<PAGE>

                                                                   EXHIBIT 10.29

                                                                    CONFIDENTIAL

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                   DEVELOPMENT AND COMMERCIALIZATION AGREEMENT


                                 BY AND BETWEEN

                          THIRD WAVE TECHNOLOGIES, INC.


                                       AND

                            ACLARA BIOSCIENCES, INC.




                             DATED OCTOBER 24, 2001


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Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as [ * ]. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

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                                                                    CONFIDENTIAL

                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE 1 DEFINITIONS2
         1.1.     "ACLARA COMPONENT" .....................................    2
         1.2.     "ACLARA MARKS" .........................................    2
         1.3.     "ACLARA PARTNER" .......................................    2
         1.4.     "ACLARA TECHNOLOGY" ....................................    2
         1.5.     "AFFILIATE" ............................................    2
         1.6.     "APPROVED PRODUCT" .....................................    3
         1.7.     "[ * ] INSTRUMENT" .....................................    3
         1.8.     "CLEAVASE ENZYME" ......................................    3
         1.9.     "COLLABORATION PRODUCT" ................................    3
         1.10.    "COMMERCIAL LAUNCH" ....................................    3
         1.11.    "COMMERCIALIZATION COSTS" ..............................    3
         1.12.    "COMMERCIALIZING PARTY" ................................    4
         1.13.    "COMMERCIALIZATION PLAN AND BUDGET" ....................    4
         1.14.    "COMMERCIALIZATION TEAM LEADER" ........................    4
         1.15.    "CONTROLLED AFFILIATE" .................................    4
         1.16.    "COVER" ................................................    4
         1.17.    "CUSTOMER" .............................................    4
         1.18.    "DEVELOPMENT COMMITTEE" ................................    4
         1.19.    "DEVELOPMENT COSTS" ....................................    4
         1.20.    "DEVELOPMENT PERSONNEL" ................................    4
         1.21.    "DEVELOPMENT PLAN AND BUDGET" ..........................    4
         1.22.    "DEVELOPMENT PROGRAM" ..................................    5
         1.23.    "DEVELOPMENT RATE" .....................................    5
         1.24.    "DEVELOPMENT TERM" .....................................    5
         1.25.    [ * ] ..................................................    5
         1.26.    "EARLY ACCESS PROGRAM" .................................    5
         1.27.    "ETAG PRODUCT" .........................................    5
         1.28.    "ETAG SIGNAL PROBE" ....................................    5
         1.29.    "EXCLUSIVE CONTROL" ....................................    5
         1.30.    "EXCLUSIVE TARGET ROYALTY" .............................    5
         1.31.    "FIELD" ................................................    5
         1.32.    "FINANCE SUB-COMMITTEE" ................................    6
         1.33.    "FTE" OR "FULL-TIME EQUIVALENT" ........................    6
         1.34.    "GAAP" .................................................    6
         1.35.    "GENOTYPING APPLICATIONS" ..............................    6
         1.36.    "INTELLECTUAL PROPERTY RIGHTS" .........................    6
         1.37.    "INTELLECTUAL PROPERTY SUB-COMMITTEE" ..................    6
         1.38.    "INVADER PROBE" ........................................    6

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                                TABLE OF CONTENTS

                                                                            PAGE

         1.39.    "INVADER REACTION" .....................................    6
         1.40.    "JOINT DISTRIBUTOR" ....................................    6
         1.41.    "JOINT MARK" ...........................................    6
         1.42.    "JOINT PRODUCT FORECAST" ...............................    7
         1.43.    "JOINT STEERING COMMITTEE" .............................    7
         1.44.    "LICENSABLE" ...........................................    7
         1.45.    "MANUFACTURING COSTS" ..................................    7
         1.46.    "MANUFACTURING PARTY" ..................................    7
         1.47.    "MARKETING DISTRIBUTOR" ................................    8
         1.48.    [ * ] ..................................................    8
         1.49.    "MILESTONE" ............................................    8
         1.50.    "MULTI-TARGET ANALYSIS" ................................    8
         1.51.    "MULTI-TARGET ETAG PROBE SET" ..........................    8
         1.52.    "NET SALES" ............................................    8
         1.53.    "NON-COMMERCIALIZING PARTY" ............................    9
         1.54.    "NON-EXCLUSIVE CONTROL" ................................    9
         1.55.    "NON-EXCLUSIVE TARGET ROYALTY" .........................    9
         1.56.    "NON-HYBRIDIZING REGION" ...............................    9
         1.57.    "PATENT RIGHTS" ........................................    9
         1.58.    "PRIMARY PROBE" ........................................    9
         1.59.    "PROJECT LEADER" .......................................   10
         1.60.    "PROPRIETARY TARGET ROYALTY" ...........................   10
         1.61.    [ * ] ..................................................   10
         1.62.    "SALES GOAL" ...........................................   10
         1.63.    "SOFTWARE" .............................................   10
         1.64.    "SPECIFICATIONS" .......................................   10
         1.65.    "TARGET" ...............................................   11
         1.66.    "TARGET FEES" ..........................................   11
         1.67.    "TECHNOLOGY" ...........................................   11
         1.68.    "TWT TECHNOLOGY" .......................................   11
         1.69.    "TWT MARKS" ............................................   11
         1.70.    "VALID CLAIM" ..........................................   11

ARTICLE 2 DEVELOPMENT PROCEDURES .........................................   12
         2.1.     PROJECT LEADERS ........................................   12
         2.2.     DEVELOPMENT COMMITTEE ..................................   13

ARTICLE 3 DEVELOPMENT PLAN AND BUDGET ....................................   14
         3.1.     GENERAL ................................................   14
         3.2.     CONTENTS ...............................................   15
         3.3.     PERIODIC REVIEWS .......................................   15
         3.4.     DEVELOPMENT PRIORITIES .................................   15

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         3.5.     EXPANSION OF THE FIELD .................................   15

ARTICLE 4 DEVELOPMENT PROGRAM ............................................   15
         4.1.     DEVELOPMENT PROGRAM ....................................   15
         4.2.     [ * ] INSTRUMENTS ......................................   16
         4.3.     PROPRIETARY TARGETS ....................................   16
         4.4.     CHANGES ................................................   18
         4.5.     EXTENSION OF MILESTONE DATES ...........................   18
         4.6.     DEVELOPMENT REPORTS AND RECORDS ........................   18
         4.7.     DEVELOPMENT TERM .......................................   19
         4.8.     DEVELOPMENT PROGRAM LICENSES ...........................   19
         4.9.     THIRD PARTY TECHNOLOGY .................................   19
         4.10.    AGREEMENTS WITH EMPLOYEES AND SUBCONTRACTORS ...........   20
         4.11.    VISITING PERSONNEL .....................................   20
         4.12.    EQUIPMENT OWNERSHIP ....................................   20

ARTICLE 5 FUNDING OF DEVELOPMENT PROGRAM .................................   20
         5.1.     FUNDING ................................................   20
         5.2.     DEVELOPMENT RATE .......................................   20
         5.3.     OTHER APPROVED DEVELOPMENT COSTS .......................   21
         5.4.     PAYMENT ................................................   21
         5.5.     EXCESS COSTS ...........................................   21
         5.6.     RECONCILIATION .........................................   22

ARTICLE 6 JOINT STEERING COMMITTEE AND COMMERCIALIZATION PLAN
          AND BUDGET .....................................................   22
         6.1.     GENERAL ................................................   22
         6.2.     COMMERCIALIZATION TEAM LEADER ..........................   22
         6.3.     [INTENTIONALLY OMITTED] ................................   23
         6.4.     JOINT STEERING COMMITTEE ...............................   23
         6.5.     FINANCE SUB-COMMITTEE ..................................   25
         6.6.     COMMERCIALIZATION PLAN AND BUDGET ......................   25
         6.7.     FUNDING OF COMMERCIALIZATION ACTIVITIES ................   27
         6.8.     JOINT PRODUCT FORECASTS AND ORDERS .....................   29

ARTICLE 7 COMMERCIALIZATION ..............................................   29
         7.1.     GENERAL RESPONSIBILITIES ...............................   29
         7.2.     SALES GOALS ............................................   30
         7.3.     COMMERCIAL LAUNCH ......................................   30
         7.4.     MARKETING AND DISTRIBUTION BY TWT ......................   30
         7.5.     MARKETING AND DISTRIBUTION BY ACLARA ...................   31
         7.6.     INDIRECT DISTRIBUTION ..................................   31
         7.7.     NO OTHER DISTRIBUTION RIGHTS ...........................   32

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                                TABLE OF CONTENTS

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         7.8.     PRODUCT CONFIGURATIONS .................................   32
         7.9.     MARKETING MATERIALS AND PRESENTATIONS ..................   32
         7.10.    CUSTOMER AGREEMENTS ....................................   32
         7.11.    THIRD PARTY PATENTS ....................................   33
         7.12.    PACKAGING AND LABELING .................................   33
         7.13.    CUSTOMER RESTRICTIONS ..................................   34
         7.14.    CUSTOMER SUPPORT AND WARRANTIES ........................   34
         7.15.    INTERNAL USE ...........................................   34

ARTICLE 8 COMMERCIALIZATION ECONOMICS ....................................   35
         8.1.     INITIAL PAYMENTS .......................................   35
         8.2.     ACCOUNTING DEFINITIONS .................................   35
         8.3.     ACCOUNTING BASED ON SALES ..............................   36
         8.4.     PROPRIETARY TARGET ROYALTIES ...........................   37
         8.5.     PROPRIETARY TARGET OFFSETS .............................   38
         8.6.     BUNDLING ...............................................   39
         8.7.     OTHER THIRD PARTY ROYALTIES ............................   39

ARTICLE 9 TRADEMARKS AND BRANDING ........................................   39
         9.1.     JOINT MARKS ............................................   39
         9.2.     CO-BRANDING ............................................   40

ARTICLE 10 MANUFACTURING .................................................   42
         10.1.    LICENSES ...............................................   42
         10.2.    RESTRICTIONS ...........................................   42
         10.3.    RESPONSIBILITIES .......................................   42
         10.4.    ECONOMICS ..............................................   43
         10.5.    PRODUCT CHANGES ........................................   43

ARTICLE 11 SUPPLY OF ACLARA COMPONENTS ...................................   44
         11.1.    TERMS AND CONDITIONS ...................................   44
         11.2.    SUPPLY .................................................   44
         11.3.    FORECASTS ..............................................   44
         11.4.    ORDERS .................................................   45
         11.5.    COMPENSATION ...........................................   45
         11.6.    DELIVERY ...............................................   45
         11.7.    INVOICING ..............................................   46
         11.8.    QUALITY AND QUALITY CONTROL ............................   46
         11.9.    INSPECTION/REJECTION ...................................   46
         11.10.   PRODUCT WARRANTY .......................................   47
         11.11.   SHORTAGE OF SUPPLY OF ACLARA COMPONENTS ................   47
         11.12.   THIRD PARTY CONTRACTORS ................................   50

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ARTICLE 12 SUPPLY OF APPROVED PRODUCTS ...................................   50
         12.1.    TERMS AND CONDITIONS ...................................   50
         12.2.    SUPPLY .................................................   50
         12.3.    FORECASTS ..............................................   51
         12.4.    ORDERS .................................................   52
         12.5.    CONSIDERATION ..........................................   52
         12.6.    DELIVERY ...............................................   53
         12.7.    INVOICING ..............................................   53
         12.8.    QUALITY AND QUALITY CONTROL ............................   53
         12.9.    INSPECTION/REJECTION ...................................   53
         12.10.   PRODUCT WARRANTY .......................................   54
         12.11.   SHORTAGE OF SUPPLY OF APPROVED PRODUCTS ................   54
         12.12.   THIRD PARTY CONTRACTORS ................................   58

ARTICLE 13 PAYMENTS; REPORTS; RECORDS ....................................   59
         13.1.    RECONCILIATION .........................................   59
         13.2.    INITIAL PAYMENT UPON MANUFACTURE OF APPROVED
                  PRODUCTS ...............................................   59
         13.3.    SUPPLY OF ACLARA COMPONENTS AND APPROVED PRODUCTS
                  TO TWT .................................................   59
         13.4.    SUPPLY OF CLEAVASE ENZYME AND APPROVED PRODUCTS
                  TO ACLARA ..............................................   59
         13.5.    PAYMENTS FOR INTERNAL USE BY THE MANUFACTURING
                  PARTY ..................................................   59
         13.6.    PAYMENT METHOD .........................................   60
         13.7.    CURRENCY CONVERSION ....................................   60
         13.8.    RECORDS; INSPECTION ....................................   60
         13.9.    TAXES ..................................................   61

ARTICLE 14 INTELLECTUAL PROPERTY .........................................   62
         14.1.    OWNERSHIP ..............................................   62
         14.2.    PROSECUTION OF SOLELY OWNED PATENT RIGHTS ..............   64
         14.3.    PROSECUTION OF JOINTLY OWNED PATENT RIGHTS .............   64

ARTICLE 15 CONFIDENTIALITY ...............................................   66
         15.1.    CONFIDENTIAL INFORMATION ...............................   66
         15.2.    PERMITTED USE AND DISCLOSURE ...........................   67
         15.3.    CONFIDENTIAL TERMS/PUBLICITY ...........................   67
         15.4.    PROPRIETARY MARKINGS ...................................   67

ARTICLE 16 REPRESENTATIONS, WARRANTIES, AND DISCLAIMERS ..................   68
         16.1.    GENERAL ................................................   68
         16.2.    BY TWT .................................................   68
         16.3.    BY ACLARA ..............................................   68
         16.4.    DISCLAIMERS ............................................   68

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ARTICLE 17 INDEMNIFICATION ...............................................   69
         17.1.    INDEMNIFICATION OF TWT .................................   69
         17.2.    INDEMNIFICATION OF ACLARA ..............................   70
         17.3.    PROCEDURE ..............................................   70

ARTICLE 18 DISPUTE RESOLUTION ............................................   71
         18.1.    DISPUTES ...............................................   71
         18.2.    FULL ARBITRATION .......................................   71
         18.3.    SHORT FORM ARBITRATION .................................   72
         18.4.    COMMERCIALIZATION PLAN AND BUDGET DISPUTE
                  RESOLUTION .............................................   73

ARTICLE 19 TERM AND TERMINATION ..........................................   74
         19.1.    TERM ...................................................   74
         19.2.    NO APPROVAL FOR COMMERCIAL LAUNCH ......................   74
         19.3.    TERMINATION FOR CAUSE ..................................   74
         19.4.    [INTENTIONALLY OMITTED] ................................   75
         19.5.    EFFECT OF TERMINATION ..................................   75
ARTICLE 20 GENERAL .......................................................   80
         20.1.    NO OTHER RIGHTS ........................................   80
         20.2.    GOVERNING LAW AND JURISDICTION .........................   80
         20.3.    ASSIGNMENT .............................................   80
         20.4.    INDEPENDENT CONTRACTORS ................................   81
         20.5.    FORCE MAJEURE ..........................................   81
         20.6.    NOTICES ................................................   81
         20.7.    COMPLIANCE WITH LAWS ...................................   82
         20.8.    ARTICLE AND SECTION HEADINGS, LANGUAGE AND
                  CONSTRUCTION ...........................................   82
         20.9.    MODIFICATION AND WAIVER ................................   82
         20.10.   SEVERABILITY ...........................................   83
         20.11.   ENTIRE AGREEMENT .......................................   83
         20.12.   FURTHER ASSURANCES .....................................   83
         20.13.   BANKRUPTCY .............................................   84
         20.14.   COUNTERPARTS ...........................................   84

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                                                                    CONFIDENTIAL

                   DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

         This Development and Commercialization Agreement (the "AGREEMENT"),
effective as of October 24, 2001 (the "EFFECTIVE DATE"), is made by and between
Third Wave Technologies, Inc., a Delaware corporation, having a place of
business at 502 S. Rosa Road, Madison, WI 53719 ("TWT"), and ACLARA BioSciences,
Inc., a Delaware corporation, having a place of business at 1288 Pear Avenue,
Mountain View, CA 94043 ("ACLARA") (each a "PARTY;" together the "PARTIES").

                                   BACKGROUND

         A. TWT has technology and intellectual property for, among other
things, genetic analysis, including test kits, components, and other products
and services based upon its proprietary Invader(R) platform, and is in the
business of manufacturing and commercializing such products, components and
services.

         B. Similarly, ACLARA has technology and intellectual property for,
among other things, genetic analysis and biopharmaceutical research, including
products and components based upon ACLARA's proprietary eTag(TM) technology.

         C. On the terms and conditions set forth below, ACLARA and TWT desire
to collaborate to develop and commercialize assay kits for use on [ * ]
instruments commercially available from third parties to perform simultaneous
multiple gene expression and/or genotyping assays, each assay testing for a
unique analyte, using ACLARA's eTag(TM) technology in TWT's Invader(R) platform.

         D. Additionally, TWT has built up significant manufacturing capacities
and capabilities for assay kits which the Parties intend to utilize, to the
extent mutually agreed, to manufacture the co-developed assay products
hereunder, all on the terms and conditions set forth below.

         E. The Parties acknowledge that the arrangement set forth in this
Agreement is intended to make available to customers a wider range and variety
of products than would have been available in the time frames contemplated
herein in the absence of the collaboration between the Parties.

         NOW, THEREFORE, for and in consideration of the covenants, conditions
and undertakings hereinafter set forth, TWT and ACLARA each agree as follows:

---------------------

  [ * ] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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                                                                    CONFIDENTIAL

                                    ARTICLE 1

                                   DEFINITIONS

         As used in this Agreement, the following terms shall have the meanings
indicated:

         1.1.  "ACLARA  COMPONENT" shall mean an ACLARA Precursor in a [ * ]. As
used herein, "ACLARA Precursors" shall mean [ * ].

         1.2. "ACLARA MARKS" shall mean the trademarks, trade names, and logos
of ACLARA set forth in Exhibit 1.2, as amended by ACLARA from time to time in
accordance with this Agreement. ACLARA uses "eTag" as a trademark of ACLARA, but
such term is printed in this Agreement without the (TM) mark for convenience.

         1.3. "ACLARA PARTNER" shall mean a non-Affiliate third party entity
that ACLARA has proposed to TWT in writing be authorized by TWT to distribute
Approved Products under this Agreement concurrently with the distribution, as
authorized by ACLARA, of [ * ].

         1.4.  "ACLARA  TECHNOLOGY"  shall  mean the ACLARA  Patents  and ACLARA
Technical Information.

                  1.4.1 "ACLARA PATENTS" shall mean all Patent Rights owned or
Licensable by ACLARA or its Controlled Affiliates during the term of this
Agreement which would, absent a license or other authorization from the owner of
such Patent Rights, be infringed by the composition, manufacture, sale, use,
importation, or other exploitation of an Approved Product (or any component
thereof).

                  1.4.2 "ACLARA TECHNICAL INFORMATION" shall mean all Technology
disclosed by ACLARA directly to TWT during the term of this Agreement to the
extent it relates to the composition, manufacture, sale, use, importation, or
other exploitation of an Approved Product, and trade secret rights to the extent
embodied in such Technology that are proprietary to or Licensable by ACLARA or
its Controlled Affiliates.

         1.5. "AFFILIATE" shall mean any entity which controls, is controlled by
or is under common control with the applicable entity for so long as such
control exists. For purposes of this definition, "control" shall mean beneficial
ownership of fifty percent (50%) or more of the shares of the subject entity
entitled to vote in the election of directors (or, in the case of an entity that
is not a corporation, for the election of the corresponding managing authority).
A "CONTROLLED AFFILIATE" shall mean an entity that is controlled by a Party to
this Agreement.

---------------------

  [ * ] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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                                                                    CONFIDENTIAL

         1.6. "APPROVED PRODUCT" shall mean a Collaboration Product for which
the Parties have agreed in writing upon a Specification and that is developed by
the Parties under this Agreement, which Collaboration Product (i) consists of a
Multi-Target eTag Probe Set, Cleavase Enzyme, and appropriate buffers, all as
specified in the Specification for such Collaboration Product and (ii) is
designed and intended for use to perform the particular Multi-Target Analysis,
producing the resulting eTag Products, using a [ * ] Instrument, each as set
forth in such Specifications. For clarity, each Approved Product shall be
limited to, and include, [ * ] as set forth in such Specifications.
Notwithstanding anything to the contrary, Approved Product shall not mean any [
* ]t.

         1.7. "[ * ] INSTRUMENT" shall mean any instrument, other than a [ * ]
on samples which is generally commercially available from a third party during
the term of this Agreement and which is suitable for use to separate in the same
solution multiple products by molecular weight and charge, including those
resultant eTag Products that arise from performing multiple genotyping and/or
gene expression analyses simultaneously in such a solution, and is suitable for
detecting and/or quantifying each of such multiple eTag Products. [ * ]
Instrument shall include the instruments identified in Exhibit 1.7.

         1.8. "CLEAVASE ENZYME" shall mean any enzyme that (A) has the ability
to recognize the structure formed by the hybridization of an Invader Probe and a
Primary Probe to their cognate Target sequence such that the Invader Probe
overlaps, at its 3' terminus by at least one nucleotide, the duplex formed by
the hybridization of the Primary Probe to the complementary region of the
Target; (B) has the ability to [ * ]. It is acknowledged and agreed that
Cleavase Enzyme shall include the enzymes having the three properties described
in (A), (B), and (C) of this Section 1.8 above, regardless of whether or not the
enzyme has other properties or uses, including [ * ]. Cleavase Enzyme shall
include those enzymes identified on Exhibit 1.8, as may be updated from time to
time by TWT.

         1.9. "COLLABORATION PRODUCT" shall mean a kit that is designed and
intended for use to perform a Multi-Target Analysis, producing the resulting
eTag Products to be analyzed by a [ * ] Instrument.

         1.10. "COMMERCIAL LAUNCH" shall mean, with respect to each Approved
Product, the first bona fide commercial sale of such Approved Product to a
non-Affiliate third party in any country of the world in a fully arms length
transaction by or under authority of a Party or its Marketing Distributor,
including Joint Partners and ACLARA Partners, and including distribution under
the Early Access Program.

         1.11.  "COMMERCIALIZATION  COSTS"  shall have the  meaning set forth in
Exhibit 1.11.

---------------------

  [ * ] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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                                                                    CONFIDENTIAL

         1.12. "COMMERCIALIZING PARTY" shall mean, with respect to each
particular unit of Approved Product, the Party that actually distributed such
unit to a Customer or to a Marketing Distributor.

         1.13. "COMMERCIALIZATION PLAN AND BUDGET" shall mean the plan and
budget in effect from time to time for commercialization of the Approved
Products, as established and modified by the Joint Steering Committee in
accordance with Article 6.

         1.14.  "COMMERCIALIZATION TEAM LEADER" shall have the meaning set forth
in Section 6.2.

         1.15.  "CONTROLLED  AFFILIATE"  shall have the  meaning as set forth in
Section 1.5.

         1.16. "COVER" shall mean that, with respect to any Target, the
composition, manufacture, use, sale, offer for sale, importation, or other
exploitation of such Target would infringe at least one Valid Claim of the
applicable Patent Rights absent a license or other authorization from the owner
of such Patent Rights. Notwithstanding anything to the contrary, Patent Rights
shall be deemed to Cover a Target for purposes of this Agreement to the extent
that the Party or its Controlled Affiliate having rights under the Patent Rights
[ * ] to a non-Affiliate third party for a license under such Patent Rights as a
result of the manufacture, use, sale, offer for sale, importation, or other
exploitation hereunder of the Approved Product designed to detect and/or
quantify such Target.

         1.17. "CUSTOMER" shall mean an end user customer that purchases an
Approved Product for its own use, including to provide services to others, and
not for further distribution.

         1.18. "DEVELOPMENT COMMITTEE" shall have the meaning defined in Section
2.2 below.

         1.19. "DEVELOPMENT COSTS" shall mean the total of (i) the hours
actually expended by Development Personnel of a Party in order to perform the
Party's responsibilities in accordance with the Development Plan and Budget
multiplied by the Development Rate in effect at the time such hours are
incurred; and (ii) such other costs and expenses actually incurred by such Party
in performing its responsibilities under the Development Program to the extent
set forth in Section 5.3.

         1.20. "DEVELOPMENT PERSONNEL" shall mean employees and subcontractors
of a Party assigned (full- or part-time) to conduct development or other work
under the Development Program, including Project Leaders, scientists, research
and manufacturing staff, quality control and assurance personnel, technicians or
the like, but excluding non-technical, non-professional personnel such as
secretarial or administrative staff.

         1.21. "DEVELOPMENT PLAN AND BUDGET" shall mean the plan and budget in
effect from time to time for the Development Program, as established and
modified by the Development Committee in accordance with Articles 2, 3 and 4.

