or copyrightable or
                   not, will belong to PEB and will be subject to the terms and
                   conditions of this Agreement.

     6.2.  Filing of Patent Applications.
           ------------------------------

           6.2.1.  Collaboration Illumina Intellectual Property. Illumina will
                   --------------------------------------------
                   have the first right, using in-house or outside legal counsel
                   selected by Illumina's sole discretion, to prepare, file,
                   prosecute, maintain and extend patent applications for
                   Collaboration Illumina Intellectual Property in countries of
                   Illumina's choosing. Illumina will bear all costs relating to
                   such activities. Illumina will solicit PEB's advice and
                   review of the patent applications, and Illumina will take
                   into consideration PEB's advice thereon. If Illumina elects
                   not to prepare, file, prosecute or maintain certain of the
                   patent applications or certain claims encompassed within the
                   patent applications, in one or more countries, Illumina will
                   give PEB notice thereof within a reasonable period prior to
                   allowing the patents or claims to lapse or become abandoned
                   or unenforceable, and PEB will thereafter have the right, at
                   its sole expense and discretion, to prepare, file, prosecute,
                   and maintain the patent applications in the name of PEB in
                   the one or more countries. Illumina will, at Illumina's
                   expense, assign the patent applications to PEB and provide
                   reasonable assistance to PEB to facilitate the filing and
                   prosecution of all the patent applications that Illumina has
                   elected not to pursue, and Illumina will execute all
                   documents

                                       15
<PAGE>

                   deemed necessary or desirable therefor. Subject to any future
                   license agreement between the Parties, PEB will provide to
                   Illumina a royalty-free non-exclusive license, with right to
                   sublicense, under all the patent applications that Illumina
                   has elected not to pursue and PEB has elected to pursue under
                   this Section 6.2.1. If claims describing Collaboration
                   Illumina Intellectual Property are combined in a patent
                   application with claims describing Pre-Collaboration Illumina
                   Intellectual Property, PEB's rights under this Section 6.2.1
                   will be limited to those claims describing Collaboration
                   Illumina Intellectual Property. PEB and Illumina will each
                   hold all information it presently knows or acquires under
                   this Section 6.2.1 as Confidential Information in accordance
                   with Section 7.

           6.2.2.  Collaboration PEB Intellectual Property. PEB will have the
                   ---------------------------------------
                   first right, using in-house or outside legal counsel selected
                   by PEB's sole discretion, to prepare, file, prosecute,
                   maintain and extend patent applications for Collaboration PEB
                   Intellectual Property in countries of PEB's choosing. PEB
                   will bear all costs relating to such activities. PEB will
                   solicit Illumina's advice and review of the patent
                   applications, and PEB will take into consideration Illumina's
                   advice thereon. If PEB elects not to prepare, file, prosecute
                   or maintain certain of the patent applications or certain
                   claims encompassed within the patent applications, in one or
                   more countries, PEB will give Illumina notice thereof within
                   a reasonable period prior to allowing the patents or claims
                   to lapse or become abandoned or unenforceable, and Illumina
                   will thereafter have the right, at its sole expense and
                   discretion, to prepare, file, prosecute, and maintain the
                   patent applications in the name of Illumina in the one or
                   more countries. PEB will, at PEB expense, assign said patent
                   applications to Illumina and provide reasonable assistance to
                   Illumina to facilitate the filing and prosecution of all the
                   patent applications that PEB has elected not to pursue, and
                   PEB will execute all documents deemed necessary or desirable
                   therefor. Subject to any future license agreement between the
                   Parties, Illumina will provide to PEB a royalty-free non-
                   exclusive license, with right to sublicense, under all the
                   patent applications that PEB has elected not to pursue and
                   Illumina has elected to pursue under this Section 6.2.2. If
                   claims describing Collaboration PEB Intellectual Property are
                   combined in a patent application with claims describing Pre-
                   Collaboration PEB Intellectual Property, Illumina's rights
                   under this Section 6.2.2 will be limited to those claims
                   describing Collaboration PEB Intellectual Property. PEB and
                   Illumina will each hold all information it presently knows or
                   acquires under this Section 6.2.2 as Confidential Information
                   in accordance with Section 7.