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  [ * ] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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                                                                    CONFIDENTIAL

         1.22. "DEVELOPMENT PROGRAM" shall have the meaning set forth in Section
4.1.

         1.23.  "DEVELOPMENT  RATE"  shall  mean the FTE  rate  for  determining
Development Costs as set forth in Section 5.2.

         1.24.  "DEVELOPMENT  TERM"  shall have the meaning set forth in Section
4.7.

         1.25. [ * ]

         1.26.  "EARLY  ACCESS  PROGRAM"  shall  have the  meaning  set forth in
Section 6.6.4.

         1.27. "ETAG PRODUCT" shall mean a molecule consisting of [ * ].

         1.28. "ETAG SIGNAL PROBE" shall mean a [ * ].

         1.29. "EXCLUSIVE CONTROL" shall mean that the applicable Party or its
Controlled Affiliate (i) solely owns all right, title, and interest in and to
Patent Rights Covering a Target reasonably sufficient to exclude all others from
the manufacture, and from the sale, in the applicable country of all generally
commercially available products to detect and/or quantify such Target, or (ii)
has a license under Patent Rights Covering a Target of the applicable Approved
Product to make, use, sell, offer to sell, and import the Approved Product in
the applicable country, which rights are exclusive (including with respect to
the licensor and all third parties) reasonably sufficient to exclude all others
from the manufacture, and from the sale, in the applicable country of all
generally commercially available products to detect and/or quantify such Target.
Notwithstanding the foregoing, rights retained by a government entity, or rights
retained by a licensor for non-commercial applications, shall not be considered
for purposes of determining whether or not the applicable Party or its
Controlled Affiliate has Exclusive Control. A Party or its Controlled Affiliate,
as applicable, shall be required to have rights to enforce the applicable Patent
Rights, however, in order to qualify as having Exclusive Control; provided that
such enforcement rights with respect to Patent Rights licensed from another
entity may be backup rights that are triggered only if the licensor (or others
on its behalf) does not enforce the Patent Rights.

         1.30. "EXCLUSIVE TARGET ROYALTY" shall mean, with respect to each
Target Exclusively Controlled by a Party or its Controlled Affiliate to which an
Approved Product is directed, an amount equal to the greater of (i) and (ii)
below, divided by the total number of Targets to which the Approved Product is
directed: (i) [ * ] percent [ * ] of the Net Sales based upon the sale by the
Commercializing Party or its Affiliate of such Approved Product directly to a
Customer or to a Marketing Distributor in the country where so Exclusively
Controlled; or (ii) (X + Y), where X is equal to the [ * ], and Y is [ * ]
percent of such Net Sales. For purposes of this Agreement, an Approved Product
shall be considered directed only to the Targets set forth in its
Specifications.

         1.31.  "FIELD"  shall mean all research  applications  for nucleic acid
analysis concerning [ * ], including such research applications involving [ * ];
but excluding [ * ].

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         1.32.  "FINANCE  SUB-COMMITTEE"  shall mean the committee  described in
Section 6.5.

         1.33. "FTE" or "FULL-TIME EQUIVALENT" shall mean a dedicated full-time
employee or contractor of ACLARA or TWT, as the case may be, or in the case of
less than a full-time dedicated person, a full-time, equivalent person year,
each based upon the total of one thousand eight hundred eighty (1,880) hours per
year of work on activities under the Development Program.

         1.34. "GAAP" shall mean the then-current applicable Generally Accepted
Accounting Principles in the United States consistently applied as recognized or
accepted by the United States Securities and Exchange Commission and the
Financial Accounting Standards Board. As used herein, "GAAP" shall also include
cost accounting principles and procedures that are generally accepted in the
United States.

         1.35.  "GENOTYPING  APPLICATIONS" shall mean use of an Approved Product
for purposes of detection and/or quantification of a DNA Target.

         1.36. "INTELLECTUAL PROPERTY RIGHTS" shall mean any and all rights in,
to, or arising out of any (i) Patent Rights; (ii) trade secrets or know how;
(iii) copyrights, copyright registrations, or any application therefor, in the
U.S. or any foreign country, or any other right corresponding thereto throughout
the world, including moral rights; or (iv) any other intellectual property or
proprietary right anywhere in the world.

         1.37.  "INTELLECTUAL  PROPERTY  SUB-COMMITTEE" shall mean the committee
described in Section 14.3.2(ii).

         1.38. "INVADER PROBE" shall mean an oligonucleotide probe comprising
(A) a region complementary to, and designed to hybridize to, the 3' portion of
the Target; and (B) an additional region (the "OVERLAP REGION") located on the
3' end of such oligonucleotide probe, which Overlap Region adjoins the foregoing
complementary region and comprises one or more nucleotides or other structural
moieties that overlaps the duplex formed by the hybridization [ * ]. The Overlap
Region may be complementary or non-complementary to the Target.

         1.39. "INVADER REACTION" shall mean the reaction occurring as a result
of the recognition and cleavage by a Cleavase Enzyme of the structure formed by
the hybridization of a nucleic acid with one or more oligonucleotide probes.

         1.40. "JOINT DISTRIBUTOR" shall mean a non-Affiliate third party entity
that is authorized by the Joint Steering Committee to distribute Approved
Products under this Agreement.

         1.41. "JOINT MARK" shall have the meaning set forth in Section 9.1.

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         1.42.  "JOINT  PRODUCT  FORECAST"  shall have the  meaning set forth in
Section 6.8.

         1.43.  "JOINT STEERING  COMMITTEE"  shall have the meaning set forth in
Section 6.4 below.

         1.44. "LICENSABLE" shall mean ownership or possession of the power and
authority to grant a license or sublicense of, or within, the scope provided for
herein with respect to the particular subject matter, without violating the
agreement or arrangement with a non-Affiliate third party under which the
applicable Party or its Controlled Affiliate acquired or generated such subject
matter. This Section 1.44 does not imply or create any obligation of a Party or
its Controlled Affiliate to obtain rights for the other Party when negotiating
such agreements or arrangements with such third parties.

         1.45. "MANUFACTURING COSTS" shall mean (i) the Manufacturing Party's
total direct and indirect costs associated with the manufacture or preparation
of the particular Approved Product, Software, or component of the Approved
Product or Software, including: direct and indirect manufacturing overhead
(including reasonable indirect materials and scrap) and related support costs
for production engineering, quality assurance and control, process engineering
and materials management; overhead for facilities; costs of equipment; salary
and benefits associated with labor, including management salary and benefits;
general and administrative expenses; inventory costs and overhead; other
overhead; direct materials costs; costs of testing, packaging and labeling;
occupancy and manufacturing equipment depreciation and rents; and any other
costs commonly treated as manufacturing costs under GAAP, but excluding
allocations or charges for idle manufacturing capacity (I. E., manufacturing
capacity that is available for the production of Approved Products but not so
used); all calculated in accordance with GAAP; (ii) with respect to components
or materials acquired from a non-Affiliate vendor, the amounts paid to such
vendor, in each case including freight, insurance, shipping, packaging, and
other similar costs associated with acquiring such components or materials, as
well as costs of inspection, rejection, and return by the Manufacturing Party;
and (iii) with respect to components or materials acquired from an Affiliate for
an Approved Product or Software, the greater of (A) costs calculated in
accordance with (i) above, but for the Affiliate rather than the Manufacturing
Party; or (B) the amounts paid to such Affiliate in the manner set forth under
(ii) above. Notwithstanding the foregoing, Manufacturing Costs shall not include
the amounts paid by the Manufacturing Party to the other Party hereto as set
forth in Section 8.1.1 or 8.1.2 for ACLARA Components or Cleavase Enzymes, as
appropriate, but shall include amounts incurred by the Manufacturing Party for
freight, insurance, shipping, packaging, and other similar costs associated with
acquiring such ACLARA Components or Cleavase Enzymes, if applicable, as well as
costs of inspection, rejection, and return by the Manufacturing Party. For
purposes of determining Manufacturing Costs, costs shall not be shifted,
allocated or weighted in any manner that overstates or unfairly increases the
costs allocated to the particular Approved Product, Software or ACLARA
Component, as applicable.

         1.46. "MANUFACTURING PARTY" shall mean, with respect to each particular
unit of Approved Product, the Party, or third party contract manufacturer if
applicable, that manufactures into final form such Approved Product for
distribution hereunder. For avoidance of doubt, neither Party shall be
considered to be a Manufacturing Party under this Agreement as a result of the
manufacture and

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supply to the other Party, or such third party contract manufacturer, of any
components used by such other Party or contract manufacturer in the manufacture
of the Approved Product.

         1.47. "MARKETING DISTRIBUTOR" shall mean a non-Affiliate third party
authorized directly by a Party pursuant to a written agreement to distribute an
Approved Product in accordance with this Agreement, including ACLARA Partners
and Joint Distributors; provided however that each such third party shall be
considered a Marketing Distributor only to the extent that the Approved Products
purchased by the third party are resold in fully arms length transactions to
Customers and are not exploited by such third party for any other purpose (e.g.,
in a service). Each such third party shall be considered a Customer with respect
to each Approved Product that it uses in any manner.

         1.48. [ * ] shall mean a [ * ]. For  avoidance  of doubt,  it is agreed
that a [ * ] shall not include [ * ].


         1.49. "MILESTONE" shall mean a particular portion of the Development
Program, and associated deadline for completion of such portion, as set forth in
the Development Plan and Budget.

         1.50. "MULTI-TARGET ANALYSIS" shall mean the performance, in a single
reaction vessel, of simultaneous Invader Reactions against a single sample for
the detection and/or quantification of [ * ] or more unique Targets in such
sample (i.e. each Target having a different nucleotide sequence) using a
Multi-Target eTag Probe Set, and physically separating the eTag Products
resulting from the Invader Reactions, where the recognition and measurement of
each such eTag Product, or lack thereof, corresponds to such detection and/or
quantification of one of the Targets in such sample.

         1.51. "MULTI-TARGET ETAG PROBE SET" shall mean a set of paired
oligonucleotide1 probes, which set and probes are developed by the Parties under
this Agreement, and where each such pair of probes consists of an eTag Signal
Probe and an Invader Probe for the Invader Reaction necessary to detect and/or
quantify a unique Target.

         1.52. "NET SALES" shall mean the total amount invoiced to Customers and
to Marketing Distributors on transfers of Approved Products, and transfers of
associated Software approved by the Development Committee or the Parties in
writing for use with an Approved Product, each transfer directly by a Party or
its Affiliates (the "SELLER") to a Customer or Marketing Distributor, as
applicable, less the following all as calculated in accordance with GAAP: (i)
all trade, cash and quantity credits, discounts, refunds or rebates; (ii)
amounts for claims, allowances or credits for returns; charge backs; and (iii)
packaging, handling fees and prepaid freight, sales taxes, duties and

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  1 As used in this Agreement, (i) "obligonucleotide probe" shall refer to any
synthesized or otherwise manufactured sequence (of any length) of nucleotides,
including DNA, RNA, PNA, modified or synthesized nucleotides, universal bases,
adducts, or the like, or combinations thereof; and (ii) "nucleic acid" shall
refer to a sequence (of any length) of nucleotides whether synthesized or
naturally occurring, including oligonucleotide probes.

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other governmental charges (including value added tax), but excluding what is
commonly known as income taxes; provided that in the case of (i) and (ii), such
amounts are allowed by the Seller to, and actually taken by, the Customer or
Marketing Distributor, and in the case of (iii), such amounts are charged
separately on the invoice and paid by the Customer or Marketing Distributor. For
avoidance of doubt, Net Sales shall not include sales (A) by a Party to an
Affiliate to the extent that the Affiliate resells the Approved Product, or
Software, to a Customer or to a Marketing Distributor, or (B) by Marketing
Distributors to Customers.

         1.53. "NON-COMMERCIALIZING PARTY" shall mean, with respect to each
particular unit of Approved Product distributed under this Agreement, the Party
that is not the Commercializing Party of that unit.

         1.54. "NON-EXCLUSIVE CONTROL" shall mean that the applicable Party or
its Controlled Affiliate has rights in or to Patent Rights Covering a Target to
make, use, sell, offer to sell, and import the applicable Approved Product in
the applicable country, which rights are not Exclusive Control.

         1.55. "NON-EXCLUSIVE TARGET ROYALTY" shall mean, with respect to each
Target Non-Exclusively Controlled by a Party or its Controlled Affiliate to
which an Approved Product is directed, an amount equal to the greater of (i) and
(ii) below, divided by the total number of Targets to which the Approved Product
is directed: (i) [ * ] percent ([ * ]%) of the Net Sales based upon the sale by
the Commercializing Party or its Affiliates directly to a Customer or to a
Marketing Distributor of such Approved Product in the country where so
Non-Exclusively Controlled; or (ii) (X + Y), where X is equal to [ * ], and Y is
[ * ] percent of such Net Sales.

         1.56.  "NON-HYBRIDIZING  REGION" shall have the meaning as set forth in
Section 1.58.

         1.57. "PATENT RIGHTS" shall mean any and all rights under any of the
following, whether existing now or in the future: (i) a United States,
international or foreign patent, utility model, design registration, certificate
of invention, patent of addition or substitution, or other governmental grant
for the protection of inventions or industrial designs anywhere in the world,
including any reissue, renewal, re-examination or extension thereof; and (ii)
any application for any of the foregoing, including any international,
provisional, divisional, continuation, continuation-in-part, or continued
prosecution application.

         1.58. "PRIMARY PROBE" shall mean an oligonucleotide probe comprising
(A) a region complementary2 to, and designed to hybridize to, the 5' portion of
a Target; and (B) a non-hybridizing region located on the 5' end of such
oligonucleotide probe (the "NON-HYBRIDIZING

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  1  As used herein,  "complementary"  allows for areas  of  non-complementarity
(i.  e.,  one or more base  pair  mismatches)  to the  cognate  sequence  of the
applicable Target or nucleotide sequence.

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REGION"); which Non-Hybridizing Region adjoins with the foregoing complementary
region and may incorporate one or more nucleotides, [ * ].

         1.59.  "PROJECT  LEADER"  shall have the  meaning  set forth in Section
2.1.1.

         1.60.  "PROPRIETARY  TARGET  ROYALTY"  shall mean an  Exclusive  Target
Royalty or a Non-Exclusive Target Royalty, as applicable.

         1.61. [ * ]

         1.62. "SALES GOAL" shall mean the total aggregate amount of Net Sales
that the Parties will attempt to generate from sales, both directly and
indirectly, of an Approved Product in a geographic region during a particular
period of time, all as expressly set forth in the Commercialization Plan and
Budget.

         1.63. "SOFTWARE" shall mean, with respect to a particular Approved
Product, only the machine readable code version of associated functional and/or
bioinformatic software necessary or useful for the integration of the Approved
Product on a particular [ * ] Instrument, or for generation, analysis or
manipulation of the data generated from use of such Approved Product, in each
case as approved by the Development Committee (or after the Development Term by
written agreement of both Parties) for use with or as part of such Approved
Product, and including any machine readable updates, improvements or
modifications additionally furnished by the Commercializing Party for use with
an Approved Product.

         1.64. "SPECIFICATIONS" shall mean:

         1.64.1 with respect to each particular ACLARA Component, the written
specifications for the ACLARA Component as most recently approved by the
Development Committee in writing and as thereafter amended solely in accordance
with this Agreement;

                  1.64.2 with respect to each particular Cleavase Enzyme, the
written specifications for the Cleavase Enzyme as most recently approved by the
Development Committee in writing and as thereafter amended solely in accordance
with this Agreement;

                  1.64.3 with respect to each particular Approved Product, the
written specifications for the Approved Product as most recently approved by the
Development Committee in writing and as thereafter amended solely in accordance
with this Agreement; and

                  1.64.4 with respect to Software, the written specifications
for such Software as most recently approved by the Development Committee in
writing and as thereafter amended solely in accordance with this Agreement.

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         1.65. "TARGET" shall mean, with respect to a particular Collaboration
Product (including Approved Products), individually each nucleic acid to be
detected and/or quantified by such Collaboration Product, which nucleic acid is
of a sufficient length to allow discrimination of other non-homologous nucleic
acids by an Invader Reaction.

         1.66. "TARGET FEES" shall mean, with respect to a particular Target of
an Approved Product, either Exclusively Controlled or Non-Exclusively Controlled
by a Party or its Controlled Affiliate, as applicable, the total aggregate
amount of all running royalties actually paid in good faith by such Party and
its Controlled Affiliates (the "Licensee") to any and all third parties as a
result of the manufacture, use, sale, importation, distribution, or other
exploitation of such Approved Product hereunder under Patent Rights owned or
controlled by such third party that Cover the particular Target. In no event
shall Target Fees include any [ * ]

         1.67. "TECHNOLOGY" shall mean any and all technology and technical
information, including without limitation data, inventions (whether or not
patented or patentable), knowledge, ideas, developments, prototypes, invention
disclosures, designs, processes, sequences, methods, techniques, materials,
instructions, formulas, compositions, chemistries, algorithms, know-how,
research, modifications, software, drawings, equipment, protocols, configuration
and process information, specifications, models, works of authorship,
improvements, and any other technical subject matter.

         1.68.  "TWT  TECHNOLOGY"  shall mean the TWT Patents and TWT  Technical
Information.

                  1.68.1 "TWT PATENTS" shall mean all Patent Rights owned or
Licensable by TWT or its Controlled Affiliate during the term of this Agreement
which would, absent a license or other authorization from the owner of such
Patent Rights, be infringed by the composition, manufacture, sale, use,
importation, or other exploitation of an Approved Product (or a component
thereof).

                  1.68.2 "TWT TECHNICAL INFORMATION" shall mean all Technology
disclosed by TWT directly to ACLARA during the term of this Agreement to the
extent it relates to the composition, manufacture, sale, use, importation, or
other exploitation of an Approved Product, and trade secret rights to the extent
embodied in such Technology that are proprietary to or Licensable by TWT or its
Controlled Affiliate.

         1.69. "TWT MARKS" shall mean the trademarks, trade names, and logos of
TWT set forth in Exhibit 1.69, as amended by TWT from time to time in accordance
with this Agreement. Invader(R) and Cleavase(R) are registered trademarks of TWT
but are printed without the registration mark in this Agreement for convenience.

         1.70.  "VALID CLAIM" shall mean (i) a claim of an issued and un-expired
patent  which has not been held  unenforceable  or  invalid  by a court or other
governmental agency of competent

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jurisdiction (from which no appeal is or can be taken), and which has not been
disclaimed or admitted to be invalid or unenforceable through reissue or
otherwise; and (ii) a claim included in a pending patent application that is
being actively prosecuted and which has not been canceled, withdrawn from
consideration, finally determined to be unallowable by the applicable
governmental authority for whatever reason (and from which no appeal is or can
be taken), and/or abandoned. Notwithstanding the foregoing, Valid Claim shall
not include any claims [ * ].

                                    ARTICLE 2

                             DEVELOPMENT PROCEDURES

         2.1. PROJECT LEADERS.

                  2.1.1 APPOINTMENT. Each Party shall appoint a project leader
that is reasonably acceptable to the other Party ("PROJECT LEADER") who shall
serve as the primary point of communication and coordination between the Parties
with respect to the Development Program and shall be responsible for day to day
coordination of the Development Program internally at the appointing Party.
Subject to the foregoing, each Party shall have the right to replace its Project
Leader from time to time by providing prior written notice to the other Party.
The initial Project Leaders for the Parties shall be as follows:

          TWT:                                  ACLARA:

          Name:    [ * ]                        Name: [ * ]

          Title:   Director, Assay              Title:   Associate Director,
                   Development                           Genomics


          Voice:   [ * ]                        Voice: [ * ]

          Fax:     [ * ]                        Fax:     [ * ]

         2.1.2 RESPONSIBILITIES. During the Development Term, the Project
Leaders shall meet to discuss the progress of the Development Program at least
weekly by phone or video conference, and in person at least once every calendar
month (with the location alternating between the facilities of ACLARA and TWT
unless otherwise agreed). The Project Leader for each Party shall act as the
chairperson of the Development Committee for such Party and shall keep the
Development Committee reasonably informed regarding such Party's progress under
the Development Program. Additionally, each Project Leader shall be responsible
for (i) monitoring the schedules and progress of the Development Program against
the Development Plan and Budget; (ii) discussing remedial measures if the
Project Leaders determine that the progress with respect to a

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particular Approved Product or a particular task (including Milestones) under
the Development Plan and Budget is unsatisfactory; (iii) receiving and
submitting requests for information, materials and/or assistance between the
Parties; (iv) preparing and providing quarterly written reports to the other
Party in accordance with Section 4.6.2; (v) coordinating the preparation and
providing each proposed Development Plan and Budget, when applicable, to the
other Development Committee members by October 1 of each calendar year; and (vi)
performing such other activities as approved by the Development Committee.
Approximately [ * ] hours of each Project Leader's time during each calendar
month of the Development Term shall be dedicated to such activities to the
extent necessary to perform the activities; it being understood that each
Project Leader shall devote greater time to such activities during the early
stages of the Development Program as is reasonably necessary in order to
establish communications and procedures and diligently commence the Development
Program. Such time commitment of the Project Leaders may be adjusted by written
agreement of the Parties from time to time.

         2.2. DEVELOPMENT COMMITTEE. ACLARA and TWT shall establish a
development committee to oversee, review and coordinate the development of each
Approved Product, and the implementation of the Development Program, in
accordance with this Agreement (the "DEVELOPMENT COMMITTEE"). The Development
Committee shall be responsible for reviewing and approving (i) each Development
Plan and Budget, including Milestones and budgets; (ii) each Specification for
ACLARA Components, Software and Approved Products (including with respect to
Target designation for Approved Products); (iii) requested modifications to any
of the foregoing; (iv) Software for use with Approved Products and Approved
Products for Commercial Launch; and (v) such other matters as provided for in
this Agreement or as approved by the Joint Steering Committee. The Development
Committee shall also be responsible for cooperating with the Joint Steering
Committee by, among other things, (A) considering feedback and information from
the Joint Steering Committee regarding desired product strategy, planning, and
direction, (B) keeping the Joint Steering Committee informed regarding proposed
and potential Collaboration Products and the nature and status of Approved
Products under development, including giving projected timing for completion of
development, and (C) proceeding in accordance with instructions or requests
approved by the Joint Steering Committee. No Development Plan and Budget,
Specification, or modification thereto, shall be effective under this Agreement
until approved by the Development Committee.

                  2.2.1 MEMBERSHIP. The Development Committee shall consist of
four members, two appointed by ACLARA and two appointed by TWT. One member
appointed by each Party shall be the Project Leader as set forth in Section 2.1
above. At least one member appointed by each Party shall being an executive of
such Party at the vice president level or higher. Subject to the requirements in
this Section 2.2.1, each of TWT and ACLARA may replace its Development Committee
members at any time by providing prior written notice of the change to the other
Party.

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                  2.2.2 MEETINGS. During the Development Term, the Development
Committee shall meet in accordance with a mutually agreed upon schedule, no less
often than once each calendar month by teleconference and once each calendar
quarter in person. The first meeting of the Development Committee shall occur
within fifteen (15) days after the Effective Date. Unless otherwise agreed, the
location of the in person meetings shall alternate between ACLARA's notice
address and TWT's notice address under Section 20.6. At its meetings, the
Development Committee will (i) monitor and review the progress of the
Development Program, including progress toward meeting Milestones, (ii) discuss
changes in development direction, potential budget overruns, delays, and any
other matters concerning the Development Program reasonably identified by either
Party; and (iii) review the then current Specifications and Development Plan and
Budget for the Approved Products and Software, including component
specifications, under development, and consider proposed changes. Other
representatives of TWT and ACLARA may attend Development Committee meetings as
non-voting observers only with the approval of the Development Committee. Each
Party shall bear the costs and expenses of its personnel participating in
Development Committee meetings, including travel expenses.

                  2.2.3 DECISION MAKING. Decisions and approvals of the
Development Committee shall be made only by majority approval of all members,
either present or voting by proxy, with each member having one vote. The
Development Committee shall prepare a written record of all Development
Committee decisions which are to be binding upon the Parties, including
approvals of Approved Products for Commercial Launch, and approvals of, or
changes to, the Development Plan and Budget or Specifications. Such records
shall be considered approved by the Development Committee, and binding upon both
Parties, only if signed by both Parties. Except for such signed records, all
decisions and approvals of the Development Committee, and discussions at
Development Committee meetings, shall be for advisory and information purposes
only and shall not be binding upon either Party. If the Development Committee
has not resolved an issue regarding the Development Program after discussing the
issue in at least two (2) meetings, then either Party may refer the issue for
consideration and attempted resolution by the Joint Steering Committee by
providing written notice of such referral to the other Party. Unless otherwise
specified, "approved" by the Development Committee as used in this Agreement
means binding approval in accordance with this Section 2.2.3.

                                    ARTICLE 3

                           DEVELOPMENT PLAN AND BUDGET

3.1. GENERAL. The Development Plan and Budget for the period through December
31, 2002 is set forth in Exhibit 3.1. Provided that both Parties desire to
continue the Development Program after the end of such calendar year, or after
the end of any calendar year thereafter, the Parties shall cooperate in an
effort to submit to the Development Committee, prior to October 1 of the then
current calendar year, a proposed development plan and budget for the following
calendar year. To the extent desired by both Parties, the Development Committee
shall review such proposals as soon

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as possible and shall diligently attempt to approve a mutually acceptable
Development Plan and Budget for the succeeding calendar year, no later than
December 1 of the then current year.

         3.2. CONTENTS. Each Development Plan and Budget shall establish, based
upon the competencies and resource availability of each Party: (i) the specific
tasks to be performed by each Party under the Development Program and the times
for completion of such tasks; (ii) the Specifications for each Approved Product,
Cleavase Enzyme, ACLARA Component, and Software, to the extent not previously
approved; (iii) the maximum budget for the Development Program and/or particular
tasks thereunder; (iv) responsibility and funding for establishing facilities;
and (v) such other matters as the Development Committee deems appropriate. The
funding level for the Development Program will be only as established by the
Development Committee.

         3.3.  PERIODIC  REVIEWS.  The  Development  Committee  shall review the
Development  Plan and  Budget on an  ongoing  basis,  no less  often than once a
calendar quarter, and may make changes thereto as it deems appropriate.

         3.4. DEVELOPMENT PRIORITIES. The Development Committee shall have the
right to include in any Development Plan and Budget activities beyond the scope
of the activities set forth in the initial Development Plan and Budget in
Exhibit 3.1; provided that activities under each Development Plan and Budget
shall extend only to the development of Approved Products expressly set forth
therein. Nothing in this Agreement, including Articles 6 and 7 and the diligence
obligations in Article 7, shall create or imply any obligation of either Party
to include any specific Collaboration Product or Approved Product in the
Development Plan and Budget or to approve any proposed Specification to cause a
Collaboration Product to become an Approved Product.

         3.5. EXPANSION OF THE FIELD. Upon request of either Party, the Parties
will discuss expanding the Field to include research applications for [ * ];
provided that neither Party shall be obligated to discuss any expansion to the
extent that it is contractually or otherwise legally prevented from doing so,
and neither Party shall be obligated to agree to any expansion. The terms and
conditions for any such expansion shall be solely as set forth in a written
agreement signed by both Parties.

                                    ARTICLE 4

                               DEVELOPMENT PROGRAM

         4.1. DEVELOPMENT PROGRAM. During the Development Term, each Party shall
use [ * ] efforts to perform the work allocated to such Party in the Development
Plan and Budget within the timeframes set forth therein (such activities,
collectively the "DEVELOPMENT PROGRAM") in order to achieve Commercial Launch of
the applicable Approved Products as soon as reasonably practicable, including
the use of [ * ] efforts to (A) deliver to the other Party reasonable quantities
of proprietary

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materials (e.g. Cleavase Enzymes and ACLARA Components) and such other
deliverables as are set forth in the Development Plan and Budget, (B) allocate
such resources as are required under the Development Plan and Budget, (C)
otherwise reasonably assist the other Party in performing the work for which the
other Party is responsible under the Development Plan and Budget, including
reasonably assisting the other Party in using materials provided to it in order
to perform its work; and (D) use personnel with sufficient skills and
experience, together with sufficient equipment and facilities, to carry out its
obligations under, and to accomplish the objectives of, the Development Plan and
Budget in an expeditious manner. For clarity, the obligations in this Section
4.1 shall not apply to any Collaboration Product that is not an Approved
Product.

         4.2. [ * ] INSTRUMENTS. Each Approved Product will be optimized for use
on the particular [ * ] Instrument(s) which are expressly identified in its
Specifications as being recommended for use with the Approved Product. The [ * ]
Instruments set forth in Exhibit 1.7 shall be deemed approved by the Development
Committee and shall be identified in the Specifications for Approved Products as
being so recommended, unless otherwise approved by the Development Committee.
The Parties intend that the Development Committee will select additional
recommended [ * ] Instruments based upon, among other things, the installed base
and ease of use. It is acknowledged and agreed, however, that use of Approved
Products is not intended to be limited to use with recommended [ * ]
Instruments. Rather, except to the extent otherwise agreed by the Parties in
writing, Customers will be free to use Approved Products with any [ * ]
instruments they deem appropriate.

         4.3. PROPRIETARY TARGETS.

                  4.3.1 NOTICE. If a Party or its Affiliate Exclusively Controls
or Non-Exclusively Controls a Target that is to be detected and/or quantified by
an Approved Product, as set forth or contemplated in a proposed development plan
and budget or proposed specification regarding such Approved Product, or if a
Party or its Affiliate otherwise owns a patent application that includes claims
directed to such a Target, such Party shall provide written notice to the other
Party of such control and patent application reasonably in advance of approval
by the Development Committee of each of the Specifications and Development Plan
and Budget for the Approved Product, as applicable. Additionally, throughout the
term of the Agreement, each Party shall notify the other Party in writing of all
Targets of an Approved Product for which it or its Affiliate thereafter obtains
Exclusive Control or Non-Exclusive Control, of all Targets of an Approved
Product for which it or its Affiliate thereafter includes claims in a filed
patent application, and of all changes to the information that it is required to
provide under this Section 4.3, each no later than fifteen (15) days after, as
applicable, the Party or its Affiliate obtains such control, includes such
claims, or such changes occur. Concurrently with such notice, the Party shall
update the information that it is required to provide under Sections 4.3.2 and
4.3.3.

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                  4.3.2 INFORMATION DISCLOSURE. In each notice under Section
4.3.1, the Party providing the notice shall identify (i) the owner and licensor
of the applicable Patent Rights Covering the Target for which a Party is
claiming Exclusive Control or Non-Exclusive Control, (ii) the patent number,
issue date, and country for all issued patents included in such Patent Rights,
(iii) the patent application number, filing date, and country for all filed
patent applications included in such Patent Rights to the extent that a Target
Fee is being paid to a non-Affiliate third party under a claim in such a patent
application (and not under issued claims in such Patent Rights Covering the same
Target); and (iv) the patent application number, filing date, and country for
all filed patent applications owned by the Party or its Affiliate that include
claims directed to the applicable Target. If the Patent Rights are licensed from
a third party, the Party providing the notice shall include a reasonably
detailed written description of the terms and conditions of the license
agreement under which the license has been obtained which are material to such
Party's obligations to pay Target Fees thereunder. Such written description is
more fully described in Section 4.3.3. Such Party shall also provide to the
other Party, concurrently with the notice, a copy of each patent application
described in (iii) or (iv) above, as filed, as well as a copy of the entire file
history for such patent application, and copies of any further communications to
and from the applicable patent office regarding such pending patent applications
within fifteen (15) days after it, or its licensor if applicable, sends or
receives such communications. For clarity, a Party shall not be required to
provide pending patent applications that it has licensed from a third party, or
the associated information described above, if it is paying Target Fees for the
particular Target under Valid Claims in issued patents and the Target Fees are
not affected by the pending patent applications.

                  4.3.3 LICENSE AGREEMENT DESCRIPTIONS. Each written description
of a license agreement provided under Section 4.3.2 shall, without limitation,
set forth (i) the term of the agreement and of each license grant to the Party
providing the notice for which a Target Fee is payable thereunder; (ii) the
scope of each such license grant to such Party, including any licensed product,
field, and like definitions, limitations, and restrictions (iii) the scope of
Patent Rights licensed under each such license grant, (iv) the scope of any
exclusivity that has been granted to such Party and the rights reserved to the
licensor, if any, with respect to the Patent Rights; (iv) the scope of such
Party's rights to grant and authorize sublicenses under each such license grant,
(v) the amount of the Target Fees that are payable by such Party with respect to
each such license grant; (vi) the terms and conditions for payment of the Target
Fees by such Party, including "valid claim" definitions, the scope of products
on which a Target Fee is paid, the definition of the basis for the Target Fees
(e.g. definition of net sales), and the timing of and trigger for the payment of
Target Fees; and (vii) any restrictions or limitations in such agreement that
are applicable to sub-licensees under the agreement if the Patent Rights are to
be sub-licensed to the other Party under this Agreement, as more fully described
in Sections 8.4.3(ii) and 8.5.2. The Party receiving such a written description
shall have the right to have an independent auditor inspect the applicable
agreement in accordance with the terms set forth in Section 13.8 in order to
confirm the accuracy of the description. The first such inspection of the
applicable agreement shall not count toward the two inspections per year
contemplated under Section 13.8, provided that the audit is limited to
inspection of the agreement itself for purposes of confirming the accuracy and
completeness of the description.

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         4.4. CHANGES. Each Party shall have the right to request changes to
previously approved Specifications, and the Development Plan and Budget, at any
time; provided that changes shall be considered effective and binding upon the
Parties only to the extent approved by the Development Committee. Except for
changes so approved, each Party shall continue to perform its responsibilities
under the Development Program in accordance with the Development Plan and Budget
and Specifications then in effect.

         4.5. EXTENSION OF MILESTONE DATES. No Milestone or deliverable shall be
considered completed until approved by the Development Committee. Neither Party
shall be held responsible for a failure to meet a Milestone date set forth in
the Development Plan and Budget, or a failure to meet Specifications under the
Development Program, however, provided that such Party has used, and continues
to use, [ * ] efforts during the Development Term to accomplish the objectives
of the applicable Milestone and Specification. Without limiting the foregoing, a
Party (the "DELAYED PARTY") shall not be held responsible for a failure to meet
a Milestone date to the extent the delay is due to the failure of the other
Party to meet its Milestone dates, provided that the performance of the Delayed
Party is actually dependent on timely performance by the other Party. Under the
circumstances set forth in this Section 4.5 above, the Development Committee
shall meet to discuss extending the Milestone schedule appropriately.

         4.6. DEVELOPMENT REPORTS AND RECORDS.

                  4.6.1  DEVELOPMENT  COMMITTEE.   Each  Party  shall  keep  the
Development  Committee  fully  informed as to the  progress and results of those
portions of the Development Program conducted by such Party.

                  4.6.2 REPORTS. Within the fifteen (15) days after the end of
each calendar quarter, each Party shall prepare and provide to the other Party a
written report that (i) summarizes the progress of the work performed pursuant
to the Development Plan and Budget during the preceding calendar quarter, (ii)
identifies any issues or circumstances of which it is aware that may prevent it
from timely performing the Milestones for which it is responsible under the
Development Program in the then current calendar quarter and the extent of any
potential delay; and (iii) to the extent reasonably practicable, identifies
steps that may be taken, or changes that may be made, to resolve issues and
return to schedule. The form of such reports shall be as mutually agreed by the
Parties prior to December 15, 2001.

                  4.6.3 RECORDS. Each Party shall use reasonable commercial
efforts to maintain, and to require its subcontractors to maintain, records in
sufficient detail and in good scientific manner as will properly reflect all
work done and results achieved in the performance of the Development Program,
including to maintain reasonably detailed logs of the work performed and time
expended

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 by  Development  Personnel and  conception and reduction to practice of
inventions under the Development Program.

         4.7.  DEVELOPMENT  TERM.  The  term  of the  Development  Program  (the
"DEVELOPMENT  TERM") shall  commence on the  Effective  Date and shall  continue
thereafter until the earlier of: (i) expiration of the then current  Development
Plan and Budget without  extension in accordance  with this  Agreement;  or (ii)
expiration or termination of this Agreement.

         4.8. DEVELOPMENT PROGRAM LICENSES.

                  4.8.1 TO ACLARA. Subject to the terms and conditions of this
Agreement, TWT hereby grants to ACLARA a non-exclusive, royalty free right and
license under the TWT Technology to perform during the Development Term those
activities assigned to ACLARA under the Development Program in accordance with
the then current Development Plan and Budget to the extent in effect hereunder.

                  4.8.2 TO TWT. Subject to the terms and conditions of this
Agreement, ACLARA hereby grants to TWT a non-exclusive, royalty free right and
license under the ACLARA Technology to perform during the Development Term those
activities assigned to TWT under the Development Program in accordance with the
then current Development Plan and Budget to the extent in effect hereunder.

                  4.8.3 RESTRICTIONS. It is understood and agreed that this
Section 4.8 does not grant either Party any right or license (i) to disclose or
use any Technology, or trade secret or know how of the other Party, to or for
any third party; (ii) to manufacture or otherwise reproduce any materials
provided by the other Party; (iii) to sell or otherwise provide any products,
components or services to any third party; or (iv) to perform any other
activities other than those reasonably necessary to perform its responsibilities
in accordance with the Development Plan and Budget. Each Party further agrees
that it will use materials provided by the other Party in connection with the
Development Program solely to perform its responsibilities in accordance with
the Development Plan and Budget. In no event shall any such materials be
transferred or delivered to any other party, unless authorized in the
Development Plan and Budget or otherwise authorized in writing by the Party
providing such materials.

         4.9. THIRD PARTY TECHNOLOGY. Except for the use of Technology generally
available for purchase from a third party and the use of Technology for which
the other Party's prior written consent has been obtained, neither Party shall
use the Technology of any third party in connection with the Development Program
if such use would result in the need for the other Party to obtain an additional
license or other authorization from such third party in order to exercise its
rights and licenses as contemplated herein. Additionally, a Party shall not
disclose any trade secrets of a third party, or copyright protected materials of
a third party, to the other Party without the prior written consent of the other
Party. The Parties will cooperate reasonably to redirect the Development Program
if the Parties are concerned that an Approved Product may infringe the Patent
Rights of any third party.

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         4.10. AGREEMENTS WITH EMPLOYEES AND SUBCONTRACTORS. Neither Party shall
use a subcontractor to perform its responsibilities under the Development
Program except to the extent expressly approved by the Development Committee.
Each Party shall enter into a written agreement with each employee, and each
such subcontractor, that it uses to perform its responsibilities under the
Development Program which assigns to such Party, to the extent permitted by
applicable law, all right, title, and interest, in and to all Technology
invented, created, or otherwise developed by the subcontractor or employee, or
the subcontractor's employees, in the performance of such activities, and all
Intellectual Property Rights in or to such Technology.

         4.11. VISITING PERSONNEL. It is understood that in the course of the
Development Program there may be occasions where one Party's personnel
("VISITING PERSONNEL") may be stationed at the other Party's facilities on a
temporary basis. Such Visiting Personnel shall agree to be bound by all
reasonable orders, rules and regulations pertaining to the hosting Party's
facilities while at such facilities, including reasonable confidentiality
obligations.

         4.12.  EQUIPMENT  OWNERSHIP.  Except as  otherwise  agreed  upon by the
Parties in writing, each Party shall solely own all equipment that it purchases.

                                    ARTICLE 5

                         FUNDING OF DEVELOPMENT PROGRAM

         5.1. FUNDING. Subject to the limitations set forth below, each party
shall be responsible for fifty percent (50%) of the total Development Costs
incurred by TWT and ACLARA in accordance with the Development Plan and Budget,
as described more fully in this Article 5 below. Except for payment of
Development Costs by a Party to the other Party in accordance with Sections 5.4
and 5.6, no other amounts shall be reimbursed to such other Party for activities
arising out of, in conducting, or otherwise related to the Development Program,
including (i) salary, employee benefits, materials, support and administrative
staff, overhead, and other associated costs and expenses; (ii) amounts payable
to third parties, such as contractors or the like; and (iii) other direct and
indirect costs and expenses incurred by or on behalf of such Party in
conducting, in connection with, or otherwise arising out of, any activity
pursuant to the Development Plan and Budget.

         5.2. DEVELOPMENT RATE. Except for Development Costs identified in
Section 5.3, an FTE rate for Development Personnel, established in accordance
with this Section 5.2, ("DEVELOPMENT RATE") shall be used for purposes of
determining all Development Costs incurred by each Party with respect to the
Development Program. The Development Rate shall be [ * ] per FTE. Except for
adjustments in accordance with the following, there shall be no change to the
Development Rate except as mutually agreed upon by the Parties in writing. It is
understood and agreed that the Development Rate shall be adjusted on January 1,
[ * ], and at the beginning of each calendar year thereafter,

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based upon the percentage increase or decrease in salaries for similar
development personnel as established in the Radford Associates Annual
Biotechnology Compensation and Benefits Survey (average for the entire U.S.)
over the applicable period. For example, on January 1, 2003, the Development
Rate shall be adjusted by the percentage increase or decrease in such salaries
shown by such survey to have occurred between the Effective Date and January 1,
2003.

         5.3. OTHER APPROVED DEVELOPMENT COSTS. While the Parties intend that
each Party's Development Costs will be calculated using the Development
Personnel hours and the Development Rate, it is acknowledged and agreed that the
Development Plan and Budget may identify from time to time costs and expenses
that are to be incurred by a Party in the performance of its responsibilities
under the Development Program which are in addition to the Development Costs
calculated in such manner. Under such circumstances, the total Development Costs
of such Party shall be the sum of (i) such additional costs and expenses and
(ii) the Development Costs of such Party that have been calculated using the
Development Rate and Development Personnel hours. Only Development Costs
expressly identified in the Development Plan and Budget as costs which are not
reimbursed through Development Personnel hours shall be so added to the
applicable Party's Development Costs.

         5.4. PAYMENT. So that the Parties will share equally in the Development
Costs incurred in accordance with the Development Plan and Budget, balancing
payments shall be made in accordance with this Section 5.4. On or before the
first day of each calendar quarter, the Party who is budgeted to use the lower
amount of Development Costs during such quarter (as reflected in the
then-current Development Plan and Budget) (the "REIMBURSING PARTY") shall pay to
the other Party (the "REIMBURSED PARTY") an amount equal to (i) fifty percent
(50%) of the Development Costs budgeted to be incurred by the Reimbursed Party
during such quarter, less (ii) fifty percent (50%) of the Development Costs
budgeted to be incurred by the Reimbursing Party during such quarter, all in
accordance with the Development Plan and Budget then in effect. Unless otherwise
specified in the applicable Development Plan and Budget, Development Costs
budgeted for a full calendar year will be deemed budgeted in equal amounts for
each calendar quarter during such year. If the Development Costs actually
incurred by a Party in a calendar quarter are less than the Development Costs
budgeted for such Party for such calendar quarter under the Development Plan and
Budget, then the difference will be carried forward and credited against
Development Costs to be incurred by such Party in succeeding calendar quarter(s)
during the same calendar year; and, subject to Section 5.5 below, if a Party
actually incurs in a calendar quarter Development Costs in excess of the amounts
budgeted for such Party for such calendar quarter, then the excess may be
carried forward and treated as a Development Cost incurred by such Party in a
subsequent calendar quarter during the same calendar year as designated by such
Party.

         5.5. EXCESS COSTS.  To the extent the  Development  Costs incurred by a
Party exceed by more than [ * ] percent ([ * ]%) the Development  Costs budgeted
for such Party for a calendar quarter in the Development Plan and Budget then in
effect,  then such Party shall not be  entitled to carry

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forward any portion of such excess Development Costs unless the other Party
approves such excess Development Costs, which approval shall not be unreasonably
withheld to the extent that incurring such excess Development Costs was not
within the reasonable control of the Party incurring such hours. Likewise,
unless otherwise mutually agreed by the Parties, neither Party shall be
obligated to incur Development Costs in excess of the amounts set forth for such
Party in the then-current Development Plan and Budget.

         5.6. RECONCILIATION. Within thirty (30) days following the end of each
calendar year, each Party shall provide to the other a written summary of the
Development Costs actually incurred by such Party during each calendar quarter
of such calendar year, in a form mutually agreed by the Parties (such form to be
agreed and established by the Parties on or before December 15, 2001). The
Parties shall reconcile, in accordance with Section 13.1, the total Development
Costs actually incurred by both Parties, and reimbursements previously provided
under Section 5.4, for such calendar year in order to determine the amount of
the payment, if any, to be made by one Party to the other so that each Party
bears fifty percent (50%) of the total Development Costs actually incurred by
both Parties in such calendar year. A balancing payment shall be payable by one
Party to the other Party under this Section 5.6 in an amount determined so that
each Party bears fifty percent (50%) of such total Development Costs.
Development Costs incurred by a Party in excess of the limits described in
Section 5.5 shall not be treated as Development Costs for purposes of such
reconciliation unless approved by the other Party.

                                    ARTICLE 6

         JOINT STEERING COMMITTEE AND COMMERCIALIZATION PLAN AND BUDGET

         6.1. GENERAL.  It is understood and agreed that Approved Products shall
be marketed and distributed by the Parties solely as set forth in Articles 6 and
7.

         6.2. COMMERCIALIZATION TEAM LEADER.

                  6.2.1 APPOINTMENT. Each Party shall appoint a
commercialization team leader that is reasonably acceptable to the other Party
("COMMERCIALIZATION TEAM LEADER") who shall serve as the primary point of
communication and coordination between the Parties with respect to activities
under the Commercialization Plan and Budget (the "COMMERCIALIZATION PROGRAM")
and shall be responsible for day to day coordination of such activities
internally at the appointing Party. Subject to the foregoing, each Party shall
have the right to replace its Commercialization Team Leader from time to time by
providing prior written notice to the other Party. The initial Commercialization
Team Leaders for the Parties shall be as follows:

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           TWT:                               ACLARA:

           Name:    [ * ]                     Name: [ * ]

           Title:   Senior Director of        Title:   Director of Corporate
                    Business Development               Development

           Voice:   [ * ]                     Voice:   [ * ]

           Fax:     [ * ]                     Fax:     [ * ]

                  6.2.2 RESPONSIBILITIES. During the term of the Agreement, the
Commercialization Team Leaders shall meet to discuss the progress of the
Commercialization Program and other activities as the Joint Steering Committee
may approve at least bi-weekly by phone or video conference, and in person at
least once every calendar month (with the location alternating between the
facilities of ACLARA and TWT unless otherwise agreed). The Commercialization
Team Leader for each Party shall act as the chairperson of the Joint Steering
Committee for such Party and shall keep the Joint Steering Committee reasonably
informed regarding such Party's progress under the Commercialization Program.
Additionally, each Project Leader shall be responsible for (i) monitoring the
schedules and progress of the Commercialization Program against the
Commercialization Plan and Budget; (ii) discussing remedial measures if the
Commercialization Team Leaders determine that the progress with respect to a
particular Sales Goal or a particular task under the Commercialization Plan and
Budget is unsatisfactory; (iii) receiving and submitting requests for
information, materials and/or assistance between the Parties, including
coordinating sales calls and information sharing; (iv) preparing and providing
quarterly written reports to the other Party in accordance with Section
6.7.5(ii); (v) coordinating the preparation and providing each proposed
Commercialization Plan and Budget to the other Joint Steering Committee members
by October 1 of each calendar year; (vi) overseeing and coordinating orders of
ACLARA Components and Approved Products, including the forecasts therefor; and
(vii) performing such other activities as approved by the Joint Steering
Committee. Approximately [ * ] hours of each Commercialization Team Leader's
time during each calendar month hereunder shall be dedicated to such activities
to the extent necessary to perform the activities; it being understood that each
Commercialization Team Leader shall devote greater time to such activities
during the plan and budget establishment process as is reasonably necessary in
order to coordinate and prepare a draft Commercialization Plan and Budget to the
Joint Steering Committee. Such time commitment of the Commercialization Team
Leaders may be adjusted by written agreement of the Parties from time to time.

         6.3. [Intentionally Omitted]

         6.4. JOINT STEERING COMMITTEE. ACLARA and TWT will establish,  promptly
following the Effective Date, a team of appropriate  personnel from both TWT and
ACLARA to oversee,  review

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and coordinate the commercialization of all Approved Products and to oversee the
Development Committee (the "JOINT STEERING COMMITTEE").

                  6.4.1 MEMBERSHIP. The Joint Steering Committee shall consist
of six members, three appointed by ACLARA and three appointed by TWT. Each
member shall have reasonable expertise in product marketing and distribution,
and at least one member appointed by each Party shall be an executive of such
Party at the vice president level or higher. Subject to the foregoing provisions
of this Section 6.4.1, each of TWT and ACLARA may replace its Joint Steering
Committee members at any time by providing prior written notice of the change to
the other Party. The Joint Steering Committee may appoint sub-committees and
project teams to, among other things, oversee, review, and coordinate
commercialization of particular Approved Products, approach particular Customers
under the Early Access Program, negotiate with such Customers the terms and
conditions for early access, and support the particular units of Approved
Product provided to such Customers prior to Commercial Launch. The Joint
Steering Committee shall appoint a Finance Sub-Committee as more fully described
in Section 6.5.