                                       16
<PAGE>

           6.2.3.  Collaboration Joint Intellectual Property. PEB and Illumina
                   -----------------------------------------
                   will jointly have the right, using in-house or outside legal
                   counsel selected by both Parties, to prepare, file,
                   prosecute, maintain and extend patent applications for
                   Collaboration Joint Intellectual Property in countries of the
                   Party's choosing. But, if the practice of the Collaboration
                   Joint Intellectual Property would necessarily infringe claims
                   of patents or patent applications claiming Pre-Collaboration
                   PEB Intellectual Property, the Collaboration Joint
                   Intellectual Property will, for the purposes of this Section
                   6.2.3 only, be treated as Collaboration PEB Intellectual
                   Property under Section 6.2.2; and, if the practice of the
                   Collaboration Joint Intellectual Property would necessarily
                   infringe claims of patents or patent applications claiming
                   Pre-Collaboration Illumina Intellectual Property, the
                   Collaboration Joint Intellectual Property will, for the
                   purposes of this Section 6.2.3 only, be treated as
                   Collaboration Illumina Intellectual Property under Section
                   6.2.1. If only one Party ("Filing Party") desires to file a
                   patent application in one or more countries, then the Filing
                   Party will thereafter have the right, at its sole expense, to
                   prepare, file, prosecute, and maintain the applications in
                   its own name in the one or more countries. The other Party
                   will, at its own expense, assign said patent applications to
                   the Filing Party and provide reasonable assistance to the
                   Filing Party to facilitate the filing and prosecution of all
                   the patent applications that the other Party has elected not
                   to pursue, and the other Party will execute all documents
                   deemed necessary or desirable therefor. The Filing Party will
                   provide to the other Party a royalty-free non-exclusive
                   license, with right to sublicense, under all the patent
                   applications that the other Party has elected not to pursue
                   and the Filing Party has elected to pursue under this Section
                   6.2.3. PEB and Illumina will each hold all information it
                   presently knows or acquires under this Section 6.2.3 as
                   Confidential Information in accordance with Section 7.

     6.3.  Licenses of Intellectual Property.
           ---------------------------------

           6.3.1.  Exclusive License to PEB for Instruments and Reagents.
                   -----------------------------------------------------
                   Subject to the exclusivity obligations of Section 2, payment
                   obligations under Section 4.3, and Illumina's reservation of
                   rights under Section 6.3.4, Illumina grants to PEB an
                   exclusive royalty-free license under Illumina's interest in
                   Subject Intellectual Property to make, have made, import,
                   use, offer to sell, and sell Instruments and Reagents in the
                   Collaboration Field.

           6.3.2.  Exclusive License to PEB for Assembled Arrays. Subject to the
                   ---------------------------------------------
                   exclusivity obligations of Section 2, payment obligations
                   under

                                       17
<PAGE>

                   Section 4.3, and Illumina's reservation of rights under
                   Section 6.3.4, Illumina grants to PEB an exclusive royalty-
                   free license under Illumina's interest in Subject
                   Intellectual Property to use, offer to sell, and sell
                   Assembled Arrays in the Collaboration Field.

           6.3.3.  Conditional Non-Exclusive License to PEB for Assembled
                   -------------------------------------------------------
                   Arrays. In the event that Illumina is unwilling or unable to
                   ------
                   supply Assembled Arrays to PEB under Section 4.2.3, or if
                   this Agreement is terminated by PEB under Section 11.2.2 and
                   subject to payment obligations under Section 4.3, Illumina
                   grants to PEB an exclusive royalty-free world-wide license
                   under Illumina's interest in Subject Intellectual Property to
                   make, have made, and import Assembled Arrays in the
                   Collaboration Field.

           6.3.4.  Illumina's Reservation of Rights. Notwithstanding the license
                   --------------------------------
                   grants of Sections 6.3.1, 6.3.2, and 6.3.3, Illumina retains
                   the right to use Instruments, Reagents, and Assembled Arrays
                   in the Collaboration Field for Illumina's internal use in
                   furtherance of the Joint Development Program and not for
                   resale, services or other use except as provided for in the
                   Early Access Program set forth in Section 3.6.

           6.3.5.  Non-Exclusive License to Illumina for Instruments. Subject to
                   -------------------------------------------------
                   the distribution restrictions of Section 4.4.1, PEB grants to
                   Illumina a non-exclusive royalty-free world-wide license
                   under PEB's interest in Subject Intellectual Property to use,
                   offer to sell, and sell Instruments outside of the
                   Collaboration Field.

           6.3.6.  Conditional Non-Exclusive License to Illumina for
                    -------------------------------------------------
                   Instruments. Subject to the royalty obligation of Section
                   -----------
                   6.3.8, and in the event that PEB is unwilling or unable to
                   supply OEM Instrument to Illumina under Section 4.4.2, or if
                   this Agreement is terminated by Illumina under Section
                   11.2.2, PEB grants to Illumina a non-exclusive royalty-
                   bearing world-wide license under PEB's interest in Subject
                   Intellectual Property to make, have made, and import,
                   Instruments outside of the Collaboration Field.

           6.3.7.  Non-Exclusive License to Illumina for Instruments Developed
                   -----------------------------------------------------------
                   Outside the Joint Development Program. Subject to the royalty
                   -------------------------------------
                   obligation of Section 6.3.8, PEB grants to Illumina a non-
                   exclusive royalty-bearing world-wide license under PEB's
                   interest in Collaboration PEB Intellectual Property to make,
                   have made, use, import, offer to sell, and sell instruments
                   (other than Instruments) outside the Collaboration Field.

                                       18
<PAGE>

           6.3.8.  Royalties. Illumina will pay to PEB a royalty of [*] of Net
                   ---------
                   Sales of Instruments or other instruments sold or otherwise
                   disposed of under the non-exclusive license granted to
                   Illumina under Section 6.3.6 or 6.3.7.

           6.3.9.  No rights other than those expressly granted in this Section
                   6.3 are hereby granted or intended to be granted to or by
                   either Party, either expressly, impliedly, or by estoppel,
                   under Subject Intellectual Property, or any other
                   Intellectual Property Rights, of either Party.