                  6.4.2 MEETINGS. After its formation in accordance with Section
6.4.1 above, the Joint Steering Committee shall meet at least once each calendar
month, unless otherwise agreed by the Parties, at such locations as the Parties
agree. If a location is not selected by the Parties, the location of such
meetings shall alternate between ACLARA's notice address and TWT's notice
address under Section 20.6. At its meetings, the Joint Steering Committee will
be responsible for establishing and implementing, as applicable: (i) a
co-branding strategy, including approving Joint Marks and approving product
labeling and marketing materials that the Joint Steering Committee desires to
have used; (ii) an early access program and strategy for applicable Approved
Products; (iii) co-marketing activities; (iv) the selection of one or more Joint
Distributors based upon mutually agreed criteria; and (v) such other matters as
provided for in this Agreement or as may be mutually established in writing by
the Parties hereto. The Joint Steering Committee shall also be responsible for
(A) overseeing activities of the Finance Sub-Committee and the Intellectual
Property Sub-Committee; (B) overseeing the Development Committee, including
providing information to the Development Committee regarding product strategy,
planning, and direction, requesting evaluation of feasibility or other
investigation of potential Collaboration Products, and providing market feedback
and evaluation with regard to potential Collaboration Products; and (C)
reviewing and approving press releases and other announcements relating to the
subject matter of this Agreement. Other representatives of TWT and ACLARA may
attend Joint Steering Committee meetings as non-voting observers only with the
approval of the Joint Steering Committee. Each Party shall bear the costs and
expenses of its personnel participating in Joint Steering Committee meetings,
including travel expenses.


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                  6.4.3 DECISION MAKING. Decisions and approvals of the Joint
Steering Committee shall be made only by majority approval of all members,
either present or voting by proxy, with each member having one vote. The Joint
Steering Committee shall prepare a written record of all Joint Steering
Committee decisions which are to be binding upon the Parties, including
approvals of Joint Distributors, co-branding strategies, and Joint Marks, which
records shall not be binding upon either Party until signed by both Parties.
Except for such signed records, all decisions and approvals of the Joint
Steering Committee, and discussions at Joint Steering Committee meetings,
including by any sub-committees and project teams, shall be for advisory and
information purposes only and shall not be binding upon either Party. Unless
otherwise specified, "approved" by the Joint Steering Committee as used in this
Agreement means binding approval in accordance with this Section 6.4.3.

         6.5. FINANCE SUB-COMMITTEE. The Parties shall also establish, promptly
following the Effective Date, a Finance Sub-Committee to advise the Joint
Steering Committee with regard to each Commercialization Plan and Budget and
other financial matters, including financial, accounting, budgeting, reporting,
and other issues that may arise in connection with the Commercialization Plan
and Budget, or activities thereunder. The Finance Sub-Committee shall consist of
at least two (2) members (or such other number as the Joint Steering Committee
may deem appropriate), with an equal number of members being appointed by each
of ACLARA and by TWT. Each member shall have reasonable expertise in the areas
of accounting, cost allocation, budgeting, and financial reporting. Subject to
the foregoing provisions of this Section 6.5, each of TWT and ACLARA may replace
its Finance Sub-Committee members at any time by providing prior written notice
of the change to the other Party. The Finance Sub-Committee shall meet
reasonably promptly upon request by the Joint Steering Committee and shall
provide, in accordance with GAAP, the review and feedback requested by the Joint
Steering Committee. Decisions and reports of the Finance Sub-Committee shall be
for advisory purposes only unless approved by the Joint Steering Committee.

         6.6. COMMERCIALIZATION PLAN AND BUDGET.

                  6.6.1 GENERAL. The Parties (through the Joint Steering
Committee) shall promptly develop and agree on a Commercialization Plan and
Budget for the period through December 31, 2002 and such Commercialization Plan
and Budget shall include funding of at least [ * ] Dollars ($[ * ]) of
Commercialization Costs. The Parties shall cooperate in an effort to submit to
the Joint Steering Committee, by October 1 of the calendar year ending at such
time, and of each calendar year of the term thereafter, a proposed
commercialization plan and budget for the immediately following calendar year,
provided that the term of the Agreement extends into such immediately following
calendar year. The Joint Steering Committee shall review such proposals as soon
as possible, including obtaining review by the Finance Sub-Committee, and shall
diligently attempt to approve a mutually acceptable Commercialization Plan and
Budget for such succeeding calendar year, no later than November 1 of the then
current year. If, by November 1 of the then current year, the Joint Steering
Committee has not approved a Commercialization Plan and Budget for the

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immediately following calendar year, either Party may, by written notice to the
other, have the matter referred for attempted resolution in accordance with
Article 18. Pending resolution of such matter, the Parties will proceed in
accordance with those aspects of the Commercialization Plan and Budget that have
been approved by the Joint Steering Committee and will proceed with respect to
the unresolved matters for up to one additional calendar quarter in accordance
with the last calendar quarter of the preceding Commercialization Plan and
Budget but only to the extent that the activities in such last calendar quarter
continue to be reasonably applicable.

                  6.6.2 CONTENTS. Unless otherwise approved by the Joint
Steering Committee, each proposed commercialization plan and budget shall be
prepared in accordance with the conditions and principles set forth in Exhibit
6.6.2 and the other requirements approved by the Joint Steering Committee for
the Commercialization Plan and Budget. Each Commercialization Plan and Budget
shall, if applicable and desired: (i) establish specific tasks, if any, to be
performed by each Party with respect to the promotion, marketing, and support of
the Approved Products, including specific marketing activities and meetings,
exhibitions, trade shows, seminars, and advertisements for the Approved
Products, the responsibilities of each Party with respect to such tasks and
activities, and the times for completion thereof; (ii) establish budgets for
tasks and activities thereunder; (iii) set forth Sales Goals for particular
geographic regions and Approved Products; and (iv) establish appropriate Early
Access Programs including identifying any particular early access Customers and
restrictions on distribution of Approved Products that have been approved by the
Development Committee for Commercial Launch. The Commercialization Plan and
Budget may be changed only by approval of the Joint Steering Committee.

                  6.6.3 PERIODIC REVIEWS. The Joint Steering Committee shall
review the Commercialization Plan and Budget on an ongoing basis, no less often
than quarterly, and may make changes thereto as it deems appropriate.

                  6.6.4 EARLY ACCESS PROGRAM. As the Joint Steering Committee
may designate from time to time, the Parties will seek to enter into
arrangements with high profile, third party Customers approved by the Joint
Steering Committee to provide such Customers with preferential access to
particular Approved Products, and will seek to perform advance marketing
activities for such Approved Products, each prior to making the Approved
Products available to Customers generally (such activities with respect to all
applicable Approved Products, collectively the "EARLY ACCESS Program"). The
Joint Steering Committee will establish an Early Access Program by including
activities therefor in the Commercialization Plan and Budget, identifying in the
Commercialization Plan and Budget any particular early access Customers and the
activities and responsibilities of each Party with respect thereto.

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         6.7. FUNDING OF COMMERCIALIZATION ACTIVITIES.

                  6.7.1 GENERAL. Subject to the limitations in this Section 6.7,
each Party shall be responsible for fifty percent (50%) of the total
Commercialization Costs incurred by TWT and ACLARA reasonably arising out of, in
conducting, or otherwise in connection with the activities for which the
applicable Party is responsible as set forth in the Commercialization Plan and
Budget or this Agreement. Except for payment of Commercialization Costs by a
Party to the other Party in accordance with Sections 6.7.2 and 6.7.4, no other
amounts shall be reimbursed to such other Party for activities related to
marketing, distribution, sale or support of Approved Products and Software
hereunder.

                  6.7.2 PAYMENT. So that the Parties will share equally in the
Commercialization Costs incurred in accordance with the Commercialization Plan
and Budget, balancing payments shall be made in accordance with this Section
6.7.2. On or before the first day of each calendar quarter for which activities
are scheduled under the Commercialization Plan and Budget, the Party who is
budgeted to expend the lower amount of Commercialization Costs during such
quarter (as reflected in the then-current Commercialization Plan and Budget)
(the "REIMBURSING PARTY") shall pay to the other Party (the "REIMBURSED PARTY")
an amount equal to (i) fifty percent (50%) of the Commercialization Costs
budgeted to be incurred by the Reimbursed Party during such quarter for
activities in accordance with the Commercialization Plan and Budget, less (ii)
fifty percent (50%) of the Commercialization Costs budgeted to be incurred by
the Reimbursing Party during such quarter for activities in accordance with the
Commercialization Plan and Budget. Unless otherwise specified in the applicable
Commercialization Plan and Budget, Commercialization Costs budgeted for a full
calendar year will be deemed budgeted in equal amounts for each calendar quarter
during such year. If the Commercialization Costs actually incurred by a Party in
a calendar quarter for a particular activity are less than the Commercialization
Costs budgeted to be incurred by such Party for such activity in such calendar
quarter under the Commercialization Plan and Budget, then the difference will be
carried forward and credited against Commercialization Costs to be incurred by
such Party for such activity in succeeding calendar quarter(s) during the same
calendar year, but only if such Party is responsible under the Commercialization
Plan and Budget for performing the same activity in the succeeding calendar
quarter; and, subject to Section 6.7.3 below, if a Party actually incurs in a
calendar quarter Commercialization Costs for a particular activity in excess of
the amounts budgeted to be incurred by such Party for such activity in such
calendar quarter, then the excess may be carried forward and treated as a
Commercialization Cost incurred by such Party for such activity in a subsequent
calendar quarter in the same calendar year as designated by such Party, but only
if such Party is responsible under the Commercialization Plan and Budget for
performing the activity in the succeeding calendar quarter.

                  6.7.3 EXCESS COSTS. To the extent the Commercialization Costs
incurred by a Party for a particular activity exceed by more than [ * ] percent
([ * ]%) the Commercialization Costs budgeted to be incurred by such Party for
such activity in a calendar quarter in the Commercialization Plan and Budget
then in effect, then such Party shall not be entitled to carry

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forward in accordance with Section 6.7.2 any portion of such excess
Commercialization Costs for such activity unless the other Party approves such
excess Commercialization Costs for the particular activity, which approval shall
not be unreasonably withheld to the extent that incurring such excess
Commercialization Costs for the particular activity was not within the
reasonable control of the Party incurring such Commercialization Costs.
Likewise, unless otherwise mutually agreed by the Parties, neither Party shall
be obligated to incur Commercialization Costs to perform its responsibilities
under the Commercialization Plan and Budget which are in excess of the amounts
set forth for such Party in the then-current Commercialization Plan and Budget.

                  6.7.4 RECONCILIATION. Within thirty (30) days following the
end of each calendar year, each Party shall provide to the other a written
summary of the Commercialization Costs actually incurred by such Party during
each calendar quarter of such calendar year, in a form mutually agreed by the
Parties (such form to be agreed and established by the Parties on or before
December 15, 2001). The Parties shall reconcile, in accordance with Section
13.1, the total Commercialization Costs actually incurred by both Parties, and
reimbursements previously provided under Section 6.7.2, for such calendar year
in order to determine the amount of the payment, if any, to be made by one Party
to the other so that each Party bears fifty percent (50%) of the total
Commercialization Costs actually incurred by both Parties in such calendar year.
A balancing payment shall be payable by one Party to the other Party under this
Section 6.7.4 in an amount determined so that each Party bears fifty percent
(50%) of such total Commercialization Costs. Excess Commercialization Costs
incurred by a Party, as set forth in Section 6.7.3, shall not be treated as
Commercialization Costs for purposes of such reconciliation unless approved by
the other Party in accordance with Section 6.7.3.

                  6.7.5   COMMERCIALIZATION   REPORTS  AND  RECORDS.

                           (i) JOINT STEERING  COMMITTEE.  Each Party shall keep
the Joint Steering Committee fully informed of its progress and activities for
which it is responsible under the Commercialization Plan and Budget.

                           (ii) REPORTS.  Within the fifteen (15) days after the
end of each calendar quarter, each Party shall prepare and provide to the other
Party a written report that summarizes the progress of the activities performed
by such Party pursuant to the Commercialization Plan and Budget during the
preceding calendar quarter, identifies any issues or circumstances of which it
is aware that may adversely affect the activities under the Commercialization
Plan and Budget in the then current calendar quarter; and, to the extent
reasonably practicable, identifies steps that may be taken, or changes that may
be made, to resolve issues. The form of such reports shall be mutually agreed
upon by the Parties on or before December 15, 2001.

                           (iii)  RECORDS.   Each  Party  shall  use  reasonable
commercial  efforts to maintain  records in  sufficient  detail as will properly
reflect all work done, and Commercialization



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                                                                     CONFIENTIAL

Costs expended, in the performance of activities arising out of, in conducting,
or otherwise in connection with the Commercialization Plan and Budget.

         6.8. JOINT PRODUCT FORECASTS AND ORDERS. In the same manner as set
forth in Section 12.3 in connection with the supply of Approved Products to
ACLARA, the Joint Steering Committee shall establish Forecasts for supply of
each Approved Product by TWT to Customers and to Marketing Distributors (the
"JOINT PRODUCT FORECASTS"). It being understood that unless otherwise agreed by
the Joint Steering Committee, the Joint Product Forecasts shall include
quantities of Approved Products independently forecasted by Marketing
Distributors and quantities ordered by Customers consistent with the forecasting
requirements set forth in Sections 12.3 and 12.4. Such Joint Product Forecasts
shall be used for purposes of determining whether or not ACLARA will have the
right to manufacture Approved Products under the Backup Manufacturing License as
set forth in Section 12.11. The Joint Steering Committee shall issue firm orders
for the supply of such Approved Products in the same manner as set forth in
Section 12.4.1 for purposes of determining the quantities of Approved Products
that TWT is obligated to supply.

                                    ARTICLE 7

                                COMMERCIALIZATION

         7.1. GENERAL RESPONSIBILITIES. Each Party shall use [ * ] efforts to
perform the activities allocated to such Party in the Commercialization Plan and
Budget in accordance with the schedules set forth therein, including the use of
[ * ] efforts to (A) allocate such resources as are required under the
Commercialization Plan and Budget, (B) cooperate with the other Party to perform
activities under the Commercialization Plan and Budget, including to support
each Customer under the Early Access Program in an effort to ensure that the
applicable early access units of Approved Product are successfully promoted to
and used by such Customers; (C) provide reasonable support of Approved Products
that have otherwise been distributed by such Party directly to Customers and
reasonable backup support to the Marketing Distributors, in each case to the
extent required by the Commercialization Plan and Budget; and (D) use personnel
with reasonably sufficient marketing and other skills and experience to carry
out its responsibilities under, and to accomplish the objectives of, the
Commercialization Plan and Budget in an expeditious manner. Neither Party shall
be held responsible for a failure to perform an activity pursuant to the
Commercialization Plan and Budget, and no such failure shall be considered a
breach of this Agreement, provided that such Party used [ * ] efforts to perform
the applicable activity in accordance with the Commercialization Plan and
Budget. Notwithstanding anything to the contrary, neither Party shall be
required to perform any activities other than as required by the
Commercialization Plan and Budget in order to market or promote the Approved
Products. The Parties will share equally in all costs and expenses associated
with the marketing, promotion, distribution, sale, and support of Approved
Products as more fully set forth in Article 6 above.

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         7.2. SALES GOALS. It is acknowledged and agreed that the
Commercialization Plan and Budget may establish from time to time Sales Goals
for Approved Products, each of which may be established on an Approved Product
by Approved Product, and geographic region by geographic region, basis. A Party
shall not be responsible for any failure to meet such Sales Goals, provided that
such failure is not primarily caused by a failure of the Party to use [ * ]
efforts to perform its responsibilities under the Commercialization Plan and
Budget.

         7.3.  COMMERCIAL LAUNCH. The Parties shall use [ * ] efforts to achieve
Commercial  Launch of each Approved  Product as soon as  reasonably  practicable
after approved by the Development Committee for Commercial Launch.

         7.4. MARKETING AND DISTRIBUTION BY TWT. Unless otherwise approved by
the Joint Steering Committee, TWT shall have [ * ]. Accordingly, it is
acknowledged and agreed that TWT shall have the right to exercise its rights
under this Article 7 with respect to Approved Products that have been approved
by the Development Committee for Commercial Launch.

                  7.4.1 GENERAL LICENSE GRANT. Subject to the terms and
conditions of this Agreement, ACLARA hereby grants to TWT a worldwide,
non-exclusive, right and license under the ACLARA Technology to promote, market,
sell, offer to sell, import, and otherwise distribute to Customers for use in
the Field in all countries and geographic regions the Approved Products
manufactured by TWT in accordance with this Agreement; provided that [ * ].
Subject to Sections 7.6.1 and 7.6.2, this license grant includes the right to
exercise such rights both directly and indirectly through Affiliates and
Marketing Distributors.

                  7.4.2 SOFTWARE LICENSES. It is acknowledged and agreed that
the Development Committee may approve the use of particular Software with an
Approved Product in the Field. Subject to the terms and conditions of this
Agreement, ACLARA hereby grants to TWT a worldwide, non-exclusive, right and
license, under the Intellectual Property Rights owned or Licensable by ACLARA
that are applicable to such Software, to distribute, transmit, and grant
licenses to Customers to use on commercially reasonable terms, such Software in
all countries and geographic regions, and machine readable updates,
improvements, and other modifications to such Software provided by TWT, each for
use in the Field with the applicable Approved Product. If the Software includes
Software provided by ACLARA, then TWT agrees to notify ACLARA of any
unauthorized use of the ACLARA Software of which TWT becomes aware.

                  7.4.3 ACLARA COMPONENTS. Notwithstanding anything to the
contrary, TWT shall not be responsible for any failure to meet any diligence
obligation of TWT under this Article 7 if the failure resulted from a failure to
supply an ACLARA Component used in the Approved Product, as such failure is more
fully defined in Section 11.11.1 or resulted from a quality issue with an

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ACLARA Component. It is acknowledged and agreed that all ACLARA Components used
in Approved Products distributed hereunder will be [ * ].

         7.5.  MARKETING AND  DISTRIBUTION  BY ACLARA.  It is  acknowledged  and
agreed that ACLARA  shall have the right to market and  promote,  in  accordance
with the  Commercialization  Plan and Budget,  Approved  Products for use in the
Field, [ * ]

                  7.5.1 [ * ]

                  7.5.2 [ * ]

                  7.5.3 SUPPLY OF APPROVED PRODUCTS. [ * ]

         7.6. INDIRECT DISTRIBUTION

                  7.6.1 AFFILIATES. TWT shall have the right to exercise its
rights pursuant to Section 7.4, and ACLARA shall have the right to exercise any
rights that it is granted pursuant to Section 7.5, each through its Affiliates,
provided that all actions and inaction of each Affiliate of a Party in
connection with the marketing, promotion, sale, distribution, or importation of
an Approved Product shall be deemed to be actions and inaction of such Party. In
particular, any action or inaction by such an Affiliate in connection with such
activities which would have been a breach of this Agreement if by the Party
itself shall be considered a breach of this Agreement by such Party in the same
manner as if performed by such Party.

                  7.6.2 MARKETING DISTRIBUTORS. Except with respect to Joint
Distributors approved by the Joint Steering Committee and ACLARA Partners
requested by ACLARA, each as set forth in this Section 7.6 below, neither Party
shall sell or otherwise distribute Approved Products using a Marketing
Distributor unless [ * ].

                  7.6.3 JOINT DISTRIBUTORS. The Parties (through the Joint
Steering Committee or its appointees) intend to evaluate the possibility and
need for using a Joint Distributor for commercialization of Approved Products
under this Agreement for particular regions and Approved Products. If the Joint
Steering Committee decides that it wishes to pursue an arrangement with one or
more Joint Distributors, the Joint Steering Committee may appoint a separate
committee of appropriate individuals to approach the potential Joint
Distributor(s) that it has selected and to negotiate the terms and conditions
for a distribution arrangement with each such entity for review and approval by
the Joint Steering Committee. The terms and conditions for distribution through
a Joint Distributor shall be solely as approved by the Joint Steering Committee.
Once a Joint Distributor has been appointed in accordance herewith, the same
shall be treated as a Marketing Distributor of the Party with which it enters
into a written agreement, as approved by the Joint Steering Committee, for
purposes of calculating Net Sales.

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                  7.6.4 ACLARA PARTNERS.

                           (i) REQUEST AND CONSIDERATION. [ * ]

                           (ii) AGREEMENT WITH TWT. [ * ]

                           (iii) SCOPE OF APPOINTMENT. [ * ]

         7.7. NO OTHER DISTRIBUTION RIGHTS. [ * ].

         7.8. PRODUCT CONFIGURATIONS. Unless otherwise expressly agreed upon by
the Parties in writing, Approved Products are licensed for distribution under
this Article 7 solely in the configurations expressly approved by the
Development Committee in the Specifications for the Approved Product. The
distribution of any component or sub-configuration of an Approved Product shall
be considered unlicensed. [ * ]

         7.9.  MARKETING  MATERIALS AND  PRESENTATIONS.  All  presentations  and
demonstrations  of  Approved  Product(s)  shall be subject  to any  requirements
approved  by  the  Joint  Steering  Committee  or  otherwise  set  forth  in the
Commercialization  Plan and  Budget.  Additionally,  subject  to  Article  9 and
requirements  approved by the Joint  Steering  Committee as between the Parties,
TWT shall be [ * ].

         7.10. CUSTOMER AGREEMENTS. Notwithstanding anything to the contrary,
including Section 6.4.3 and the Commercialization Plan and Budget, to the extent
that a Customer desires to enter into a written agreement for the supply of
Approved Product(s), the Party having responsibility for distribution of
Approved Products to such Customer (the "RESPONSIBLE PARTY") shall control the
negotiations of such agreements, and the terms and conditions therein, provided
that the other Party shall not be obligated to perform obligations under such
agreement, except to the extent set forth in this Agreement or otherwise agreed
upon by such other Party in writing. The Responsible Party shall not, however,
commit to supply Approved Products to the Customer in a manner that is
inconsistent with its right to obtain Approved Products in accordance with this
Agreement. [ * ] This Section 7.10 is not intended to prevent the Party that is
not the Responsible Party (the "NON-RESPONSIBLE PARTY"), however, from otherwise
promoting the Approved Products to Customers, or working with Customers to
understand the terms and conditions for supply desired by the Customer, and
soliciting from Customers purchase orders for Approved Products that have been
approved by the Development Committee for Commercial Launch in order to provide
the purchase orders to the Responsible Party, each in accordance with this
Agreement to the extent authorized in the Commercialization Plan and Budget;
provided that the Non-Responsible Party shall have no authority, express or
implied, to bind the Responsible Party, accept purchase orders, or to make
commitments or incur obligations of any kind on behalf of the Responsible Party
and shall inform the Customer of such limitations in advance. To the extent that
the Non-Responsible Party provides

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                                                                    CONFIDENTIAL

to the Responsible Party a purchase order issued by a Customer, within ten (10)
days after such issuance, for the purchase by such Customer of Approved Products
that have been approved by the Development Committee for Commercial Launch, and
provided that marketing to the particular Customer is within the scope of the
Non-Responsible Party's marketing responsibilities under the Commercialization
Plan and Budget, then the Responsible Party agrees to use its [ * ] efforts to
supply to such Customer the quantity of Approved Products ordered in such
purchase order on the Responsible Party's then standard terms and conditions for
supply of the applicable Approved Products, which terms and conditions will be
substantially similar to the non-financial terms and conditions in this
Agreement applicable to supply of Approved Products (excluding backup
manufacturing rights, such as under Section 12.11). The Non-Responsible Party
shall provide purchase orders to the Responsible Party only in a form
pre-approved by the Responsible Party. The Non-Responsible Party acknowledges
and agrees that the Responsible Party may issue an acknowledgement, and ship the
Approved Products, directly to the Customer.

         7.11. THIRD PARTY PATENTS. If it is determined by a court or other body
of competent jurisdiction, or if either Party reasonably believes, that an
Approved Product may infringe the Patent Rights of a third party, the Parties
shall meet promptly to discuss the matter. If, after such discussion, the
Commercializing Party desires to continue to distribute the Approved Product, it
shall be free to do so in accordance with this Agreement. If the Commercializing
Party is not comfortable with the continued distribution of the Approved
Product, however, it shall be relieved of any diligence obligations applicable
to the Approved Product under this Agreement in the countries affected by the
potential infringement until such time as (i) the Parties have obtained a
license under the applicable Patent Rights authorizing the manufacture, use,
sale, offer for sale, distribution, and importation of such Approved Product in
accordance with this Agreement and agreed upon an adjustment in royalties
pursuant to Section 8.7 to compensate the Party that obtained the license; or
(ii) otherwise resolved the matter to the satisfaction of the Commercializing
Party. If the Non-Commercializing Party is not comfortable with continued
distribution of an Approved Product in accordance with this Agreement in light
of the applicable third party Patent Rights, it shall be relieved of its
obligation under Section 17.1.2 or 17.2.2, as applicable, to indemnify the
Commercializing Party with respect to infringement of such Patent Rights except
to the extent that the Commercializing Party has obtained a non-infringement,
unenforceability, and/or invalidity opinion of patent counsel regarding the
applicable Patent Rights which reasonably addresses the potential infringement.