     6.4.  Interfering Third Party Intellectual Property. If a Party believes
           ---------------------------------------------
           that any activities within the Joint Development Program infringe any
           Intellectual Property Rights of a third party, that Party will
           promptly notify the other Party, and the Joint Steering Committee
           will seek to agree upon the appropriate response to be taken.

     6.5.  Patent Litigation.
           -----------------

           6.5.1.  Defense Against Third Party Claims. In the event of the
                   ----------------------------------
                   institution of any suit by a third party against Illumina or
                   PEB alleging that the manufacture, use, sale, distribution or
                   marketing of Collaboration Product infringes a third party
                   patent, the Party sued will promptly notify the other Party
                   in writing. The other Party will have the right but not the
                   obligation to defend or participate in the defense of such
                   suit at its own expense. Illumina and PEB will assist one
                   another and cooperate in any such litigation at the other's
                   reasonable request without expense to the requesting Party.
                   The Party conducting such action will have full control over
                   its conduct, including settlement thereof. But, no settlement
                   of an action will be made without the prior written consent
                   of the other Party if such settlement would adversely affect
                   the rights of the other Party, the consent not to be
                   unreasonably withheld or delayed.

           6.5.2.  Prosecution of Infringement Action. In the event that
                   ----------------------------------
                   Illumina or PEB becomes aware of actual or threatened
                   infringement of a patent resulting from Collaboration
                   Illumina Intellectual Property, Collaboration PEB
                   Intellectual Property, or Collaboration Joint Intellectual
                   Property, that Party will promptly notify the other Party in
                   writing. Either owner of a patent resulting from the
                   intellectual property will have the first right but not the
                   obligation to bring, at its own expense, an infringement
                   action against any third party and to use the other Party's
                   name in connection therewith. If an owner of the patent does
                   not commence a particular infringement action within 90 days,
                   the other Party, after

____________________
[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                       19
<PAGE>

                   notifying the owner in writing, will be entitled to bring the
                   infringement action at its own expense. The Party conducting
                   the action will have full control over its conduct, including
                   settlement thereof. But, no settlement of an action will be
                   made without the prior written consent of the other Party if
                   such settlement would adversely affect the rights of the
                   other Party, such consent not to be unreasonably withheld or
                   delayed. In any event, Illumina and PEB will assist one
                   another and cooperate in any such litigation at the other's
                   reasonable request without expense to the requesting Party,
                   and, if a Party is necessary in order to institute or
                   maintain an infringement suit by the other Party as defined
                   by law, that Party will join such suit, represented by its
                   own counsel.

           6.5.3.  Expenses. Illumina and PEB have the right to recover their
                    -------
                   respective actual out-of-pocket expenses, or proportionate
                   share thereof, in connection with any litigation or
                   settlement thereof from any recovery made by any Party. Any
                   excess amount will be shared between PEB and Illumina in an
                   amount proportional to their respective expenses.

           6.5.4.  Information. The Parties will keep one another reasonably
                   -----------
                   informed of the status of their respective activities
                   regarding any such litigation or settlement thereof.

     6.6.  Effect of Bankruptcy. All rights and licenses granted under this
           --------------------
           Agreement by one Party to the other Party are, and will irrevocably
           be deemed to be, "intellectual property" as defined in Section
           101(56) of Title 11, U.S. Code ("Bankruptcy Code"). In the event of
           the commencement of a case by or against either Party under any
           Chapter of the Bankruptcy Code, this Agreement will be deemed an
           executory contract and all rights and obligations hereunder will be
           determined in accordance with Section 365(n) thereof.

     6.7.  Trademarks and Non-Proprietary Names. The Joint Steering Committee,
           ------------------------------------
           at equally shared expense between each Party, will be responsible for
           the selection, registration and maintenance of all trademarks that it
           employs in connection with Collaboration Product, and both Parties
           will own and control such trademarks jointly for use in the
           Collaboration Field. Nothing in this agreement will be construed as a
           grant of rights, by license or otherwise, to either Party to use any
           trademarks for any purpose other than co-promotion of Collaboration
           Product as provided in this Agreement. PEB, at its expense, will be
           responsible for the selection of non-proprietary names for
           Collaboration Product sold by PEB.

7.   Confidentiality and Non-Solicitation

                                       20
<PAGE>

     7.1.  Non-Disclosure. Because Illumina and PEB will be cooperating with
           --------------
           each other under this Agreement, each may reveal Confidential
           Information to the other. The Parties agree, by using the same degree
           of care as each uses for its own information of like importance, but
           not less than a reasonable degree of care, to hold in confidence any
           Confidential Information disclosed by the other Party hereunder, and
           not to disclose any Confidential Information to any third party
           without the express written consent of the other Party. Each Party
           will disclose Confidential Information only to its employees or
           agents who have a need to know. Each Party will use Confidential
           Information only for purposes of furthering the Joint Development
           Program. With respect to any Confidential Information that is
           revealed by a Party to the other Party, this confidentiality
           requirement will remain in force for a period of 5 years following
           the date the Confidential Information is revealed.

     7.2.  Responsibility over Employees and Agents. Each Party will assume
           ----------------------------------------
           individual responsibility for the actions and omissions of its
           respective employees, agents and assigns, and to inform same of the
           responsibilities for confidentiality under this Agreement, and to
           obtain their agreement to be bound in the same manner that the Party
           is bound.