         7.12. PACKAGING AND LABELING. The Commercializing Party shall use its
reasonable commercial efforts to ensure that the packaging and labeling of each
Approved Product is in accordance with the requirements of applicable laws in
the countries for which the Approved Product is distributed. If the packaging
Party and Commercializing Party are different, the Commercializing Party shall
notify the packaging Party of any such requirements of which the Commercializing
Party is aware through the exercise of such reasonable commercial efforts.

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Additionally, the Parties agree to discuss patent, trademark, and copyright
markings on a product-by-product basis prior to Commercial Launch, and
thereafter to the extent additional Patent Rights, trademark, or copyright
rights apply to the Approved Product. The Parties agree to cooperate reasonably
to mark Approved Products to preserve Patent Rights, trademark, and copyright
rights of TWT and ACLARA, as applicable, and to confer with the Intellectual
Property Sub-Committee with regard to such matters.

         7.13. CUSTOMER RESTRICTIONS. Except to the extent otherwise agreed upon
by the Parties in writing, all Approved Products that are distributed under this
Agreement shall be labeled conspicuously "FOR RESEARCH USE ONLY; NOT FOR USE IN
DIAGNOSTIC PROCEDURES." Additionally, if applicable, the Parties will cooperate
reasonably in order to mark Approved Products with restricted use legends in an
effort avoid issues related to the Intellectual Property Rights of third
parties.

         7.14. CUSTOMER SUPPORT AND WARRANTIES.

                  7.14.1 SUPPORT. Except as otherwise provided in the
Commercialization Plan and Budget and as otherwise set forth in this Section
7.14.1 below, each Party shall be solely responsible for providing support for
the Approved Products that it distributes, including Customer and technical
support relating to the use, operation, and performance of Approved Products,
and any equipment on which such Approved Products are used. Prior to
distributing an Approved Product pursuant to this Article 7, the Commercializing
Party shall establish trained personnel and other resources, and will maintain
such personnel and resources, in a manner sufficient to enable the
Commercializing Party to support in accordance with industry standards, which
shall be no less than a reasonable level of support, the Approved Products that
it distributes. At the request of the Commercializing Party, the other Party
will provide to the Commercializing Party from time to time reasonable training
of personnel and mutually agreed upon documentation for purposes of assisting
the Commercializing Party in establishing and maintaining such support
capabilities. Additionally, each Party agrees to provide to the Commercializing
Party a reasonable level of backup technical support with regard to each
Approved Product that has been approved by the Development Committee for
Commercial Launch.

                  7.14.2 WARRANTIES. Each Party shall be solely responsible for
all representations and warranties that it makes with respect to an Approved
Product beyond the warranties approved by the Joint Steering Committee.

         7.15. INTERNAL USE. [ * ]

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                                    ARTICLE 8

                           COMMERCIALIZATION ECONOMICS

         8.1. INITIAL PAYMENTS.

                  8.1.1 ACLARA COMPONENTS. The transfer price for ACLARA
Components provided by ACLARA to TWT under Article 11 shall be [ * ]. Payment of
such transfer price by TWT to ACLARA shall be in accordance with Section 13.3.

                  8.1.2 CLEAVASE ENZYME. The transfer price for Cleavase Enzymes
provided by TWT to ACLARA under Article 12 shall be [ * ]. Payment of such
transfer price by TWT to ACLARA shall be in accordance with Section 13.4.

                  8.1.3 APPROVED PRODUCTS. Each of TWT and ACLARA, when it is
the Manufacturing Party, shall be paid by the other Party [ * ] for each unit of
Approved Product manufactured by the applicable Party. Payment of such amounts
by a Party to the other Party, as the Manufacturing Party, shall be in
accordance with Section 13.2.

         8.2.  ACCOUNTING  DEFINITIONS.  As  used  in  Section  8.3  below,  the
following terms shall have the meanings indicated:

                  8.2.1 "RECONCILIATION MARGIN" shall mean, with respect to a
particular Commercializing Party and its Affiliate's Net Sales of Approved
Products, and the Software for use therewith ("SOLD PRODUCTS"), [ * ].

                           (i) [ * ]; and

                           (ii) [ * ]

                  8.2.2 "MANUFACTURING RECONCILIATION" shall mean the Component
Reconciliation and/or the Product Reconciliation, as appropriate.

                           (i)  "COMPONENT   RECONCILIATION"  shall  mean,  with
respect to a Party who supplies either ACLARA Component or Cleavase Enzyme to
the Manufacturing Party of Sold Products (where such Manufacturing Party is the
other Party hereto or a third party) hereunder, [ * ] such ACLARA Components or
Cleavase Enzyme, as appropriate, incorporated into such Sold Product.

                           (ii)  "PRODUCT   RECONCILIATION"   shall  mean,  with
respect to the  Manufacturing  Party of Sold  Product,  [ * ] such Sold Product;
provided that [ * ].

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                  8.2.3 "NET REVENUES" shall mean, with respect to a particular
Commercializing Party and its Affiliate's Net Sales of Sold Products, [ * ].

                  8.2.4 "TARGET BURDEN" shall mean with respect to a particular
Commercializing Party and its Affiliate's Net Sales of Sold Products, the [ * ].

         8.3. ACCOUNTING BASED ON SALES.

                  8.3.1 REPORTS. In addition to the reports required under
Sections 5.6 and 6.7.4, within fifteen (15) days immediately after the end of
each calendar quarter, each Party (the "Reporting Party") shall provide to the
other Party (the "Receiving Party") a written report, in a form mutually agreed
upon by the Parties (such form to be agreed upon by the Parties on or before
December 15, 2001) setting forth: (i) the Reporting Party's Manufacturing Costs
accruing during the calendar quarter for the manufacture of ACLARA Components
and Cleavase Enzyme supplied to the Receiving Party and of Approved Products and
Software manufactured during such calendar quarter; (ii) the number, product
name, description, and Net Sales with respect to all Approved Products sold
during the calendar quarter by the Reporting Party and its Affiliates, broken
down by Approved Product and country in which the sales are made; (iii) a
calculation of all Proprietary Target Royalties payable by the Reporting Party
to the Receiving Party in accordance with Section 8.4 with respect to Approved
Products sold by the Reporting Party; and (iv) a calculation of all offsets to
be taken by the Reporting Party under Section 8.5 with respect to the reported
Net Sales. The calculations of Proprietary Target Royalties and offsets shall be
broken down by Approved Product, Target, Patent Rights, and third party licensor
(if applicable), setting forth the Target Fees payable by the Reporting Party or
by the Receiving Party (as understood by the Reporting Party) to the licensor,
if any, for each unit of Approved Product under such Patent Rights for sales in
the particular country, and the total aggregate amount of the Proprietary Target
Royalties and offsets taken for each Approved Product. Such report shall also
identify the country in which the Customer or Marketing Distributor, as
applicable, that purchased each Approved Product from the Reporting Party is
located. For purposes of this Agreement, including for calculating Net Sales,
sales shall be deemed to occur in the country in which, and at the time at
which, risk of loss passes from the Commercializing Party to its Marketing
Distributor or to its Customer, as applicable. If such location and time are not
specified for a particular sale, the sale shall be deemed to occur in the
country in which, and at the time at which, the Commercializing Party directly
provides the Approved Product to the carrier for shipment to the Customer or to
the Marketing Distributor, as applicable.

                  8.3.2 ACCOUNTING BASED ON TWT SALES. The amount payable to
ACLARA as a result of Net Sales based upon sales of Approved Products and
Software by TWT and its Affiliates shall be equal to [ * ]. An example of the
operation of Sections 8.3.2 and 8.3.3 is set forth on Exhibit 8.3.

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                  8.3.3  ACCOUNTING BASED ON ACLARA SALES. The amount payable to
TWT as a result of Net Sales based upon sales of Approved  Products and Software
by ACLARA and its Affiliates shall be equal to [ * ].

         8.4. PROPRIETARY TARGET ROYALTIES.

                  8.4.1 PAYMENT. In addition to the amounts payable under
Sections 8.1 and 8.3, if a Target to be detected and/or quantified by an
Approved Product, as set forth in its Specifications, is Covered by Patent
Rights owned by, or licensed by a third party to, the Non-Commercializing Party
or its Controlled Affiliate, then the Commercializing Party shall pay a
Proprietary Target Royalty to the Non-Commercializing Party in accordance with
this Section 8.4. For each such Target of an Approved Product distributed by the
Commercializing Party that is Covered by such Patent Rights, the Commercializing
Party shall pay a royalty to the Non-Commercializing Party that is equal to (i)
the Exclusive Target Royalty for such Patent Rights Covering a Target that is
under the Exclusive Control of the Non-Commercializing Party; or (ii) the
Non-Exclusive Target Royalty for such Patent Rights Covering a Target that is
under the Non-Exclusive Control of the Non-Commercializing Party. Whether or not
a Party has Exclusive Control of a Target for purposes of determining whether an
Exclusive Target Royalty or a Non-Exclusive Target Royalty will be paid shall be
determined based upon whether or not such Party has Exclusive Control in the
country of sale by the Commercializing Party, as more fully defined in Section
8.3.1.

                  8.4.2 SINGLE ROYALTY. Notwithstanding Section 8.4.1, for each
unit of Approved Product, only one Proprietary Target Royalty shall be paid for
each Target to be detected and/or quantified by such unit for all Patent Rights
owned by, or licensed by a third party to, the Non-Commercializing Party and its
Controlled Affiliates, regardless of the number of Patent Rights and regardless
of the number of third parties from which licenses have been obtained. If the
Non-Commercializing Party or its Controlled Affiliate has both Exclusive Control
and Non-Exclusive Control of the particular Target based upon different Patent
Rights, then the Proprietary Target Royalty for such Target and unit shall be
calculated as if the Party had Exclusive Control of the Target.

                  8.4.3 ADDITIONAL CONDITIONS.

                           (i)  Notwithstanding  Section  8.4.1,  a  Proprietary
Target Royalty shall be payable under this Section 8.4 for a particular unit of
Approved Product under Patent Rights Covering a Target of such unit only if a
Valid Claim of such Patent Rights would also be infringed, absent a license or
other authorization from the patent owner (which may be the Non-Commercializing
Party or its Controlled Affiliate), by the manufacture, use, sale, offer for
sale, importation, or other exploitation of such unit of Approved Product under
this Agreement. Notwithstanding anything to the contrary, however, the
manufacture, use, sale, offer for sale,

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importation, or other exploitation of an Approved Product hereunder shall be
deemed to so infringe a Valid Claim of the applicable Patent Rights for purposes
of this Agreement to the extent that the Non-Commercializing Party or its
Controlled Affiliate actually pays Target Fees in good faith to a non-Affiliate
third party for a license under such Patent Rights as a result of any such
activity with respect to the particular unit of such Approved Product.

                           (ii)   Notwithstanding    Section   8.4.1,   if   the
Commercializing Party and the Manufacturing Party of a particular unit of
Approved Product are the same Party, a Proprietary Target Royalty for a
particular Target shall be payable to the Non-Commercializing Party under this
Section 8.4 for distribution of such unit by the Commercializing Party only with
respect to those Patent Rights owned by, or licensed by a third party to, the
Non-Commercializing Party or its Controlled Affiliate that are included in the
Patent Rights licensed to the Commercializing Party under the applicable
manufacturing and distribution licenses. Accordingly, if TWT is both the
Manufacturing Party and the Commercializing Party for the particular unit of
Approved Product, a Proprietary Target Royalty shall be payable to ACLARA under
this Section 8.4 only with respect those Patent Rights that are included in the
ACLARA Technology licensed to TWT under Sections 7.4.1, 10.1.1 and 11.11.2.
Similarly, if ACLARA is both the Manufacturing Party and the Commercializing
Party for the particular unit of Approved Product, a Proprietary Target Royalty
shall be payable to TWT under this Section 8.4 only with respect to those Patent
Rights that are included in the TWT Technology licensed to ACLARA under Section
12.11.2 and the distribution licenses granted pursuant to Section 7.5, each when
applicable. Additionally, Proprietary Target Royalties shall accrue under this
Section 8.4 with respect to particular Patent Rights only with respect to those
units of Approved Product sold by the Commercializing Party after it received
the notice and information from the Non-Commercializing Party that is required
under Section 4.3.

                  8.4.4 BOTH ROYALTIES AND OFFSETS ALLOWED. It is acknowledged
and agreed that both Parties or their Controlled Affiliates may own, or be
licensed by third parties under, Patent Rights Covering the same Target and that
both Parties or their Controlled Affiliates may have Exclusive Control of the
same Target. Accordingly, Sections 8.4 and 8.5 may require and authorize,
respectively, both a Proprietary Target Royalty to the Non-Commercializing Party
and an offset to the Commercializing Party for each particular Target.

         8.5. PROPRIETARY TARGET OFFSETS.

                  8.5.1 OFFSET. If a Target to be detected and/or quantified by
an Approved Product, as set forth in its Specifications, is Covered by Patent
Rights owned by, or licensed by a third party to, the Commercializing Party or
its Controlled Affiliate, then, for the purpose of calculating the Target Burden
(as defined in Section 8.2.4) and amounts payable under Section 8.3, the
Commercializing Party shall be entitled to offset against its applicable Net
Sales an amount equal to what the Proprietary Target Royalty would have been to
the Non-Commercializing Party for such Patent Rights had the Patent Rights been
owned by, or licensed by a third party on the same terms to, the
Non-Commercializing Party rather than the Commercializing Party or its
Controlled Affiliate. For clarity, what the Proprietary Target Royalty would
have been under such circumstances shall be

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determined in accordance with Sections 8.4.1, 8.4.2, and 8.4.3(i), but not
Section 8.4.3(ii). Section 8.5.2 shall apply in lieu of Section 8.4.3(ii).

                  8.5.2 ADDITIONAL CONDITIONS. Notwithstanding Section 8.5.1, if
the Non-Commercializing Party and the Manufacturing Party of a particular unit
of Approved Product are the same Party, then the Commercializing Party shall be
entitled to take an offset for a particular Target under this Section 8.5 in
connection with its distribution of such unit only with respect to those Patent
Rights owned by, or licensed by a third party to, the Commercializing Party or
its Controlled Affiliate that are included in the Patent Rights licensed to the
Non-Commercializing Party under the applicable manufacturing and distribution
licenses. Accordingly, if TWT is both the Manufacturing Party and the
Non-Commercializing Party for the particular unit of Approved Product, an offset
may be taken by ACLARA under this Section 8.5 only with respect those Patent
Rights that are included in the ACLARA Technology licensed to TWT under Sections
7.4.1, 10.1.1 and 11.11.2. Similarly, if ACLARA is both the Manufacturing Party
and the Non-Commercializing Party for the particular unit of Approved Product,
an offset may be taken by TWT under this Section 8.5 only with respect those
Patent Rights that are included in the TWT Technology licensed to ACLARA under
Section 12.11.2 and the distribution licenses granted pursuant to Section 7.5,
each when applicable. It is acknowledged and agreed that the Commercializing
Party may take an offset under this Section 8.5 if it is patent owner and that
the Commercializing Party may take an offset for Patent Rights owned by or
licensed by a third party to the Commercializing Party's Controlled Affiliate
only to the extent that the Controlled Affiliate pays Target Fees in good faith
for a license under the applicable Patent Rights as a result of the manufacture,
use, sale, offer for sale, importation, or other exploitation of the applicable
Approved Product under this Agreement.

         8.6. BUNDLING. [ * ].

         8.7. OTHER THIRD PARTY ROYALTIES. Other than with respect to Targets,
if the Parties agree to incorporate Technology of a third party into an Approved
Product, or if it is otherwise determined that an Approved Product may infringe
the Patent Rights of a third party, each such that the payment of royalties to
the third party is required, the Parties will agree, at such time, to
adjustments to the amounts payable under Article 8 to compensate the Party
paying the royalties.

                                    ARTICLE 9

                             TRADEMARKS AND BRANDING

         9.1.  JOINT  MARKS.  The Parties  acknowledge  and agree that the Joint
Steering Committee may determine that it would be beneficial to market,  promote
and  otherwise  commercialize  Approved  Products  using one or more  trademarks
uniquely associated with the Approved Products (each a

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"JOINT MARK"). In such event, the Parties will discuss an appropriate trademark
for such purposes and enter into trademark licensing and usage agreements as the
Parties may agree with respect to such Joint Marks, including with respect to
establishing, maintaining and protecting the Joint Marks. Unless otherwise
agreed by the Parties in writing, neither Party shall use any Joint Mark except
for purposes of marketing, promoting, and commercializing the Approved Products.
Commencing with approval by the Joint Steering Committee of a Joint Mark, all
Approved Products, and associated marketing materials, shall be labeled with the
Joint Mark in the manner approved. It is acknowledged and agreed that Approved
Products may be labeled with Joint Marks in addition to, or in lieu of, the
trademarks, trade names, trade dress, and logos of the Parties, as the Joint
Steering Committee approves. Joint Marks shall be used solely in accordance with
the usage guidelines established therefor by the Joint Steering Committee.

         9.2. CO-BRANDING. Except to the extent modified by the Joint Steering
Committee, such as through approval of a Joint Mark for an Approved Product, the
branding requirements set forth in this Section 9.2 below shall apply. The
Commercializing Party shall apply the trademarks, trade names, and logos of the
other Party to each Approved Product distributed under this Agreement, and to
the packaging materials, labels and promotional materials used in connection
therewith, as more fully described in this Section 9.2 below. In particular, if
TWT is the Commercializing Party, TWT shall apply the ACLARA Marks (as set forth
in Exhibit 1.2 and updated by ACLARA from time to time in accordance with this
Agreement) in addition to any of TWT's own trademarks, trade names, and logos
that it applies. If ACLARA is the Commercializing Party, ACLARA shall apply the
TWT Marks (as set forth in Exhibit 1.69 and updated by TWT from time to time in
accordance with this Agreement) in addition to any of ACLARA's own trademarks,
trade names, and logos that it applies. The trademarks, trade names, and logos
of both Parties shall be displayed equally legibly and equally prominently, but
nevertheless separated from the other so that each appears to be a mark in its
own right, distinct from the other mark. No Approved Product, or such materials
or labels, shall display the trademarks, trade names, or logos of any third
party without the approval of the Joint Steering Committee.

                  9.2.1 TRADEMARK LICENSE. ACLARA hereby grants to TWT a
non-exclusive, non-transferable, royalty free license to use the ACLARA Marks in
connection with the marketing, promotion, and sale of Approved Products for use
in the Field in accordance with this Agreement. If the Joint Steering Committee
approves distribution of an Approved Product by ACLARA, TWT will grant ACLARA a
similar license to use the TWT Marks under the terms and conditions set forth in
this Article 9. All ownership and goodwill arising out of the use of a Party's
trademarks, trade names, and logos shall vest in and inure solely to the benefit
of such Party, and all ownership and goodwill arising out of the use of the
Joint Marks shall vest in and inure to the benefit of both ACLARA and TWT in
accordance with the agreements regarding the Joint Marks. Each Party reserves
all rights regarding its trademarks, trade names, and logos not expressly
granted to the other Party. Each Party agrees to conduct business related to the
Approved Products in a manner that reflects favorably at all times on the
products, goodwill, and reputation of the other Party.

                  9.2.2 APPROVAL OF REPRESENTATION OF MARKS. All representations
of the trademarks,  trade names, and logos of the Non-Commercializing Party that
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use shall first be submitted to the Non-Commercializing Party for approval
(which shall not be unreasonably withheld or delayed) of design, color, and
other details or shall be exact copies of those used by the Non-Commercializing
Party. In addition, all representations of the trademarks, trade names, and
logos of the Non-Commercializing Party that are used by the Commercializing
Party shall comply with the reasonable usage guidelines provided by the
Non-Commercializing Party to the Commercializing Party, subject to the
following. The Commercializing Party shall submit to the Non-Commercializing
Party representative promotional materials, packaging and product labels for
review and comment by the Non-Commercializing Party prior to their first use and
prior to any subsequent change or addition. The Non-Commercializing Party may
change its trademarks, trade names, and logos, and usage guidelines, to be used
by the Commercializing Party hereunder only upon ninety (90) days prior written
notice to the Commercializing Party, setting forth in such notice the changes.
Changes shall be limited to changes that are generally applicable to other uses
of the trademarks, trade names, and logos by the Non-Commercializing Party and
its licensees thereof. From and after the end of such ninety (90) day period, as
so designated in the notice, any trademarks, trade names, and logos that is to
be deleted shall cease to be an ACLARA Mark or TWT Mark, as applicable, any
trademarks, trade names, and logos that is to be added shall thereafter be
deemed to be an ACLARA Mark or TWT Mark, as applicable, and changes to the usage
guidelines shall take effect. Each Party shall solely bear all reasonable costs
and expenses that result from a change requested by such Party with respect to
such Party's own trademarks, trade names, and logos.

                  9.2.3 QUALITY CONTROL AND OTHER RESTRICTIONS. To enable the
Non-Commercializing Party to monitor the quality of the Approved Products in
connection with which its trademarks, trade names, and logos are used when the
Non-Commercializing Party is not the Manufacturing Party, the Commercializing
Party shall provide such Non-Commercializing Party with samples of the
applicable Approved Products under commercially reasonable terms and conditions
for such purposes. When TWT is the Manufacturing Party, such terms and
conditions for supply to ACLARA shall be those set forth in Article 12. In
addition, the Party manufacturing the Approved Product shall maintain reasonable
quality control procedures consistent with industry standards for similar
products.

                  9.2.4 RECORDATION. In those countries where a license to use
trademarks, trade names, and logos must be recorded, the Party granting a
license pursuant to this Article 9 shall have the right to provide and record a
separate license for such licenses to the other Party hereunder. The Party
receiving the license shall cooperate in the preparation and execution of such
documents. Upon termination of a license pursuant to this Article 9, the Party
receiving the license shall cooperate in the cancellation of any such licenses
recorded or entered into in applicable countries.

                  9.2.5 MARK INFRINGEMENT. Each Party shall notify the other
Party promptly upon learning of any actual, alleged, or threatened infringement
of, or of any unfair trade practices, trade dress imitation, passing off of
counterfeit goods, or similar offenses relating to, the trademarks, trade names,
or logos of the other Party.

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                                   ARTICLE 10

                                  MANUFACTURING

         10.1. LICENSES.

                  10.1.1 GENERAL. Subject to the terms and conditions of this
Agreement, ACLARA hereby grants to TWT a worldwide, non-exclusive, right and
license under the ACLARA Technology to manufacture, have manufactured, and
otherwise produce Approved Products, including the right to practice any method
or process for such purposes; provided that (i) Approved Products manufactured
under this Section 10.1.1 shall be used, sold and distributed solely in
accordance with the terms and conditions of this Agreement for use in the Field;
and (ii) this Section 10.1.1 does not include the right to manufacture ACLARA
Components. Prior to exercising its license under this Section 10.1.1 to have an
Approved Product manufactured by a third party, TWT shall obtain ACLARA's prior
written consent to the particular third party unless it is an Affiliate of TWT,
which consent shall not be unreasonably withheld or delayed by ACLARA.

                  10.1.2 SOFTWARE. Subject to the terms and conditions of this
Agreement, ACLARA hereby grants to TWT a worldwide, non-exclusive, right and
license, under the Intellectual Property Rights owned or Licensable by ACLARA
that are applicable to the Software identified in Section 7.4.2, to reproduce
such Software, including onto appropriate media for distribution pursuant to
this Agreement for use in the Field. This license grant includes the right to
reproduce and modify the source code version of such Software as reasonably
necessary for such purposes, and to create error corrections and other
reasonable updates and modifications to such Software. TWT shall have the right
to exercise its rights under this Section 10.1.2 using third party contractors.

         10.2. RESTRICTIONS.

                  10.2.1 ACLARA COMPONENTS. ACLARA Components used to
manufacture Approved Products pursuant to Section 10.1.1 will be obtained by TWT
solely in accordance with Article 11 below.

                  10.2.2  APPROVED  PRODUCTS.  The manufacture of Approved
Products by TWT under this Article 10 shall be limited to Approved Products
approved by the Development Committee for Commercial Launch. It is acknowledged
and agreed, however, that TWT is licensed under Section 4.8.2 to manufacture,
have manufactured, and otherwise produce Approved Products, and portions
thereof, for purposes of performing its responsibilities under the Development
Program.

         10.3.  RESPONSIBILITIES.  Subject to the terms and  conditions  of this
Agreement,  TWT will have  responsibility for, and sole control of, assembly and
packaging of Approved  Products and Software,  including  copying  Software onto
appropriate media.