     7.3.  Affiliates. Nothing herein will be construed as preventing either
           ----------
           Party from disclosing any information to an Affiliate of PEB or
           Illumina for the purpose of furthering the Joint Development Program,
           provided such Affiliate has undertaken a similar obligation of
           confidentiality with respect to the Confidential Information.

     7.4.  Bankruptcy. All Confidential Information disclosed by one Party to
           ----------
           the other will remain the intellectual property of the disclosing
           Party. The bankrupt or insolvent Party will, to the extent permitted
           by law, take all steps necessary or desirable to maintain the
           confidentiality of the other Party's Confidential Information and to
           ensure that the court or other tribunal maintain such information in
           confidence in accordance with the terms of this Agreement. In the
           event that a court or other legal or administrative tribunal,
           directly or through an appointed master, trustee or receiver, assumes
           partial or complete control over the assets of a Party to this
           Agreement based on the insolvency or bankruptcy of such Party, the
           bankrupt or insolvent Party will promptly notify the court or other
           tribunal

           (A)  that Confidential Information received from the other Party
                under this Agreement remains the property of the other Party;
                and,

           (B)  of the confidentiality obligations under this Agreement.

     7.5.  Publication. Neither PEB nor Illumina will submit for written or oral
           -----------
           publication any manuscript, abstract or the like that includes data
           or other

                                       21
<PAGE>

           information generated and provided by the other Party or otherwise
           developed by either Party under the Joint Development Program without
           first obtaining the prior written consent of the other Party, which
           consent will not be unreasonably withheld or delayed. If written
           consent or written denial is not provided by the other Party within
           90 days, the first Party will have the right to publish. But, the
           foregoing will not apply to customary literature that is prepared for
           marketing and sales purposes and that does not contain Confidential
           Information.

     7.6.  Publicity. Neither Party nor any of its Affiliates will originate any
           ---------
           news relating to this Agreement without the prior written approval of
           the other Party, which approval will not be unreasonably withheld or
           delayed. However, within 30 days after the execution of this
           Agreement the Parties will mutually agree on a joint press release
           announcing the existence of this Agreement.

     7.7.  Compliance with Statutory Requirements. Nothing in this Agreement
           --------------------------------------
           will be construed as preventing or in any way inhibiting either Party
           from complying with statutory or regulatory requirements governing
           the development, manufacture, use, sale, or other distribution, of
           Collaboration Product in any manner that it reasonably deems
           appropriate, including, for example, by disclosing to regulatory
           authorities Confidential Information or other information received
           from a Party or third parties. The Parties will take reasonable
           measures to assure that no unauthorized use or disclosure is made by
           others to whom access to such information is granted under this
           Section 7.7.

     7.8.  Non-Solicitation. During the term of the Agreement, and for a period
           ----------------
           of 1 year thereafter, a Party will not solicit any person who is
           employed by or is an exclusive consultant to the other Party, and
           directly involved with the Joint Development Collaboration to
           terminate that person's employment by or consultantcy to the other
           Party. As used herein, the term "solicit" will mean requesting,
           directly or indirectly, any employee or consultant to terminate his
           employment by or consultantcy to a Party.

8.   Representations, Warranties and Covenants

     Each Party represents, warrants and covenants to the other Party that:

           (A)  it has the corporate power and authority and legal right to
                enter into this Agreement and to perform its obligations
                hereunder;

           (B)  the execution and delivery of this Agreement and the performance
                of the transactions contemplated thereby have been duly
                authorized by all necessary corporate action of the Party;

                                       22
<PAGE>

           (C)  the execution and delivery of this Agreement and the performance
                by the Party of any of its obligations under this Agreement do
                not and will not:

                (1)  conflict with, or constitute a breach or violation of, any
                     other contractual obligation to which it is a party, any
                     judgment of any court or governmental body applicable to
                     the Party or its properties, or, to the Party's knowledge,
                     any statute, decree, order, rule or regulation of any court
                     or governmental agency or body applicable to the Party or
                     its properties, and

                (2)  require any consent or approval of any governmental
                     authority or other person;

           (D)  each Party will, to the best of its knowledge without
                undertaking a special investigation, disclose to the other Party
                any material adverse proceedings, claims or actions that arise
                that would materially interfere with that Party's performance of
                its obligations under this Agreement; and

           (E)  each Party's employees have executed or will execute agreements
                whereby all right, title and interest in any Intellectual
                Property Rights will be assigned to their respective employers.

9.  Indemnification

    9.1.  PEB's Indemnity. PEB will defend and indemnify Illumina against any
          ---------------
          judgement, damage, liability, loss, cost or other expense, including
          legal fees ("Liability"), resulting from any third-party claims made
          or proceedings brought against Illumina to the extent that the
          Liability arises from the following:

          (A)  PEB's negligent or willful act or omission in the manufacture,
               storage, handling, distribution, use or sale of Collaboration
               Product; or,

          (B)  from PEB's breach of any warranty set forth in Section 8.

    9.2.  Illumina's Indemnity. Illumina will defend and indemnify PEB against
          --------------------
          any Liability, resulting from any third-party claims made or
          proceedings brought against PEB to the extent that the Liability
          arises from the following:

          (A)  Illumina's negligent or willful act or omission in the
               manufacture, storage, handling, distribution, use or sale of
               Collaboration Product; or,

                                       23
<PAGE>

          (B)  from Illumina's breach of any warranty set forth in Section 8.

    9.3.  Notice; Choice of Attorney. A Party that intends to claim
          --------------------------
          indemnification under this Section 9 (the "Indemnitee") will promptly
          notify the other Party (the "Indemnitor") of any Liability in respect
          of which the Indemnitee intends to claim indemnification. The
          Indemnitor, after it determines that indemnification is required of
          it, will assume the defense and settlement thereof with counsel of its
          choice, reasonably satisfactory to the other Party. But, an Indemnitee
          will have the right to retain its own counsel, with the fees and
          expenses to be paid by the Indemnitor if Indemnitor does not assume
          the defense; or, if representation of such Indemnitee by the counsel
          retained by the Indemnitor would be inappropriate due to actual or
          potential differing interests between such Indemnitee and any other
          Party represented by counsel. The Indemnitee's failure to deliver
          notice to the Indemnitor within a reasonable time after the
          commencement of any such action, if prejudicial to Indemnitor's
          ability to defend the action, will relieve the Indemnitor of any
          liability to the Indemnitee under this Section 9, but the omission to
          deliver notice to the Indemnitor will not relieve it of any liability
          that it may have to any Indemnitee otherwise than under this Section
          9.

    9.4.  Consent Required. The indemnity provisions in this Section 9 will not
          ----------------
          apply to amounts paid in settlement of any Liability if the settlement
          is effected without the consent of the Indemnitor.

    9.5.  Cooperation. The Indemnitee under this Section 9, its employees and
          -----------
          agents, will cooperate fully with the Indemnitor and its legal
          representatives in the investigations of any action, claim or
          liability covered by this indemnification. In the event that each
          Party claims indemnity from the other and one Party is finally held
          liable to indemnify the other, the Indemnitor will additionally be
          liable to pay the reasonable legal costs and attorneys' fees incurred
          by the Indemnitee in establishing its claim for indemnity.

    9.6.  Limitation on Liability. In no event will either Party be liable to
          -----------------------
          the other for incidental, special, consequential, or punitive damages.

10. Quiet Period

    During the period beginning on the Effective Date and ending 6 months
    thereafter, and inside the Nucleic Acid Field, Illumina will not negotiate
    with, or enter into any agreement with, a third party with respect to the
    commercialization of Illumina Pre-Collaboration Intellectual Property,
    Illumina Collaboration Intellectual Property, or Illumina's interest in
    Collaboration Joint Intellectual Property.

                                       24
<PAGE>

11. Term and Termination

    11.1.  Term. Unless terminated earlier as provided herein, this Agreement
           ----
           will commence on the Effective Date and will remain in full force
           until the expiration of the last to expire Subject Patent.

    11.2.  Termination.
           -----------

           11.2.1. This Agreement may be terminated without cause by mutual
                   written agreement of the Parties, effective as of the time
                   specified in such written agreement.

           11.2.2. This Agreement may be terminated by either Party,

                   (A)  in the event the other Party files in any court or
                        agency under any statute or regulation of any state or
                        country, a petition in bankruptcy or insolvency or for
                        reorganization or for the appointment of a receiver or
                        trustee of the other Party or of its assets, or if the
                        other Party proposes a written agreement of composition
                        or extension of its debts, or if the other Party will be
                        served with an involuntary petition against it, filed in
                        any insolvency proceeding, and the petition is not
                        dismissed within 60 days after the filing thereof, or if
                        the other Party will propose or be a Party to any
                        dissolution or liquidation, or if the other Party will
                        make an assignment for the benefit of creditors; or

                   (B)  upon any material breach of this Agreement by the other
                        Party; except that,

                        (1)  the Party alleging such breach must first give the
                             other Party written notice thereof, which notice
                             must state the nature of the breach in reasonable
                             detail and the other Party must have failed to cure
                             such alleged breach within 60 days after receipt of
                             the notice; and

                        (2)  the Party alleging the breach terminates the
                             Agreement within 1 year of first giving the other
                             Party such written notice.


           11.2.3  Survival of Obligations. Upon any termination of this
                   -----------------------
                   Agreement, by expiration of the term or otherwise, neither
                   Party will be relieved of any obligations incurred prior to
                   such termination. Despite any termination of this Agreement,
                   the obligations of the Parties under Sections 4.4, 6.1, 7, 8,
                   9, 11.2.3, and 13, as well as

                                       25
<PAGE>

                any other provisions that by their nature are intended to
                survive any termination, will survive and continue to be
                enforceable. With respect to the survival of licenses granted in
                Section 6.3,

             (A)  if termination of this Agreement is by PEB under Section
                  11.2.2, licenses granted to PEB under Section 6.3 will survive
                  termination of this Agreement only to the extent that the
                  licenses relate to Collaboration Product that has reached New
                  Product Release prior to such material breach; or

             (B)  if termination of this Agreement is by Illumina under Section
                  11.2.2, licenses granted to Illumina under Section 6.3 will
                  survive termination.