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         10.4. ECONOMICS. It is acknowledged that TWT has a goal of a
Reconciliation Margin (as defined in Section 8.2.1) for the manufacture of
Approved Products of [ * ] bringing its total margin to [ * ] in order to
receive a minimally acceptable return on its investment in equipment and
facilities. If the Reconciliation Margin for Approved Products manufactured by
TWT does not exceed [ * ] for any [ * ], then TWT shall have the right to notify
ACLARA of its desire to discontinue manufacturing Approved Product, all as set
forth in this Section 10.4 below.

         10.4.1 ALTERNATE SOURCE INVESTIGATION. If TWT's Reconciliation Margin
is below [ * ] for any calendar quarter with respect to Approved Products
manufactured by TWT and sold during such quarter, TWT shall promptly notify
ACLARA in writing of such occurrence. In such case, at ACLARA's request the
Parties shall (i) discuss in good faith an adjustment to the Reconciliation
Margin calculation that will provide TWT with its minimally acceptable return on
investment and/or (ii) cooperate to [ * ].

         10.4.2 CONTINUED SUPPLY/TERMINATION BY TWT. If TWT's Reconciliation
Margin is [ * ] for [ * ] with respect to Approved Products manufactured by TWT
and sold during such [ * ], TWT shall have the right to terminate its obligation
to supply Approved Products hereunder on [ * ] written notice to ACLARA.
Notwithstanding the foregoing, upon receipt of such notice ACLARA shall have the
right to [ * ].

         10.4.3 APPOINTMENT. To the extent that TWT provides notice in
accordance with Section 10.4.2 that it is terminating its obligation to
manufacture Approved Products and ACLARA has not paid to TWT the difference
between the Reconciliation Margin, then if ACLARA has identified in reasonable
cooperation with TWT a manufacturer that is willing to commit contractually to
manufacture and supply the Approved Products for distribution and use hereunder
under the terms and conditions, including price, described in Section 10.4.1,
after giving reasonable consideration to the input and concerns of TWT, then [ *
]. If not otherwise addressed, ACLARA would have the right to reproduce the
Software for such Approved Products MUTATIS MUTANDIS with the terms set forth in
Section 10.1.2. Unless otherwise agreed in writing, there shall be no disclosure
of a Party's trade secrets, know-how, source code, or Confidential Information
to such manufacturer, or use thereof by such manufacturer for such purposes,
without such Party's consent.

         10.5.  PRODUCT  CHANGES.  During the Development  Term,  changes to the
Specifications  for an Approved  Product shall be made solely by approval of the
Development Committee.  Thereafter,  changes to the Specifications shall be made
solely by written agreement of the Parties.

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                                   ARTICLE 11

                           SUPPLY OF ACLARA COMPONENTS

         11.1. TERMS AND CONDITIONS. All supply of ACLARA Components by ACLARA
to TWT shall be subject to the terms and conditions of this Agreement. ANY TERMS
OR CONDITIONS OF ANY PURCHASE ORDER OR ACKNOWLEDGMENT GIVEN OR RECEIVED WHICH
ARE ADDITIONAL TO OR INCONSISTENT WITH THIS AGREEMENT SHALL HAVE NO EFFECT AND
SUCH TERMS AND CONDITIONS ARE HEREBY EXCLUDED AND REJECTED.

         11.2. SUPPLY. Subject to the terms and conditions of this Article 11,
ACLARA shall supply TWT with ACLARA Components, and TWT shall purchase ACLARA
Components from ACLARA. Provided that TWT does not breach Article 15, nothing in
this Agreement shall be construed to prevent TWT from purchasing similar
components from any other party; except that TWT shall not include in any
Approved Product an ACLARA Component obtained from another party (except
pursuant to its have made rights in the backup manufacturing license in Section
11.11). For clarity, nothing in this Agreement shall prevent TWT from
distributing or otherwise exploiting outside the scope of this Agreement
products or components that are equivalent to Approved Products or ACLARA
Components, provided that any such distribution or exploitation shall not be
licensed hereunder, and ACLARA's Confidential Information shall not be used or
disclosed, in order to do so. It is acknowledged and agreed that ACLARA
Components purchased by TWT under this Article 11 are subject to restriction and
are only for distribution and use as part of Approved Products in accordance
with this Agreement. Any other distribution or use of such ACLARA Components
shall be deemed to be unauthorized and unlicensed. Except for the licenses
expressly granted to TWT by ACLARA in this Agreement or otherwise in a writing
signed by both Parties, no transfer of an ACLARA Component to TWT shall be
construed to grant TWT any right or license under ACLARA's Intellectual Property
Rights, whether by implication, estoppel, reliance, or otherwise.

         11.3. FORECASTS. With respect to each Approved Product that has been,
or that TWT anticipates will be, approved by the Development Committee for
Commercial Launch, TWT will provide forecasts for the quantities of ACLARA
Component(s) which are estimated to be required by TWT on a calendar monthly
basis as set forth in this Section 11.3. Each such forecast ("FORECAST") shall
indicate the estimated quantities of each ACLARA Component (identified by name
and part number) on a calendar month by calendar month basis for the applicable
initial month, as described below, and for each calendar month thereafter until
the twelfth (12th) calendar month following the then current month. [ * ] TWT
shall purchase, and ACLARA shall supply, the quantities of ACLARA Component set
forth in each Forecast to the extent set forth in Section 11.4.

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         11.4. ORDERS.

                  11.4.1 ORDERS. Together with each Forecast submitted under
Section 11.3 above (the "CURRENT FORECAST") which includes quantities of ACLARA
Component(s) forecasted for delivery in the [ * ] calendar month after the then
current calendar month (the "BINDING MONTH"), TWT shall place its firm order
with ACLARA, setting forth trade units, delivery dates and shipping instructions
with respect to each shipment, for delivery in the Binding Month of that
quantity of each particular ACLARA Component equal to the quantity of such
ACLARA Component forecasted for the Binding Month in the Current Forecast.
ACLARA shall accept such orders from TWT, subject to the remaining terms and
conditions of this Agreement, provided that ACLARA shall not be obligated to
accept orders for the Binding Month to the extent that the quantity ordered for
delivery in such month exceeds the amount forecasted in the Binding Month; but
ACLARA shall use reasonable commercial efforts to fill orders for such excess
quantities from available supplies. Additionally, if demand exceeds Forecasted
quantities of ACLARA Components, the Parties shall meet to discuss the matter in
an effort to determine a course of action that will enable the demand to be met.

                  11.4.2  MINIMUM  ORDER   QUANTITIES.   The  Parties  agree  to
cooperate  diligently  in  order  to  establish  minimum  quantities  of  ACLARA
Components that may be ordered in each order.

                  11.4.3 FORM OF ORDER. All of TWT's orders shall be made
pursuant to a written purchase order which is in a form approved by both
Parties, and shall provide for shipment in compliance with Section 11.4.1.
ACLARA shall use reasonable efforts to notify TWT within ten (10) days from
receipt of an order of its ability to fill any amounts of such order in excess
of the quantities that ACLARA is obligated to supply.

         11.5. COMPENSATION. TWT acknowledges and agrees that the entire amounts
payable under Article 8 from the sale of the Approved Products are payable to
ACLARA notwithstanding the transfer to TWT of the ACLARA Components under this
Article 11 or payment by TWT of the transfer price under Section 8.1.1 or
Component Reconciliation under Section 8.3.2. In particular, no transfer of an
ACLARA Component to TWT shall be considered to exhaust ACLARA's right to receive
such amounts under Article 8, it being acknowledged that the transfer price and
Component Reconciliation for the ACLARA Component have not been established in a
manner intended to fully compensate ACLARA for the ACLARA Component.

         11.6. DELIVERY. All ACLARA Components delivered pursuant to the terms
of this Agreement shall be suitably packed for shipment in accordance with the
applicable Specifications, marked for shipment to the destination point
indicated in TWT's purchase order, and shipped FOB (as defined under the UCC)
point of shipment. Such packing, and the manner of shipment, shall be reasonably
sufficient to prevent damage, contamination, or degradation during shipment and
during

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unpacking at the destination. All freight, insurance and other shipping expenses
from the point of shipment shall be borne by TWT. The carrier shall be selected
by ACLARA and TWT, provided that in the event no agreement is reached, TWT shall
select the carrier. With respect to exact delivery dates of ACLARA Components,
ACLARA shall use its [ * ] efforts to ship quantities of ACLARA Components for
delivery on the dates specified in TWT's purchase orders submitted in accordance
with this Article 11 to the extent such dates are consistent with the forecasted
quantities ACLARA is obligated to supply hereunder.

         11.7. INVOICING. ACLARA shall submit an invoice to TWT no earlier than
shipment of the ACLARA Component ordered by TWT hereunder. All invoices shall be
sent to TWT's address for notices hereunder or such other address as designated
by TWT in writing, and each such invoice shall state TWT's aggregate and unit
prices for the ACLARA Components in a given shipment, and shall separately
itemize any insurance, taxes or other costs incident to the transfer or shipment
initially paid by ACLARA but to be borne by TWT hereunder.

         11.8. QUALITY AND QUALITY CONTROL. All ACLARA Components supplied by
ACLARA shall be manufactured using reasonable manufacturing and record keeping
procedures, including with regard to quality control. Prior to each shipment of
each ACLARA Component, ACLARA shall perform reasonable quality control
procedures and inspections in an effort to confirm that such ACLARA Component
conforms fully with the Specifications. Each shipment of ACLARA Components shall
be accompanied by a written certificate of analysis describing all current
requirements of the Specifications, and results of test performed, certifying
that the ACLARA Components in such shipment have been manufactured, controlled
and released in accordance with this Section 11.8.

         11.9. INSPECTION/REJECTION.

                  11.9.1 PRODUCT INSPECTION. TWT shall, promptly upon receipt of
each shipment, perform customary inspection. Any claim regarding the failure of
such shipment to conform to the applicable Specifications shall be submitted to
ACLARA promptly upon discovery, but in no case later than forty five (45) days
after receipt of the shipment, together with reasonable evidence of such
nonconformity. Any ACLARA Component supplied by ACLARA under this Agreement
which fails to conform to the applicable Specifications shall be subject to the
provisions of Section 11.10.2.

                  11.9.2 DISCREPANCIES. All shipments, and all shipping and
other charges, shall be deemed correct unless ACLARA receives from TWT, no later
than thirty (30) days after TWT's receipt of a given shipment, a written notice
specifying the shipment, the purchase order number, and the exact nature of the
discrepancy between the order and the shipment, or the exact nature of the
discrepancy in the shipping or other charges, as applicable.

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         11.10. PRODUCT WARRANTY.

                  11.10.1 PRODUCT WARRANTY. Subject to the terms and conditions
of this Agreement, ACLARA represents and warrants that all ACLARA Components
supplied by ACLARA to TWT under this Agreement shall (i) comply, at the time of
shipment to TWT, with the Specifications; and (ii) conform to the information
provided in the certificate of analysis under Section 11.8. ACLARA further
represents and warrants that title to all ACLARA Components shall pass to TWT
concurrently with risk of loss, free and clear of all security interests, liens
and other encumbrances.

         11.10.2 REMEDY FOR NON-CONFORMANCE. In the event that any ACLARA
Component fails to comply with such Specifications at the time of shipment to
TWT, then ACLARA shall as its sole and exclusive liability, and TWT's sole and
exclusive remedy, at ACLARA's own cost (including freight and insurance) (i)
deliver replacement quantities of such ACLARA Component to TWT as soon as
reasonably practicable; or (ii) in the case of a recall if replacement is
commercially unreasonable, credit TWT's account for the amount paid for such
ACLARA Component. ACLARA may analyze any unit of ACLARA Component rejected by
TWT for nonconformity. In case of a disagreement between the Parties, the claim
shall be submitted for tests and decision to an independent testing organization
mutually agreed upon by the Parties, which meets appropriate current Good
Laboratory Practices as defined by the FDA from time to time (the "LABORATORY"),
the appointment of which shall not be unreasonably withheld or delayed by either
Party. The determination of such entity with respect to all or part of any
shipment of ACLARA Component shall be final and binding upon the Parties. The
fees and expenses of the Laboratory making such determination shall be paid by
the Party against which the determination is made. ACLARA shall give TWT written
instructions as to how TWT should, at ACLARA's expense, dispose of any
non-conforming ACLARA Component.

         11.11. SHORTAGE OF SUPPLY OF ACLARA COMPONENTS. ACLARA shall notify TWT
as soon as reasonably practicable if ACLARA has any reason to believe that it
may be unable to deliver ACLARA Components in accordance with TWT's purchase
orders to the extent that ACLARA is obligated to supply the Approved Products
under this Article 11, including if ACLARA is experiencing manufacturing
difficulties that it believes create a reasonably possibility of disrupting
supply in the future. In such event the Parties shall meet and cooperate
reasonably in order to formulate a plan in an effort to avoid any such
disruption, which plan may include identifying potential third party suppliers
of ACLARA Components or TWT manufacturing the ACLARA Components.

                  11.11.1 RIGHT TO MANUFACTURE. If for any [ * ], ACLARA fails
to supply the quantities of an ACLARA Component that ACLARA is obligated to
supply under Section 11.4.1, and provided that such failure will result in a
substantial interruption of TWT's commercial sales of Approved Products that
have been approved by the Development Committee for Commercial

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Launch, then TWT may manufacture (and have manufactured), pursuant to the
license granted in Section 11.11.2 (the "COMPONENT MANUFACTURING LICENSE") such
ACLARA Component. Such right shall not include any right to sublicense and shall
continue in effect only until such time as ACLARA demonstrates that it will
supply TWT's requirements of such ACLARA Component; it being understood that
such demonstration will be made over the course of a phase in period in which
supply by ACLARA to TWT of the ACLARA Component is ramped up concurrent with a
wind down by TWT in the manufacture of the ACLARA Component, each as reasonably
established to avoid disruptions in supply to TWT. At the end of such phase-in
period, which shall include at least [ * ]of supply by ACLARA of TWT's full
requirements of the ACLARA Component for distribution and use in accordance with
this Agreement, TWT shall discontinue any exercise of the Component
Manufacturing License with respect to such ACLARA Component; provided that the
Component Manufacturing License shall remain in effect and may be further
exercised by TWT in accordance with this Section 11.11 in the event of
additional failures to supply an ACLARA Component. For purposes of this
Agreement, a "failure to supply", or like terminology, when used with reference
to supply by ACLARA, shall mean, with respect to a particular ACLARA Component,
a failure to supply to TWT in the applicable calendar month [ * ] of the
quantity of such ACLARA Component that ACLARA is obligated to supply under
Section 11.4.1 above for such calendar month.

                  11.11.2 COMPONENT MANUFACTURING LICENSE. Subject to all other
terms and conditions of this Agreement, ACLARA hereby grants to TWT, and TWT
hereby accepts, a non-exclusive right and license under the ACLARA Technology,
without right to grant or authorize sublicenses, as necessary to make, and have
made (solely as set forth in this Section 11.11.2) ACLARA Components only to the
extent included in Approved Products for use in the Field and that are
distributed or used by TWT in accordance with this Agreement, including the
right to practice any method or process in connection with the foregoing. TWT
may exercise its right to have ACLARA Components manufactured in accordance with
this Section 11.11.2 solely through a single third party contract manufacturer
subject to ACLARA's approval, not to be unreasonably withheld or delayed; and
provided that such third party manufacturer (A) agrees to enter into a
reasonable confidentiality agreement with ACLARA to protect against the
unauthorized use and disclosure of Confidential Information of ACLARA; and (B)
agrees to supply and otherwise transfer the manufactured ACLARA Components only
to TWT and not to any other party.

                           (i) EXERCISE OF THE COMPONENT  MANUFACTURING LICENSE.
TWT agrees that it will not exercise any of its rights under the Component
Manufacturing License except to the extent expressly permitted in this Section
11.11. At such time as TWT is authorized to exercise its rights under the
Component Manufacturing License, as set forth in this Section 11.11, ACLARA will
use reasonable commercial efforts to assist TWT in securing supply terms that
are similar to the terms in ACLARA's agreements with its suppliers of
pre-produced ACLARA Components and ACLARA raw materials.

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                           (ii)  ESCROW.  At any time  after the first  Approved
Product is approved by the Development Committee for Commercial Launch, TWT
shall have the right to request that ACLARA place in escrow the ACLARA Deposit
Materials for each ACLARA Component that is used in an Approved Product that has
been approved by the Development Committee for Commercial Launch. As used in
this Article 11, "ACLARA DEPOSIT MATERIALS" shall mean instructions,
specifications, and other Technology and materials describing the composition
and manufacture of each such ACLARA Component, including a description of the
suppliers, raw materials, processes, equipment, and instruments used for such
manufacture, all in sufficient detail to reasonably enable TWT to manufacture,
without need for further information, the ACLARA Component in the same manner as
such manufacture is performed by or for ACLARA. As soon as reasonably
practicable, but no later than thirty (30) days, after TWT's request under the
circumstances set forth above, ACLARA shall deposit such ACLARA Deposit
Materials in escrow under an escrow agreement reasonably acceptable to both
Parties, or if the Parties are unable to agree, the standard escrow agreement
used by a nationally known and reputable escrow agent reasonably selected by
TWT. ACLARA shall update the ACLARA Deposit Materials consistent with the
foregoing at least each time an Approved Product is approved by the Development
Committee for Commercial Launch, and otherwise regularly as set forth in the
applicable escrow agreement, but no less often than once per calendar year. It
is acknowledged and agreed that ACLARA may segregate the ACLARA Deposit
Materials, to the extent possible, so that only those portions of the ACLARA
Deposit Materials pertaining to the manufacture of the particular ACLARA
Component for which there has been a failure to supply will be released to TWT,
provided that the escrow agent shall be required to release all of the ACLARA
Deposit Materials to TWT if the segregated materials are not sufficient to
reasonably enable TWT to manufacture the applicable ACLARA Component as set
forth above. TWT shall have the right to have an independent technical auditor
that is approved by ACLARA, which approval will not be unreasonably withheld,
inspect the ACLARA Deposit Materials to evaluate the sufficiency thereof for
purposes of TWT's exercise of its rights under this Section 11.11; provided that
the auditor shall be required to enter into a reasonable confidentiality
agreement with ACLARA. The ACLARA Deposit Materials released to TWT under such
an escrow agreement shall be treated as the Confidential Information of ACLARA
under this Agreement to the extent set forth in Article 15, and shall be used
only by TWT, and its contract manufacturer authorized under this Section 11.11,
to manufacture ACLARA Components in accordance with this Section 11.11. TWT
shall be solely responsible for the fees payable to the escrow agent under this
Section 11.11. The conditions for release to TWT of those portions of the ACLARA
Deposit Materials pertaining to the particular ACLARA Component which ACLARA
failed to supply shall include release of such portions to TWT if, for any [ *
], ACLARA fails to supply TWT's requirements of the ACLARA Component (as such
failure is defined in this Section 11.11), and provided that such failure will
result in a substantial interruption of TWT's commercial sales of the applicable
Approved Products. The conditions for release after termination of this
Agreement by TWT for breach by ACLARA shall include the failure of ACLARA to
supply an ACLARA Component to TWT in one calendar month

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after such termination, and the escrow agreement shall provide for release of
the ACLARA Deposit Materials for all ACLARA Components under such circumstances.
In the event of the occurrence of a release condition under this Section
11.11.2, ACLARA shall diligently cooperate with TWT without charge as necessary
to enable TWT to exercise its rights under this Section 11.11 for purposes in
accordance with this Agreement, including to identify a third party contract
manufacturer acceptable to both Parties.

                  11.11.3 SOLE REMEDY. THIS SECTION 11.11 SHALL BE TWT'S SOLE
AND EXCLUSIVE REMEDY, AND ACLARA'S SOLE AND EXCLUSIVE LIABILITY, FOR A FAILURE
BY ACLARA TO SUPPLY ACLARA COMPONENTS PURSUANT TO THIS ARTICLE 11. For clarity,
TWT shall remain obligated to pay amounts to ACLARA in accordance with Sections
8.3.2 and 8.4 in the event of a failure by ACLARA to supply ACLARA Components,
and such a failure shall not be cause for termination of this Agreement for
breach.

         11.12. THIRD PARTY CONTRACTORS. ACLARA shall have the right at any time
to satisfy its supply obligations to TWT under this Article 11 either in whole
or in part through arrangements with third parties engaged to perform services
or supply facilities or goods in connection with the manufacture, testing,
and/or packaging of ACLARA Components, provided that ACLARA shall remain
responsible for compliance with its obligations under this Agreement. Prior to
exercising its rights under this Section 11.12 to have an ACLARA Component
manufactured by a third party, ACLARA shall obtain TWT's prior written consent
to the particular third party unless it is an Affiliate of ACLARA, which consent
shall not be unreasonably withheld or delayed by TWT.

                                   ARTICLE 12

                           SUPPLY OF APPROVED PRODUCTS

         12.1. TERMS AND CONDITIONS. All supply of Approved Products by TWT to
ACLARA shall be subject to the terms and conditions of this Agreement. Likewise,
in the event that TWT is required to supply Cleavase Enzyme to ACLARA for
ACLARA's manufacture of Approved Products as a result of TWT's failure to supply
Approved Products as set forth in Section 12.11 below, such supply shall be
subject to the terms and conditions of this Article 12. ANY TERMS OR CONDITIONS
OF ANY PURCHASE ORDER OR ACKNOWLEDGMENT GIVEN OR RECEIVED WHICH ARE ADDITIONAL
TO OR INCONSISTENT WITH THIS AGREEMENT SHALL HAVE NO EFFECT AND SUCH TERMS AND
CONDITIONS ARE HEREBY EXCLUDED AND REJECTED. Only Approved Products that have
been Commercially Launched will be available for purchase by ACLARA for its own
use under this Agreement.

         12.2. SUPPLY. Subject to the terms and conditions of this Article 12,
TWT shall supply Approved Products, and ACLARA shall pay for Approved Products
so supplied. Provided that ACLARA does not breach Article 15, nothing in this
Agreement shall be construed to prevent ACLARA from purchasing similar products
from any other party; except that (i) ACLARA shall obtain Approved Products only
from TWT, or through the exercise of its backup manufacturing

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license, under this Article 12, (ii) any rights of ACLARA to distribute Approved
Products shall remain subject to Section 7.5; and (iii) ACLARA shall not include
in any Approved Product any Cleavase Enzyme obtained from another party (except
pursuant to its have made rights in the backup manufacturing license in Section
12.11). For clarity, nothing in this Agreement shall prevent ACLARA from
distributing or otherwise exploiting outside the scope of this Agreement
products or components that are equivalent to Approved Products or Cleavase
Enzyme, provided that any such distribution or exploitation shall not be
licensed hereunder, and TWT's Confidential Information shall not be used or
disclosed, in order to do so. It is acknowledged and agreed that Approved
Products purchased by ACLARA under this Article 12 are subject to restriction
and are only for distribution and use in accordance with this Agreement in the
same form and format as supplied by TWT. Likewise, it is acknowledged and agreed
that Cleavase Enzymes transferred to ACLARA under this Article 12 are subject to
restriction and are solely for use in manufacturing Approved Products for
distribution and use in accordance with this Agreement pursuant to the Backup
Manufacturing License set forth in Section 12.11 below and in no event shall any
Cleavase Enzyme be transferred to any third party except as part of an Approved
Product. For clarity, ACLARA shall not distribute any Approved Product purchased
under this Article 12 except to the extent expressly approved by the Joint
Steering Committee in accordance with Articles 6 and 7 of this Agreement. Any
other distribution or use of Approved Products or Cleavase Enzymes shall be
deemed to be unauthorized and unlicensed. Except for licenses expressly granted
by TWT to ACLARA in this Agreement or otherwise in a writing signed by both
Parties, no transfer of an Approved Product or Cleavase Enzyme to ACLARA shall
be construed to grant ACLARA any right or license under TWT's Intellectual
Property Rights, whether by implication, estoppel, reliance, or otherwise.

         12.3. FORECASTS. With respect to each Approved Product that has been
approved by the Development Committee for Commercial Launch, ACLARA will provide
forecasts for the quantities of such Approved Product which are estimated to be
required by ACLARA on a calendar monthly basis as set forth in this Section
12.3. Each such forecast ("FORECAST") shall indicate the estimated quantities of
each Approved Product (identified by name and part number) on a calendar month
by calendar month basis for the applicable initial month, as described below,
and for each calendar month thereafter until the twelfth (12th) calendar month
following the then current month. The first Forecast for an Approved Product
shall commence with [ * ]. A Forecast for each Approved Product shall be
provided by ACLARA prior to the end of each calendar month following the
calendar month in which ACLARA provides the initial Forecast for the applicable
Approved Product; provided that no such Forecast shall include any Approved
Product that has not been approved by the Development Committee for Commercial
Launch. ACLARA shall purchase, and TWT shall supply, the quantities of Approved
Products set forth in each Forecast to the extent set forth in Section 12.4. In
the event that TWT is obligated to supply Cleavase Enzymes to ACLARA the
foregoing forecasting obligations shall apply to ACLARA MUTATIS MUTANDIS as
reasonably necessary to manufacture Approved Products pursuant to the Backup
Manufacturing License.