     11.2.4  Refund of Unused Development Funding. In the event that the
              ------------------------------------
     Agreement is terminated by PEB under Section 11.2.2, Illumina will refund
     to PEB any portion of development funding given to Illumina under Section
     3.7 that is unspent at the time of termination.

12.  Use of Collaboration Product by PEB or Affiliates

     In the event that PEB or an Affiliate of PEB uses Collaboration Product to
     supply services or information to a third party for commercial purposes,
     PEB shall make such Collaboration Product available for sale to third
     parties on commercially reasonable terms and without restriction, by way of
     license or otherwise, on the ability of such customers to themselves use
     such Collaboration Product to supply services or information to third
     parties for commercial purposes.  An Affiliate of a Party who desires to
     purchase or use Collaboration Product will not receive (i) any preferences
     over and above those granted to preferred third-party customers with
     respect to price of, the use of, or access to Collaboration Product, or
     (ii) any rights under  Collaboration Illumina Intellectual Property,
     Collaboration Joint Intellectual Property, or Collaboration PEB
     Intellectual Property, beyond those  granted to third party customers with
     the sale of Collaboration Product.

13.  General Provisions

     13.1.  Force Majeure. If the performance of any part of this Agreement by
            -------------
            either Party, or of any obligation under this Agreement, is
            prevented, restricted, interfered with or delayed by reason of any
            cause beyond the reasonable control of the Party liable to perform,
            unless conclusive evidence to the contrary is provided, the Party so
            affected will, upon giving written notice to the other Party, be
            excused from the performance to the extent of the prevention,
            restriction, interference or delay; provided, however, the affected
            Party will use its reasonable best efforts to avoid or remove the


                                       26
<PAGE>

            causes of non-performance and will continue performance with the
            utmost dispatch whenever the causes are removed. When the
            circumstances arise, the Parties will discuss what, if any,
            modification of the terms of this Agreement may be required in order
            to arrive at an equitable solution.

     13.2.  Governing Law. This Agreement will be deemed to have been made in
            -------------
            the State of California and its form, execution, validity,
            construction and effect will be determined in accordance with the
            laws of the State of California.

     13.3.  Books and Records. Using a Party's customary practices and
            -----------------
            procedures in accordance with GAAP, each Party will keep and
            maintain proper and complete records and books of account sufficient
            in detail to enable the verification of monies spent and received by
            each Party in connection with each Party's obligations under this
            Agreement. The books and records will be retained for a period of at
            least 6 years. Each Party will provide to the other Party detailed
            quarterly statements for monies spent and received by each Party in
            connection with each Party's obligations under this Agreement. Each
            Party will have the right from time to time (not to exceed once
            during each calendar year) during normal business hours and upon
            reasonable notice to inspect in confidence, or have an agent,
            accountant or other representative inspect in confidence, the books
            and records. The Party initiating the inspection will bear the costs
            thereof unless the inspection reveals a discrepancy unfavorable to
            that Party of at least 10%, in which case the other Party will pay
            the costs of the inspection. If the inspection results in a final
            determination that amounts have been overstated or understated, the
            applicable amount will be refunded or paid promptly by the
            appropriate Party.

     13.4.  Payments. All payments due under this Agreement will be due 30 days
            --------
            following the start or end, as the case may be, of the relevant
            Quarter. All payments under this Agreement will be made in United
            States dollars by wire transfer to a bank account designated by the
            Party receiving the payment, without deductions of taxes charges and
            any other duties that may be imposed. For converting payments due on
            sales made in currencies other than United States dollars into
            United States dollars, the payments will be converted at the closing
            commercial sell rate of exchange for United States dollars and each
            currency involved as quoted by Citibank, N.A., or any successor
            thereto, in New York on the last business day of the relevant
            period.

     13.5.  Severability. If a court or an arbitrator of competent jurisdiction
            ------------
            holds any provision of this Agreement to be illegal, unenforceable,
            or invalid, in whole or in part for any reason, the validity and
            enforceability of the remaining provisions, or portions thereof,
            will not be affected.

                                       27
<PAGE>

     13.6.  Entire Agreement. This Agreement and the Equity Agreement, and
            ----------------
            exhibits, and schedules referred to in this Agreement constitute the
            final, complete, and exclusive statement of the terms of the
            agreement between the Parties pertaining to the subject matter of
            this Agreement and supersedes all prior and contemporaneous
            understandings or agreements of the Parties. However, confidential
            disclosures made under previously executed Confidentiality
            Agreements between Illumina and PEB will remain subject to the terms
            of those Confidentiality Agreements. No Party has been induced to
            enter into this Agreement by, nor is any Party relying on, any
            representation or warranty outside those expressly set forth in this
            Agreement.

     13.7.  Modification of Agreement. No terms or conditions of this Agreement
            -------------------------
            will be varied or modified by any prior or subsequent statement,
            conduct or act of either of the Parties, except that the Parties may
            supplement, amend, or modify this Agreement by written instruments
            specifically referring to and executed in the same manner as this
            Agreement.