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         12.4. ORDERS. 12.4.1 ORDERS. Together with each Forecast submitted
under Section 12.3 above (the "CURRENT FORECAST") which includes quantities of
Approved Product(s) forecasted for delivery in the [ * ] after the then current
month (the "BINDING MONTH"), ACLARA shall place its firm order with TWT, setting
forth trade units, delivery dates and shipping instructions with respect to each
shipment, for delivery in the Binding Month of that quantity of each particular
Approved Product equal to the quantity of such Approved Product forecasted for
the Binding Month in the Current Forecast. TWT shall accept such orders from
ACLARA, subject to the remaining terms and conditions of this Agreement,
provided that TWT shall not be obligated to accept orders for the Binding Month
to the extent that the quantity ordered for delivery in such month exceeds the
amount forecasted in the Binding Month; but TWT shall use [ * ] efforts to fill
orders for such excess quantities from available supplies, taking into account
TWT's own distribution, and obligations to Marketing Distributors for
distribution, of the Approved Products. Additionally, if demand exceeds
Forecasted quantities of Approved Products, the Parties shall meet to discuss
the matter in an effort to determine a course of action that will enable the
demand to be met. In the event that TWT is obligated to supply Cleavase Enzymes
to ACLARA, the ordering obligations in this Section 12.4 shall apply to ACLARA,
and the supply obligations in this Section 12.4 shall apply to TWT, MUTATIS
MUTANDIS.

                  12.4.2  MINIMUM  ORDER   QUANTITIES.   The  Parties  agree  to
cooperate  diligently  in order to  establish  minimum  quantities  of  Approved
Products and Cleavase Enzymes that may be ordered in each order.

                  12.4.3 FORM OF ORDER. All of ACLARA's orders of Approved
Products and Cleavase Enzymes shall be made pursuant to a written purchase order
which is in a form approved by both Parties, and shall provide for shipment in
compliance with Section 12.4.1. TWT shall use reasonable efforts to notify
ACLARA within ten (10) days from receipt of an order of its ability to fill any
amounts of such order in excess of the quantities that TWT is obligated to
supply.

         12.5. CONSIDERATION. Notwithstanding any payment by ACLARA to TWT of a
transfer price for Cleavase Enzyme under Section 8.1.2, of the amounts in
Section 8.1.3, or of any Manufacturing Reconciliation, ACLARA acknowledges and
agrees that the entire amounts payable under Article 8 from the sale of the
Approved Products are payable to TWT notwithstanding the transfer to ACLARA of
the Approved Products or Cleavase Enzyme under this Article 12. In particular,
no transfer of an Approved Product or Cleavase Enzyme to ACLARA shall be
considered to exhaust TWT's right to receive such amounts under Article 8, it
being acknowledged that the transfer price and Manufacturing Reconciliation for
the Approved Product and Cleavase Enzyme have not been established in a manner
intended to fully compensate TWT for the Approved Product or Cleavase Enzyme, as
applicable.

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         12.6. DELIVERY. All Approved Products or Cleavase Enzyme delivered to
ACLARA pursuant to the terms of this Agreement shall be suitably packed for
shipment in accordance with the applicable Specifications, marked for shipment
to the destination point indicated in ACLARA's purchase order, and shipped FOB
(as defined under the UCC) point of shipment. Such packing, and the manner of
shipment, shall be reasonably sufficient to prevent damage, contamination, or
degradation during shipment and during unpacking at the destination. All
freight, insurance and other shipping expenses from the point of shipment shall
be borne by ACLARA. The carrier shall be selected by ACLARA and TWT, provided
that in the event no agreement is reached, ACLARA shall select the carrier. With
respect to exact delivery dates of Approved Product and Cleavase Enzyme, TWT
shall use its [ * ] efforts to ship quantities of Approved Product and Cleavase
Enzyme for delivery on the dates specified in ACLARA's purchase orders submitted
in accordance with this Article 12 to the extent such dates are consistent with
the forecasted quantities TWT is obligated to supply hereunder.

         12.7. INVOICING. TWT shall submit an invoice to ACLARA for Approved
Products no earlier than shipment to ACLARA transfer from manufacturing of the
Approved Product to ACLARA in accordance with this Article 12. TWT shall submit
an invoice to ACLARA for Cleavase Enzymes no earlier than shipment of the
Cleavase Enzyme ordered by ACLARA in accordance with this Article 12. All
invoices shall be sent to ACLARA's address for notices hereunder or such other
address as designated by ACLARA in writing, and each such invoice shall state
ACLARA's aggregate and unit prices for the Approved Products and Cleavase
Enzyme, and shall separately itemize any insurance, taxes or other costs
incident to the transfer or shipment initially paid by TWT but to be borne by
ACLARA hereunder.

         12.8. QUALITY AND QUALITY CONTROL. All Approved Products and Cleavase
Enzymes supplied by TWT to ACLARA shall be manufactured using reasonable
manufacturing and record keeping procedures, including with regard to quality
control. Prior to each shipment of each Approved Product and Cleavase Enzyme to
ACLARA, TWT shall perform reasonable quality control procedures and inspections
in an effort to confirm that the same conforms fully with the Specifications.
Each shipment of Approved Products or Cleavase Enzyme to ACLARA shall be
accompanied by a written certificate of analysis describing all current
requirements of the Specifications, and results of test performed, certifying
that the Approved Products or Cleavase Enzyme in such shipment have been
manufactured, controlled and released in accordance with this Section 12.8.

         12.9. INSPECTION/REJECTION.


                  12.9.1 PRODUCT INSPECTION. ACLARA shall, promptly upon receipt
of each shipment perform customary  inspection.  Any claim regarding the failure
of such shipment to conform to the applicable  Specifications shall be submitted
to TWT promptly upon discovery, but in no case later

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than forty five (45) days after receipt of the shipment, together with
reasonable evidence of such nonconformity. Any Approved Product or Cleavase
Enzyme supplied by TWT to ACLARA under this Agreement which fails to conform to
the applicable Specifications shall be subject to the provisions of Section
12.10.2.

                  12.9.2 DISCREPANCIES. All shipments, and all shipping and
other charges, shall be deemed correct unless TWT receives from ACLARA, no later
than thirty (30) days after ACLARA's receipt of a given shipment, a written
notice specifying the shipment, the purchase order number, and the exact nature
of the discrepancy between the order and the shipment, or the exact nature of
the discrepancy in the shipping or other charges, as applicable.

         12.10. PRODUCT WARRANTY.

                  12.10.1 PRODUCT WARRANTY. Subject to the terms and conditions
of this Agreement, TWT represents and warrants to ACLARA that all Approved
Products and Cleavase Enzymes supplied by TWT to ACLARA under this Agreement
shall (i) comply, at the time of shipment to ACLARA, with the Specifications;
and (ii) conform to the information provided in the certificate of analysis
under Section 12.8. TWT further represents and warrants that title to all
Approved Products shall pass to ACLARA concurrently with risk of loss, free and
clear of all security interests, liens and other encumbrances.

                  12.10.2 REMEDY FOR NON-CONFORMANCE. In the event that any
Approved Product fails to comply with its Specifications at the time of shipment
to ACLARA, then TWT shall as its sole and exclusive liability, and ACLARA's sole
and exclusive remedy, at TWT's own cost (including freight and insurance) (i)
deliver replacement quantities of such Approved Product to ACLARA as soon as
reasonably practicable; or (ii) in the case of a recall if replacement is
commercially unreasonable, credit ACLARA's account for the amount paid for such
Approved Product. In the event that any Cleavase Enzyme fails to comply with its
Specifications at the time of shipment, then TWT shall as its sole and exclusive
liability, and the ACLARA's sole and exclusive remedy, at TWT's own cost
(including freight and insuance) deliver replacement quantities of such Cleavase
Enzyme as soon as reasonably practicable provided that replacement is not
commercially unreasonable. TWT may analyze any unit of Approved Product or
Cleavase Enzyme rejected by ACLARA for nonconformity. In case of a disagreement
between the Parties, the claim shall be submitted for tests and decision to an
independent testing organization mutually agreed upon by the Parties, which
meets appropriate current Good Laboratory Practices as defined by the FDA from
time to time (the "LABORATORY"), the appointment of which shall not be
unreasonably withheld or delayed by either Party. The determination of such
entity with respect to all or part of any shipment of Approved Product shall be
final and binding upon the Parties. The fees and expenses of the Laboratory
making such determination shall be paid by the Party against which the
determination is made. TWT shall give ACLARA written instructions as to how
ACLARA should, at TWT's expense, dispose of any non-conforming Approved Product.

         12.11. SHORTAGE OF SUPPLY OF APPROVED PRODUCTS. TWT shall notify ACLARA
as soon as reasonably  practicable  if TWT has any reason to believe that it may
be unable to deliver Approved

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Products in accordance with the Joint Steering Committee's purchase orders to
the extent that TWT is obligated to deliver Approved Products pursuant to
Section 6.8, including if TWT is experiencing manufacturing difficulties that it
believes create a reasonable possibility of disrupting supply in the future. In
such event the Parties shall meet and cooperate reasonably in order to formulate
a plan in an effort to avoid any such disruption, which plan may include
identifying potential third party suppliers of such Approved Products or
Cleavase Enzymes or ACLARA manufacturing the same.

                  12.11.1 RIGHT TO MANUFACTURE. If for [ * ], TWT fails to
supply the quantities of an Approved Product that has been approved by the
Development Committee for Commercial Launch that TWT is obligated to supply in
accordance with Section 6.8, and provided that such failure will result in a
substantial interruption of commercial sales of such Approved Products to
Customers and Marketing Distributors, then ACLARA may manufacture (and have
manufactured), pursuant to the license granted in Section 12.11.2 (the "BACKUP
MANUFACTURING LICENSE") such Approved Product (excluding Cleavase Enzyme and any
other components and materials that are not included as part of the Approved
Product as expressly set forth in its Specifications). The Backup Manufacturing
License shall extend to the manufacture of Cleavase Enzyme solely to the extent
set forth in Section 12.11.3. The Backup Manufacturing License shall not include
any right to sublicense, including when it extends to Cleavase Enzyme, and shall
continue in effect only until such time as TWT demonstrates that it will not
fail to supply the Joint Steering Committee's requirements of such Approved
Product; it being understood that such demonstration will be made over the
course of a phase in period in which supply by TWT of the Approved Product is
ramped up concurrent with a wind down by ACLARA in the manufacture of the
Approved Product, each as reasonably established to avoid disruptions in supply
to Customers and Marketing Distributors. At the end of such phase-in period,
which shall include at least two consecutive calendar months of supply by TWT of
the Joint Steering Committee's full requirements of the Approved Product for
distribution and use in accordance with this Agreement, ACLARA shall discontinue
any exercise of the Backup Manufacturing License with respect to such Approved
Product; provided that the Backup Manufacturing License shall remain in effect
and may be further exercised by ACLARA in accordance with this Section 12.11 in
the event of additional failures of TWT to supply an Approved Product. For
purposes of this Agreement, a "failure to supply," or like terminology, when
used with reference to supply by TWT, shall mean, with respect to a particular
Approved Product or Cleavase Enzyme, a failure to supply in the applicable
calendar month [ * ] of the quantity of such Approved Product that TWT is
obligated to supply under Section 6.8 above for such calendar month; provided
that no such failure shall be considered a failure of TWT to supply Approved
Products if (i) the failure resulted from any action or inaction of ACLARA; or
(ii) TWT was, in the calendar month of the failure by TWT, otherwise authorized
to exercise its rights to manufacture ACLARA Components under Section 11.11.
Notwithstanding anything to the contrary, a failure by TWT to supply shall be
deemed to result from action or inaction of ACLARA if ACLARA failed to supply
the quantity of an ACLARA Component that ACLARA was obligated to supply under
Section 11.4 above.

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                  12.11.2 BACKUP MANUFACTURING LICENSE. Subject to all other
terms and conditions of this Agreement, TWT hereby grants to ACLARA, and ACLARA
hereby accepts, a non-exclusive right and license under the TWT Technology,
without right to grant or authorize sublicenses, as necessary to make, and have
made (solely as set forth in this Section 12.11.2) Approved Products for use in
the Field that use only Cleavase Enzyme obtained in accordance with Section
12.11.3 and that are distributed or used in accordance with this Agreement,
including the right to practice any method or process in connection with the
foregoing. For avoidance of doubt, the license granted in this Section 12.11.2
shall not be exercised to manufacture Cleavase Enzyme except to the extent
authorized in Section 12.11.3. ACLARA may exercise its right to have Approved
Products manufactured in accordance with this Section 12.11.2 (including
Cleavase Enzyme when applicable pursuant to Section 12.11.3) solely through a
single third party contract manufacturer subject to TWT's approval, not to be
unreasonably withheld or delayed; and provided that such third party
manufacturer (A) agrees to enter into a reasonable confidentiality agreement
with TWT to protect against the unauthorized use and disclosure of Confidential
Information of TWT; and (B) agrees to supply and otherwise transfer the
manufactured Approved Products only to ACLARA and not to any other party.

                           (i)  EXERCISE  OF THE BACKUP  MANUFACTURING  LICENSE.
ACLARA agrees that it will not exercise any of its rights under the Backup
Manufacturing License except to the extent expressly permitted in this Section
12.11. At such time as ACLARA is authorized to exercise its rights under the
Backup Manufacturing License, as set forth in this Section 12.11, TWT will use
reasonable commercial efforts to assist ACLARA in securing supply terms for raw
materials that are similar to the terms in TWT's agreements with its suppliers
of raw materials.

                           (ii)  ESCROW.  At any time  after the Joint  Steering
Committee has authorized ACLARA to distribute to Customers generally an Approved
Product that has been approved by the Development Committee for Commercial
Launch, ACLARA shall have the right to request that TWT place in escrow the TWT
Deposit Materials for each Approved Product which ACLARA has been so authorized
to distribute. As used in this Article 12, "TWT DEPOSIT MATERIALS" shall mean
instructions, specifications, and other Technology and materials describing the
composition and manufacture of the components of each such Approved Product
other than Cleavase Enzyme, including a description of the suppliers, raw
materials, processes, equipment, and instruments used for the manufacture of
such components, all in sufficient detail to reasonably enable ACLARA to
manufacture, without need for further information, such components in the same
manner as such manufacture is performed by or for TWT. Notwithstanding anything
to the contrary, TWT shall not be required to include in the TWT Deposit
Materials any information or Technology regarding Cleavase Enzyme, such as
information regarding the manufacture thereof and the supply of raw materials
therefor. Escrow for information regarding Cleavase Enzyme, and the release of
such information, shall be solely as set forth in Section 12.11.3. As soon as
reasonably practicable, but no later than thirty (30) days, after ACLARA's
request under the circumstances set forth above, TWT shall deposit such TWT
Deposit Materials in escrow under an escrow agreement reasonably acceptable to
both Parties, or if the Parties are unable to agree, the standard escrow
agreement used by a nationally known and reputable escrow agent reasonably
selected by ACLARA. TWT shall update the TWT Deposit Materials consistent with
the foregoing at least each time an

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Approved Product is approved by the Development Committee for Commercial Launch,
and otherwise regularly as set forth in the applicable escrow agreement, but no
less often than once per calendar year. It is acknowledged and agreed that TWT
may segregate the TWT Deposit Materials, to the extent possible, so that only
those portions of the TWT Deposit Materials pertaining to the manufacture of the
components of the particular Approved Product for which there has been a failure
to supply will be released to ACLARA, provided that the escrow agent shall be
required to release all of the TWT Deposit Materials to ACLARA if the segregated
materials are not sufficient to reasonably enable ACLARA to manufacture the
applicable Approved Product as set forth above. ACLARA shall have the right to
have an independent technical auditor that is approved by TWT, which approval
will not be unreasonably withheld, inspect the TWT Deposit Materials to evaluate
the sufficiency thereof for purposes of ACLARA's exercise of its rights under
this Section 12.11; provided that the auditor shall be required to enter into a
reasonable confidentiality agreement with TWT. The TWT Deposit Materials
released to ACLARA under such an escrow agreement, and the Cleavase Materials
released under Section 12.11.3, shall be treated as the Confidential Information
of TWT under this Agreement to the extent set forth in Article 15, and shall be
used only by ACLARA, and its contract manufacturer authorized under this Section
12.11, to manufacture Approved Products in accordance with this Section 12.11.
ACLARA shall be solely responsible for the fees payable to the escrow agent(s)
under this Section 12.11. The conditions for release to ACLARA of those portions
of the TWT Deposit Materials pertaining to the particular Approved Product which
TWT failed to supply shall include release of such portions to ACLARA if (i) for
[ * ], TWT fails to supply ACLARA's requirements of an Approved Product which
ACLARA is authorized to distribute generally to Customers, and (ii) such failure
will result in a substantial interruption of ACLARA's commercial sales of such
Approved Products. The conditions for release after termination of this
Agreement by ACLARA for breach by TWT shall include the failure of TWT to supply
such an Approved Product to ACLARA in one calendar month after such termination
of this Agreement, and the escrow agreement shall provide for release of the TWT
Deposit Materials for all such Approved Products under such circumstances. In
the event of the occurrence of a release condition under this Section 12.11.2,
TWT shall diligently cooperate with ACLARA without charge as necessary to enable
ACLARA to exercise its rights under this Section 12.11 for purposes in
accordance with this Agreement, including to identify a third party contract
manufacturer acceptable to both Parties.

                  12.11.3 CLEAVASE MATERIALS AND LICENSE. Prior to release of
the Cleavase Materials under this Section 12.11.3, all Cleavase Enzyme used in
Approved Products manufactured under the Backup Manufacturing License shall be
Cleavase Enzyme purchased from TWT under the terms and conditions set forth in
this Article 12 with respect to Approved Products. All Cleavase Enzyme obtained
pursuant to this Section 12.11 shall be used only in accordance with the
applicable Specifications as part of an Approved Product that ACLARA is
authorized to manufacture under this Section 12.11 and that is distributed and
used solely in accordance with this Agreement. ACLARA's request in accordance
with Section 12.11.2(ii) that TWT place the TWT Deposit

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Materials for an Approved Product in escrow shall not be deemed to include a
request that TWT place in escrow under this Section 12.11.3 information and
Technology regarding Cleavase Enzyme used by such Approved Product, such as
information regarding the manufacture of such Cleavase Enzyme and the supply of
raw materials therefor, (collectively the "CLEAVASE MATERIALS"), unless ACLARA
indicates specifically its desire that TWT do so. ACLARA acknowledges and
agrees, however, that the escrow agreement for such Cleavase Materials shall be
different than the escrow agreement for the TWT Deposit Materials and that the
release conditions for the Cleavase Materials shall be as described in this
Section 12.11.3, rather than the release conditions for the TWT Deposit
Materials in Section 12.11.2(ii). The condition for release of the Cleavase
Materials (the "CLEAVASE RELEASE CONDITION") shall be the occurrence, after
release of the TWT Deposit Materials to ACLARA from escrow as set forth in
Section 12.11.2, for [ * ], in which ACLARA is authorized to exercise its rights
under the Backup Manufacturing License to manufacture an Approved Product, of
TWT's failure to supply ACLARA's requirements of the Cleavase Enzyme necessary
for ACLARA to exercise such rights, and the substantial interruption as a result
of such failure of ACLARA's commercial sales of Approved Products that ACLARA is
authorized to distribute. If the Cleavase Release Condition occurs, then the
Backup Manufacturing License in Section 12.11.2 shall be deemed to extend to the
manufacture of the Cleavase Enzyme which TWT so failed to supply and that is
used in the Approved Products that ACLARA is authorized to manufacture under
Section 12.11.2. The manufacture of such Cleavase Enzyme under the Backup
Manufacturing License shall be so authorized, however, to no greater extent than
the manufacture of the applicable Approved Product is authorized, and such
rights to manufacture Cleavase Enzyme shall be subject to all of the other terms
and conditions of this Section 12.11, provided that such right shall continue in
effect only until such time as TWT demonstrates that it will supply ACLARA's
requirements of such Cleavase Enzyme or the Approved Product.

                  12.11.4 SOLE REMEDY. THIS SECTION 12.11 SHALL BE ACLARA'S SOLE
AND EXCLUSIVE REMEDY, AND TWT'S SOLE AND EXCLUSIVE LIABILITY, FOR A FAILURE BY
TWT TO SUPPLY APPROVED PRODUCTS OR CLEAVASE ENZYME PURSUANT TO THIS ARTICLE 12.
For clarity, ACLARA shall remain obligated to pay amounts to TWT in accordance
with Section 8.1.2, 8.3.3, and 8.4 in the event of a failure by TWT to supply
Approved Products, and in accordance with Sections 8.3.3 and 8.4 in the event of
a failure by TWT to supply Approved Products and Cleavase Enzymes, and such a
failure shall not be cause for termination of this Agreement for breach.
Additionally, ACLARA shall remain obligated to continue to supply ACLARA
Components to TWT in accordance with Article 11 so that TWT may continue its
manufacture of Approved Products in accordance with this Agreement.

         12.12. THIRD PARTY CONTRACTORS. TWT shall have the right at any time to
satisfy its supply obligations to TWT under this Article 12 either in whole or
in part through arrangements with third parties engaged to perform services or
supply facilities or goods in connection with the manufacture, testing, and/or
packaging of Approved Products, provided that TWT shall remain responsible for

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compliance with its obligations under this Agreement. Prior to exercising its
rights under this Section 12.12 to have an Approved Products manufactured by a
third party, TWT shall obtain ACLARA's prior written consent to the particular
third party unless it is an Affiliate of TWT, which consent shall not be
unreasonably withheld or delayed by ACLARA.

                                   ARTICLE 13

                           PAYMENTS; REPORTS; RECORDS

         13.1. RECONCILIATION. The Parties shall cooperate in order to minimize
the actual exchange of money between the Parties that occurs as a result of
Sections 5.6, 6.7.4 and 8.3. Reconciliation with respect to such provisions
shall be performed in a mutually agreed upon manner, such as by the Finance
Sub-Committee under Section 6.5 or an independent third party financial auditor
acceptable to both Parties. Reconciliation shall be completed within thirty (30)
days after the end of the applicable calendar quarter, and appropriate balancing
payments shall be made by each Party within such thirty (30) day time period, as
applicable, in accordance with the results of the reconciliation.

         13.2. INITIAL PAYMENT UPON MANUFACTURE OF APPROVED PRODUCTS. At any
time after the Manufacturing Party has transferred a unit of Approved Product
from manufacturing, the Manufacturing Party shall have the right to invoice the
other Party for the amounts payable by the other Party under Section 8.1.3. Each
invoice shall be accompanied by a certification that manufacture of the Approved
Products identified in such invoice has been completed and transferred to
inventory or sold. Payment of each such invoice by such other Party to the
Manufacturing Party shall be due net thirty (30) days from the date of invoice.

         13.3. SUPPLY OF ACLARA COMPONENTS AND APPROVED PRODUCTS TO TWT. Payment
for all ACLARA  Components  and Approved  Products  purchased by TWT from ACLARA
shall be due net thirty (30) days from the date of proper invoice.

         13.4.  SUPPLY OF  CLEAVASE  ENZYME  AND  APPROVED  PRODUCTS  TO ACLARA.
Payment for all Cleavase Enzyme and Approved  Products  purchased by ACLARA from
TWT shall be due net thirty (30) days from the date of proper invoice.

         13.5. PAYMENTS FOR INTERNAL USE BY THE MANUFACTURING PARTY. If an
Approved Product is used by the Manufacturing Party under Section 7.15 (other
than use for quality control or monitoring purposes), then payment to the other
Party for the Approved Product shall be due net thirty (30) days from the date
of transfer for use by the Manufacturing Party from manufacture or inventory, as
applicable.


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         13.6. PAYMENT METHOD. All amounts payable under this Agreement shall be
made by bank wire transfer, or check in immediately available funds, to an
account designated by the Party receiving payment. All payments hereunder shall
be made in U.S. dollars. Any payments or portions thereof due hereunder which
are not paid when due shall bear interest equal to the lesser of the prime rate
as reported by the WALL STREET JOURNAL, Eastern Edition, on the date such
payment is due, plus an additional [ * ] per annum, or the maximum rate
permitted by law, calculated on the number of days such payment is delinquent.
This Section 13.6 shall in no way limit any other remedies available to either
Party.

         13.7. CURRENCY CONVERSION. All amounts set forth in this Agreement, or
in any Exhibit, are in U.S. Dollars. If any currency conversion shall be
required in connection with the calculation of royalties hereunder, such
conversion shall be made using the average of the buying and selling exchange
rate for the foreign currency, in U.S. Dollars, quoted for current transactions
reported in THE WALL STREET JOURNAL, Eastern Edition, for the last business day
of the calendar quarter to which such payment pertains.