     13.8.  Assignment. Neither Party has the power to assign this Agreement nor
            ----------
            any interest hereunder without the written consent of the other
            Party. Except that either Party may assign this Agreement or any of
            its rights or obligations to any Affiliate or to any third party
            with which it may merge or consolidate, or to which it may transfer
            all or substantially all of its assets to which this Agreement
            relates, without obtaining the consent of the other Party.

     13.9.  Construction.
            ------------

            13.9.1.  Headings; Sections and Exhibits. Headings contained in this
                     -------------------------------
                     Agreement are for convenience only and will not be used in
                     the interpretation of this Agreement. References herein to
                     sections and exhibits are to the sections and exhibits,
                     respectively, of this Agreement. The exhibits are hereby
                     incorporated herein by reference and made a part of this
                     Agreement. Should any inconsistency exist or arise between
                     a provision of this Agreement and a provision of any
                     exhibit, schedule, or other incorporated writing, the
                     provision of this Agreement will prevail.

            13.9.2.  No Construction Against Drafter. Each Party and its counsel
                     -------------------------------
                     have participated fully in the review and revision of this
                     Agreement. Any rule of construction to the effect that
                     ambiguities are to be resolved against the drafting Party
                     will not apply in interpreting this Agreement.

            13.9.3.  Certain Words and Terms. Unless the context clearly
                      ----------------------
                     requires otherwise,

                                       28
<PAGE>

                     (A)  the plural and singular numbers will each be deemed to
                          include the other;

                     (B)  the masculine, feminine, and neuter genders will each
                          be deemed to include the others;

                     (C)  "will," "will agree," or "agrees" are mandatory, and
                          "may" is permissive;

                     (D)  "or" is not exclusive; and

                     (E)  "includes" and "including" are not limiting.

    13.10.  Counterparts. This Agreement may be executed in any number of
            ------------
            counterparts, and each counterpart will be deemed an original
            instrument, but all counterparts together will constitute but one
            agreement.

    13.11.  Notices.
            -------

            13.11.1.  Sufficient Notice. All notices, requests, demands, or
                      -----------------
                      other communications under this Agreement will be in
                      writing. Notice will be sufficiently given for all
                      purposes as follows:

           (A)  when personally delivered to the recipient, notice is effective
                on delivery;

           (B)  when mailed certified mail, return receipt requested, notice is
                effective on receipt, if delivery is confirmed by a return
                receipt;

           (C)  when delivered by Federal Express/Airborne/United Parcel
                Service/DHL WorldWide, or United States Express Mail, charges
                prepaid or charged to the sender's account, notice is effective
                on delivery, if delivery is confirmed by the delivery service;
                and

           (D)  when sent by telex or fax to the last telex or fax number of the
                recipient known to the Party giving notice, notice is effective
                on receipt, provided that

               (1)  a duplicate copy of the notice is promptly given by first-
                    class or certified mail or by overnight delivery, or

               (2)  the receiving Party delivers a written confirmation of
                    receipt. Any notice given by telex or fax will be deemed
                    received on the next business day if it is received after
                    5:00 p.m. (recipient's time) or on a nonbusiness day.

                                       29
<PAGE>

            13.11.2.  Notice Refused, Unclaimed, Or Undeliverable. Any correctly
                      -------------------------------------------
                   addressed notice that is refused, unclaimed, or undeliverable
                   because of an act or omission of the Party to be notified
                   will be deemed effective as of the first date that said
                   notice was refused, unclaimed, or deemed undeliverable by the
                   postal authorities, messenger, or overnight delivery service.

            13.11.3.  Addresses. Addresses for purpose of giving notice are as
                      ---------
                   follows:



            If to Illumina:                 Illumina, Inc.
                                            9390 Towne Centre Drive, Suite 200
                                            San Diego, CA 92121-3015
                                            FAX No.: 858-587-4297
                                            Attn.: President

            If to PEB                       PE Biosystems
                                            850 Lincoln Centre Drive
                                            Foster City, CA 94404
                                            FAX No.: 650-638-6677
                                            Attn.: President, PE Biosystems


[Signature Page Follows]

                                       30
<PAGE>

The Parties , through their authorized officers, have executed this Agreement as
of the Effective Date.

ILLUMINA, INC.                          PE CORPORATION, THROUGH ITS PE
                                        BIOSYSTEMS GROUP



By: _______________________________     By: _______________________________


Name: _____________________________     Name: _____________________________

Title: ____________________________     Title: ____________________________

Date: _____________________________     Date: _____________________________

                                       31
<PAGE>

                                   EXHIBIT 1

                 Technical Milestones and Development Funding
                 --------------------------------------------

                              Technical Milestones

                                      [*]

____________________
[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                       1
<PAGE>

                              Development Funding

                                      [*]

____________________
[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                       2
<PAGE>

                                   EXHIBIT 2

                         Alternative Dispute Resolution


In the event of any dispute, difference or question arising between the Parties
in connection with this Agreement, the construction thereof, or the rights,
duties or liabilities of either Party excluding any dispute or controversy for
which arbitration is prohibited by any applicable law or treaty, and which
dispute is not amicably resolved by the good faith efforts of the Parties under
Section 5.4, then such dispute will be resolved by binding Alternative Dispute
Resolution ("ADR") in the manner described below:

1)  If any Party intends to begin an ADR to resolve a dispute, such Party will
    provide written notice to counsel for the other Party informing the other
    Party of such intention and the issues to be resolved. Within 10 business
    days after the receipt of such notice, the other Party may by written notice
    to the counsel for the Party initiating ADR, add additional issues to be
    resolved. From the date of receipt of the ADR notice and until such time as
    any matter has been finally settled by ADR, the running of the time periods
    in which a Party must cure a breach of this Agreement will be suspended as
    to the subject matter of the dispute.

2)  Within 5 business days following the receipt of the original ADR notice
    ("Notice Date") a neutral will be selected by the then President of the
    Center for Public Resources ("CPR"), 14th Floor, 366 Madison Avenue, New
    York, New York 10017. The neutral will be an individual who will preside in
    resolution of any disputes between the Parties. The neutral selected will be
    a member of the Judicial Panel of the CPR and will not be an employee,
    director or shareholder of either a Party or of an Affiliate of either
    Party.

3)  Each Party will have 10 business days from the date the neutral is selected
    to object in good faith to the selection of that person. If either Party
    makes such an objection, the then president of the CPR will as soon as
    possible thereafter, select another neutral under the same conditions set
    forth above. This second selection will be final.

4)  No later than 90 business days after selection, the neutral will hold a
    hearing to resolve each of the issues identified by the Parties.

    a)  Each Party will have the right to be represented by counsel at the
        hearing.

    b)  The hearing will be held at such place as agreed upon by the Parties or
        if they are unable to agree at a place designated by the neutral.

5)  The ADR proceeding will be confidential and the neutral will issue
    appropriate protective orders to safeguard each Parties' Confidential
    Information. Except as required by law, no Party will make (or instruct the
    neutral to make) any public

                                       1
<PAGE>

    announcement with respect to the proceedings or decision of the neutral
    without the prior written consent of each other Party. The existence of any
    dispute submitted to ADR, and the award of the neutral, will be kept in
    confidence by the Parties and the neutral, except as required in connection
    with the enforcement of such award or as otherwise required by applicable
    law.

6)  It is the intention of the Parties that discovery, although permitted as
    described herein, will be limited except in exceptional circumstances. The
    neutral will permit such limited discovery necessary for an understanding of
    any legitimate issue raised in the ADR, including the production of
    documents. Each Party will be permitted but not required to take the
    deposition of not more than 5 persons, each such deposition not to exceed 6
    hours in length. If the neutral believes that exceptional circumstances
    exist, and additional discovery is necessary for a full and fair resolution
    of the issue, the neutral may order such additional discovery as the neutral
    deems necessary. At the hearing the Parties may present testimony (either by
    live witness or deposition) and documentary evidence. The neutral will have
    sole discretion with regard to the admissibility of any evidence and all
    other materials relating to the conduct of the hearing.

7)  Each Party will be entitled to no more than 4 hours of hearing to present
    testimony or documentary evidence. The testimony of both Parties will be
    presented during the same calendar day. Such time limitation will include
    any direct, cross or rebuttal testimony, but such time limitation will only
    be charged against the Party conducting such direct, cross or rebuttal
    testimony. It will be the responsibility of the neutral to determine whether
    the Parties have had the 4 hours to which they are entitled. If the neutral
    believes that exceptional circumstances exist, and additional hearing time
    is necessary for a full and fair resolution of the issue, the neutral may
    order such additional hearing time as the neutral deems necessary.

8)  At least 15 business days prior to the date set for the hearing, each Party
    will submit to each other Party and the neutral a list of all documents on
    which such Party intends to rely in any oral or written presentation to the
    neutral and a list of all witnesses, if any, such Party intends to call at
    such hearing and a brief summary of each witnesses testimony.

9)  At least 5 business days prior to the hearing, each Party must submit to the
    neutral and serve on each other Party a proposed ruling on each issue to be
    resolved. Such writing will be limited to presenting the proposed ruling,
    will contain no argument or analysis of the facts or issues, and will be
    limited to not more than 10 pages.

10) Not more than 5 business days following the close of hearings, the Parties
    may each submit post hearing briefs to the neutral addressing the evidence
    and issues to be resolved. Such post hearing briefs will not be more than 50
    pages.

                                       2
<PAGE>

11)  The neutral will rule on each disputed issue after the hearing as
     expeditiously as possible, but in no event more than 30 days after the
     close of the hearing. The neutral will, in rendering his decision, apply
     the substantive law of the state of California, U.S.A., and without giving
     effect to its principles of conflicts of law, and without giving effect to
     any rules or laws relating to arbitration. The neutral is not empowered
     with the remedy of termination of the Agreement.

12)  Any judgment upon the award rendered by the neutral may be entered in any
     court having jurisdiction thereof. The decision rendered in any such ADR
     will be final and not appealable, except in cases of fraud or bad faith on
     the part of the neutral or any Party to the ADR proceeding in connection
     with the conduct of such proceedings, and will be enforceable in any court
     of competent jurisdiction.

13)  The neutral will have the option to assess costs and expenses to the non-
     prevailing Party, otherwise the Parties will pay their own costs
     (including, without limitation, attorneys fees) and expenses in connection
     with such ADR.

                                       3