         13.8. RECORDS; INSPECTION. Each Party shall keep, and shall cause its
Marketing Distributors to keep, complete, true and accurate books of account and
records reasonably sufficient to determine and establish the amounts payable
under this Agreement and compliance with its other obligations under this
Agreement. Such records shall include records in reasonable detail of the FTE
hours incurred by each Party in performing the Development Program and the Early
Access Program, including a reasonable description of the applicable task, the
name of each individual performing the task, and the time spent by such
individual to perform the task on a daily basis. Such books and records,
including records under Section 4.6.3, shall be kept reasonably accessible for
three (3) years following the end of the calendar quarter to which they pertain.
All such records maintained by a Party, its Marketing Distributors, or
development subcontractors, as the case may be, shall be made available for
inspection throughout such three (3) year period by an independent third party
auditor selected by the other Party for such purposes. To the extent that a
Party does not have the right to grant to the other Party the right to audit its
Marketing Distributors' or development subcontractors' books and records
hereunder, such Party shall obtain for itself such rights and, at the request of
the other Party, shall exercise such audit rights with respect to Marketing
Distributors and development subcontractors and provide the results of such
audit for inspection by the other Party pursuant to this Section 13.8. Such
inspections may be made no more than twice each calendar year, once for purposes
of inspecting records relating to the Development Program, and once for purposes
of inspecting records relating to distribution or other commercialization of
Approved Products hereunder, provided that if a non-compliance is identified by
an audit, then an additional audit for the applicable purpose may be conducted
during such calendar year. Each audit shall be during the normal business hours
of the Party being audited upon ten (10) days advance notice. The auditor
selected by the auditing Party will be obliged to execute a reasonable
confidentiality agreement prior to commencing any such inspection. In addition,
the audited Party may request that, at its expense, a

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representative or agent familiar with its record keeping systems be present at
the audit to assist the auditor in using such internal record management system.
The auditing Party shall bear the costs and expenses of inspections conducted
under this Section 13.8, unless a variation or error producing an underpayment
exceeding ten percent (10%) of the amount paid for any period covered by the
inspection is established in the course of any such inspection, whereupon all
reasonable out-of-pocket costs paid to third parties relating to the inspection
and any unpaid amounts that are discovered will be paid by the audited Party,
together with interest on such unpaid amounts at the rate specified in Section
13.8 above.

         13.9. TAXES.

                  13.9.1 Amounts payable by one Party to the other Party under
this Agreement shall be paid in full without reduction for taxes (including
withholding taxes) or customs duties. Any such taxes or duties that would
otherwise reduce the amount of such payment shall be the sole responsibility of,
and shall be paid by, the paying Party who shall provide the other Party with
official receipts issued by the appropriate taxing authority, or such other
evidence, each as is reasonably requested by such other Party to establish that
taxes have been properly paid. If either Party uses a foreign tax credit
received by such Party as a result of the payment of withholding taxes by the
paying Party, and thereby reduces the amount of U.S. income tax that such Party
otherwise would have paid, then such Party shall refund to the paying Party the
amount of such reduction with respect to such foreign tax credit.

                  13.9.2 Transfer prices for ACLARA Components do not include
any taxes or customs duties. Likewise, transfer prices for Approved Products and
Cleavase Enzyme do not include any taxes or customs duties. Notwithstanding the
foregoing, if a Party has the legal obligation to collect and/or pay any sales,
use, excise, value added, or similar taxes in connection with the sale to the
other Party of goods hereunder, then the appropriate amount shall be invoiced to
and paid by such other Party, unless such other Party provides the selling Party
with a valid tax exemption certificate authorized by the appropriate taxing
authority. The selling Party shall provide the other Party with official
receipts issued by the appropriate taxing authority, or such other evidence,
each as is reasonably requested by such other Party to establish that taxes have
been properly paid.

                  13.9.3 The Parties do not intend that the contractual
arrangements set forth pursuant to this Agreement constitute a partnership or
joint venture of any kind whatsoever.


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                                   ARTICLE 14

                              INTELLECTUAL PROPERTY

         14.1. OWNERSHIP.

                  14.1.1 INVENTIONS. Ownership of inventions made in performing
activities under the Development Program (excluding inventions made through the
internal use of Approved Products pursuant to Section 7.15, but including
inventions made in connection with the use of materials or Technology provided
for purposes of the Development Program) (each such invention, a "COLLABORATIVE
INVENTION") shall be determined in accordance with United States patent laws'
rules of inventorship, except that, subject to the terms and conditions of this
Section 14.1: (i) Patent Rights to the extent claiming Collaborative Inventions
that are [ * ], regardless of the identity of the inventor, will be solely owned
by and assigned to ACLARA (each an "ACLARA INVENTION"); (ii) Patent Rights to
the extent claiming Collaborative Inventions that are [ * ], regardless of the
identity of the inventor, will be solely owned by and assigned to TWT (each a
"TWT INVENTION"); and (iii) all other Patent Rights to the extent claiming
Collaborative Inventions, regardless of the identity of the inventor, will be
owned by and assigned to the Parties jointly (each a "JOINT INVENTION"). For
clarity all Patent Rights claiming Collaborative Inventions shall be jointly
owned by the Parties unless determined to be ACLARA Inventions, TWT Inventions,
or Prior Art Inventions in accordance with this Section 14.1. Any and all
decisions as to whether a Collaborative Invention is an ACLARA Invention, a TWT
Invention or a Joint Invention will be made in accordance with the procedure set
forth in Section 14.1.3.

                           (i) "ACLARA FIELD" shall mean Technology related to
                               [ * ].

                           (ii) "TWT FIELD" shall mean Technology related to
                               [ * ].

                  14.1.2 PRIOR ART INVENTIONS. Notwithstanding anything in this
Section 14.1 to the contrary, if only one Party (the "FIRST PARTY") owns subject
matter that qualifies as prior art under any of 35 U.S.C. ss. 102(e), (f) and
(g) with respect to any Collaborative Invention conceived, developed or reduced
to practice by the employees or contractors of the other Party (such other Party
the "SECOND PARTY") or by the First Party and the Second Party jointly, then the
First Party shall own all right, title and interest in, to and under United
States Patent Rights to the extent claiming such Collaborative Invention (a
"PRIOR ART INVENTION"); PROVIDED, HOWEVER, that the rights to such Prior Art
Invention outside of the United States shall be as otherwise set forth in this
Agreement and shall be unaffected by this Section 14.1.2. Each Party may
identify to the Intellectual Property Sub-Committee subject matter owned by such
Party that qualifies as prior art under 35 U.S.C. ss. 102(e), (f) or (g) with
respect to a Collaborative Invention being considered by the Intellectual
Property Sub-Committee. Upon determination by the Parties in accordance with
Section 14.1.3 that a

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Collaborative Invention is a Prior Art Invention, the Parties shall cooperate to
execute all instruments required to document the assignment of Patent Rights
claiming the Prior Art Invention as required by this Section 14.1.2. In the
event of such a determination, the Second Party hereby agrees to transfer and
assign to the First Party all of its right, title and interest in, to and under
United States Patent Rights to the extent claiming the Prior Art Invention,
provided, however that all other Patent Rights claiming the Prior Art Invention
shall be owned as otherwise set forth in this Article 14 and shall be unaffected
by this Section 14.1.2. The prosecution and maintenance of any Patent Rights to
the extent claiming a Prior Art Invention owned by the First Party pursuant to
this Section 14.1.2 shall be governed in accordance with the provisions of
Section 14.2.

                  14.1.3 DECISION ON PATENT RIGHTS. Upon request of a Party, the
Intellectual Property Sub-Committee shall consider whether a Collaborative
Invention is an ACLARA Invention, a TWT invention, a Joint Invention, and/or a
Prior Art Invention, each as applicable. If the Intellectual Property
Sub-Committee does not reach consensus regarding classification of a
Collaborative Invention within a reasonable period of time, then either Party
may refer the matter for attempted resolution by the Joint Steering Committee,
and similarly to the CEO's of both Parties if the Joint Steering Committee does
not reach resolution in within a reasonable period of time. [ * ]

                  14.1.4 ASSIGNMENTS. The assignments necessary to accomplish
ownership of Patent Rights as set forth in this Section 14.1 are hereby made,
and shall be made, and each Party will execute such further documents as may be
reasonably necessary or appropriate, and provide reasonable assistance and
cooperation, to implement the provisions of this Section 14.1. For clarity, each
Party hereby assigns, and shall assign, to the other Party a joint ownership
interest in and to all Patent Rights to the extent claiming Joint Inventions
such that the Patent Rights are jointly owned by TWT and ACLARA, and, except as
expressly provided herein, without any obligation to account to the other Party
for profits therefrom and without any obligation to obtain any approval of the
other Party to license or otherwise exploit the Patent Rights in such Joint
Inventions. Each Party hereby waives any such right for accounting or approval
it may have under applicable laws in any country. No right, title, or interest
is assigned in or to any Patent Rights owned by a Party prior to the Effective
Date or with respect to any invention that is not a Collaborative Invention.

                  14.1.5 LICENSES.

                           (i)  Subject  to the  terms  and  conditions  of this
Agreement, including restrictions on exploitation of Approved Products and
ACLARA Components, ACLARA hereby grants, and shall grant, to TWT a worldwide,
non-exclusive, fully paid up, royalty free, perpetual, non-terminable, right and
license under all Patent Rights assigned to ACLARA under this Section 14.1, to
make, have made, use, sell, offer to sell, import, and otherwise exploit any and
all products, components, services, and other subject matter covered by such
Patent Rights, including to practice any method or process in connection
therewith. The right and license granted to TWT in this

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Section 14.1.5(i) includes the right to grant and authorize sublicenses under
the Patent Rights assigned to ACLARA under this Section 14.1, provided that TWT
shall not grant or authorize any such sublicenses except in connection with the
license of other Intellectual Property Rights of TWT or its Affiliate or in
connection with any products, components, services, or other Technology of TWT
or its Affiliates.

                           (ii)  Subject  to the  terms and  conditions  of this
Agreement, including restrictions on exploitation of Approved Products and
Cleavase Enzymes, TWT hereby grants, and shall grant, to ACLARA a worldwide,
non-exclusive, fully paid up, royalty free, perpetual, non-terminable, right and
license under all Patent Rights assigned to TWT under this Section 14.1, to
make, have made, use, sell, offer to sell, import, and otherwise exploit any and
all products, components, services, and other subject matter covered by such
Patent Rights, including to practice any method or process in connection
therewith. The right and license granted to ACLARA in this Section 14.1.5(ii)
includes the right to grant and authorize sublicenses under the Patent Rights
assigned to TWT under this Section 14.1, provided that ACLARA shall not grant or
authorize any such sublicenses except in connection with the license of other
Intellectual Property Rights of ACLARA or its Affiliate or in connection with
any products, components, services, or other Technology of ACLARA or its
Affiliates.

         14.2. PROSECUTION OF SOLELY OWNED PATENT RIGHTS. TWT shall, at its
expense, have sole control and authority in preparing, filing, prosecuting and
maintaining worldwide, in such countries as it deems appropriate, Patent Rights
to the extent claiming TWT Inventions or other inventions solely owned by TWT,
including in conducting interferences, re-examinations, reissues, oppositions or
requests for patent term extensions, each using counsel of its choice.
Similarly, ACLARA shall, at its expense, have sole control and authority in
preparing, filing, prosecuting and maintaining worldwide, in such countries as
it deems appropriate, Patent Rights to the extent claiming ACLARA Inventions and
other inventions solely owned by ACLARA, including in conducting interferences,
re-examinations, reissues, oppositions or requests for patent term extensions,
each using counsel of its choice.

         14.3. PROSECUTION OF JOINTLY OWNED PATENT RIGHTS. One Party (the
"PROSECUTING PARTY") shall have the first right to pursue patent protection for
Joint Inventions, and the other party (the "NON-PROSECUTING PARTY") agrees to
take all reasonable action to cooperate fully with the Prosecuting Party in this
regard. If the Joint Invention relates solely to ACLARA Technology that is
developed other than under the Development Program, then ACLARA shall be the
Prosecuting Party. Otherwise, TWT shall be the Prosecuting Party. In the event
that a Party determines that it may be desirable to file a patent application
for a Joint Invention, it shall consult with the other Party and the
Intellectual Property Sub-Committee in accordance with Section 14.3.2 regarding
the Joint Invention. After such consultation, if either Party desires to file a
patent application for the Joint Invention, then the Parties shall proceed in
accordance with this Section 14.3. Neither Party shall file a patent application
for a Joint Invention, however, prior to such consultation.

                  14.3.1 The  Prosecuting  Party  shall have the first  right to
file,  prosecute and maintain patent and patents applications for the respective
Joint Invention. The Non-Prosecuting Party shall

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promptly reimburse the Prosecuting Party for one-half (1/2) of the Prosecuting
Party's out-of-pocket expenses in connection with such activities as they are
incurred, provided that if the Non-Prosecuting Party so notifies the Prosecuting
Party, the Non-Prosecuting Party shall not be responsible for any further costs
under this Section 14.3.1 related to the particular patent or patent
application, in which case all right, title and interest in and to such patent
or application (as the case may be) and any patents issuing thereon shall be
owned by the Prosecuting Party (subject to any licenses granted to the
Non-Prosecuting Party under this Agreement). If the Prosecuting Party fails or
declines to take such actions to pursue patent protection with respect to any
Joint Invention after consultation in accordance with this Section 14.3, then
the Non-Prosecuting Party shall have the right to file, prosecute and maintain
such patent applications or patents at its sole expense, in which case all
right, title and interest in and to such patent or application (as the case may
be) and any patents issuing thereon shall be owned by the Non-Prosecuting Party
(subject to the licenses granted to the Prosecuting Party solely under this
Agreement, excluding any licenses with respect to such Patent Rights granted
under this Article 14, each unless otherwise agreed by the Parties in writing),
and the subject matter thereof shall no longer be considered a Joint Invention
hereunder. The Prosecuting Party shall notify the Non-Prosecuting Party at least
sixty (60) days (or such shorter period as is reasonably practicable for
deadlines not extendable beyond ninety (90) days) prior to the date the next
action or filing is due to be taken with respect to a patent application or
patent for a Joint Invention, if the Prosecuting Party does not intend to take
any of the foregoing actions with respect to such patent application or patent.

                  14.3.2 COOPERATION.

                           (i)  GENERAL.  The  Prosecuting  Party shall keep the
Non-Prosecuting Party reasonably informed as to the status of patent matters
pertaining to Joint Inventions for which a patent application has been filed in
accordance with this Section 14.3, including providing to the Non-Prosecuting
Party copies of any significant documents that the Prosecuting Party receives
from or sends to patent offices, such as notices of interferences,
re-examinations, oppositions or requests for patent term extensions. The
Non-Prosecuting Party shall fully cooperate with and assist the Prosecuting
Party in connection with such activities, at the Prosecuting Party's request.

                           (ii) INTELLECTUAL PROPERTY  SUB-COMMITTEE.  The Joint
Steering Committee shall establish an Intellectual Property Sub-Committee to
manage the cooperation between the Parties under this Section 14.3.2 and to
propose determinations under Section 14.1.3. The Intellectual Property
Sub-Committee shall report to, and follow guidelines established by, the Joint
Steering Committee. The Intellectual Property Sub-Committee shall be comprised
of an equal number of representatives of each Party and its decisions shall be
for advisory purposes only unless approved by the Joint Steering Committee,
provided that decisions regarding ownership shall be made solely by the Parties
in accordance with Section 14.1.3. Prior to filing a new application for Patent
Rights claiming a Joint Invention, each Party shall submit to the Intellectual
Property Sub-Committee an invention disclosure form for the respective invention
which sets forth in reasonable detail the names of the respective inventors;
their affiliation; an invention title; a reasonable description of the
invention, including the proposed benefit or improvement over the current
technology and how the invention could be used; and the invention conception
date referring to the

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first oral disclosure and any notebook or other written documentation. The
Intellectual Property Sub-Committee shall review such invention disclosure form
and shall attempt in good faith to determine whether TWT or ACLARA is the
Prosecuting Party for the Joint Invention. Additionally, the Intellectual
Property Sub-Committee shall, among other things, determine whether, consistent
with applicable law regarding inventorship, to correct or supplement the
inventors listed on the invention disclosure form in view of activities
conducted under the Development Program.

                  14.3.3 ENFORCEMENT. Each Party shall have the sole right, but
not the obligation, to enforce its solely owned Patent Rights. Each Party shall
have the right, but not the obligation, to enforce Patent Rights to the extent
claiming Joint Inventions ("JOINT PATENTS"). Because each Party has the right to
grant and authorize sublicenses under Joint Patents, however, a Party that
intends to enforce a Joint Patent shall first consult with the other Party. [ *
] Each Party shall notify the other Party in writing if it becomes aware of an
infringement by a third party of any Joint Patents, and the Parties will
promptly thereafter meet to discuss the matter. The Parties shall each have the
right to participate in any action to enforce Joint Patents and shall each
cooperate with the other in good faith.

                                   ARTICLE 15

                                 CONFIDENTIALITY

         15.1. CONFIDENTIAL INFORMATION. As used herein, "CONFIDENTIAL
INFORMATION" shall mean information disclosed by a Party which if disclosed in
tangible form is marked "Confidential" or with other similar designation to
indicate its confidential or proprietary nature or if disclosed orally is
indicated orally at the time of such disclosure to be confidential or
proprietary by the Party disclosing such information and is confirmed as being
confidential or proprietary by the disclosing Party in a writing delivered to
the receiving Party within a reasonable time after such disclosure. The Parties
agree that the receiving Party shall not publish or otherwise disclose, and
shall not use for any purpose, any Confidential Information furnished to it by
the other Party pursuant to this Agreement, except as set forth in Section 15.2.
Notwithstanding the foregoing, Confidential Information shall not include
information that, in each case as demonstrated by competent evidence:

                  15.1.1 was already known to the receiving Party, other than
under an obligation of confidentiality, at the time of disclosure or, as shown
by written documentation;

                  15.1.2 was  independently  developed  by the  receiving  Party
without use of or reference to the  Confidential  Information  of the disclosing
Party;

                  15.1.3 was generally available to the public or otherwise part
of the  public  domain at the time of its  disclosure  to the  receiving  Party;

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                  15.1.4 became generally available to the public or otherwise
part of the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement; or

                  15.1.5 was subsequently lawfully disclosed to the receiving
Party by a person other than the disclosing Party not under an obligation of
confidentiality.

         15.2. PERMITTED USE AND DISCLOSURE. Notwithstanding the provisions of
Section 15.1, each Party may disclose the other Party's Confidential Information
to the extent such disclosure is reasonably necessary to comply with applicable
governmental laws, regulations, or orders; provided that if a Party is required
to make any such disclosure of the other Party's Confidential Information, it
will, to the extent it may legally do so, give reasonable advance notice to the
latter Party of such disclosure and will use its reasonable efforts to secure
confidential treatment of such information prior to its disclosure (whether
through protective orders or otherwise). Each Party shall also have the right to
use the Confidential Information of the other Party in accordance with licenses
granted in this Agreement and as otherwise reasonably necessary to exercise its
rights hereunder. Each Party shall disclose the Confidential Information of the
other Party only to its employees and Affiliates as reasonably necessary for
such Party to exercise such rights, provided that TWT shall have the right to
disclose the Confidential Information of ACLARA to third party contractors as
reasonably necessary to exercise its rights set forth in Section 10.1 and 11.11,
and ACLARA shall have the right to disclose the Confidential Information of TWT
to the third party contract manufacturer in order to exercise its rights in
accordance with Section 12.11.

         15.3. CONFIDENTIAL TERMS/PUBLICITY. Each of the Parties hereto agrees
not to disclose to any third party the terms and conditions of this Agreement
without the prior written consent of the other Party hereto, except (i) to
advisors and investors on a need-to-know basis under conditions which reasonably
ensure the confidentiality thereof; (ii) as required by any court or other
governmental body; (iii) as otherwise required by law; (iv) in confidence to
legal counsel of such parties; (v) in confidence, in connection with the
enforcement of this Agreement or rights under this Agreement; (vi) in
confidence, in connection with a merger, acquisition of stock or assets,
proposed merger or acquisition, or the like; or (vii) as advisable or required
in connection with any government or regulatory filings, including without
limitation filings with the SEC; provided however, prior to any such required
disclosure the non-disclosing Party shall be allowed to review the proposed
disclosure, and the disclosing Party agrees to consider in good faith any
proposed revisions thereof provided to the disclosing Party within two (2)
business days of the non-disclosing Party's receipt of the proposed disclosure,
and the Parties shall seek confidential treatment for such disclosure as
permitted by applicable law.

         15.4.  PROPRIETARY MARKINGS.  Neither Party shall remove any trademark,
trade name,  copyright notice,  patent marking or other proprietary  notice from
any  materials  provided  to it by the  other  Party  in  connection  with  this
Agreement.

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                                   ARTICLE 16

                  REPRESENTATIONS, WARRANTIES, AND DISCLAIMERS

         16.1. GENERAL. Each Party represents, warrants and covenants to other
that (i) it has obtained all necessary corporate approvals to enter into and
execute this Agreement; (ii) it has the full right, power, and authority to
enter into this Agreement, grant the rights and licenses granted herein, and to
perform its obligations hereunder; (iii) it has not previously granted and will
not grant any rights in conflict with the rights and licenses granted herein;
and (iv) it shall comply with the requirements of any and all applicable
federal, state, local, foreign and other laws, regulations, rules and orders of
any governmental body having jurisdiction over such Party or the activities of
such Party contemplated by this Agreement.

         16.2. BY TWT. Subject to the terms and conditions of this Agreement,
TWT represents and warrants to ACLARA that, as of the Effective Date, none of
TWT or its Affiliates has received from a third party notice in writing that the
composition, manufacture, sale, use, or other exploitation of its products or
services might infringe or misappropriate any Intellectual Property Rights of
such third party and to the knowledge of the senior management of TWT (at the
Vice President level or higher) as of the Effective Date, (i) no action, suit or
claim (each an "ACTION") has been initiated or threatened against TWT or its
Affiliates with respect to such products or services, and (ii) there is no basis
for any such notice or Action.

         16.3. BY ACLARA. Subject to the terms and conditions of this Agreement,
ACLARA represents and warrants to TWT that, as of the Effective Date none of
ACLARA or its Affiliates has received from a third party notice in writing that
the composition, manufacture, sale, use, or other exploitation of its products
or services might infringe or misappropriate any Intellectual Property Rights of
such third party and to knowledge of the senior management of ACLARA (at the
Vice President level or higher) as of the Effective Date, (i) no action, suit or
claim (each an "Action") has been initiated or threatened against ACLARA or its
Affiliates with respect to such products or services, and (ii) there is no basis
for any such Action.

         16.4. DISCLAIMERS.

                  16.4.1 Notwithstanding Sections 16.2 and 16.3, if a Party has
knowledge that a third party Patent Right might be asserted with respect to
particular uses of its product, such Party shall not be considered in breach of
Section 16.2 or 16.3, as applicable, with respect to such Patent Right or
product to the extent that the Party in good faith labels the product, as of the
Effective Date, in a manner that reasonably restricts the uses of the product
that are licensed or authorized in light of the third party Patent Right.

                  16.4.2 EXCEPT AS EXPRESSLY  SET FORTH  HEREIN,  TWT AND ACLARA
EXPRESSLY  DISCLAIM  ANY AND ALL  REPRESENTATIONS,  WARRANTIES  AND  CONDITIONS,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITH RESPECT TO ANY WARRANTY
OF MERCHANTABILITY, NON-INFRINGEMENT,

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FITNESS FOR A PARTICULAR PURPOSE, OR VALIDITY. Neither Party makes any
representation or warranty that the Development Program, the Early Access
Program, or commercialization of the resulting Approved Products, if any, will
be successful in whole or part.

                  16.4.3 EXCEPT WITH RESPECT TO THE UNAUTHORIZED EXPLOITATION OF
THE OTHER PARTY'S INTELLECTUAL PROPERTY RIGHTS OR A BREACH OF ARTICLE 15, IN NO
EVENT SHALL EITHER PARTY BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, OR
INCIDENTAL DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING LOSS
OF PROFITS OR ANTICIPATED SALES, OR ON ACCOUNT OF EXPENSES, INVESTMENTS, OR
COMMITMENTS IN CONNECTION WITH THIS AGREEMENT, HOWEVER CAUSED, ON ANY THEORY OF
LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OR IS AWARE OF THE
POSSIBILITY OF SUCH DAMAGES.

                                   ARTICLE 17

                                 INDEMNIFICATION

         17.1. INDEMNIFICATION OF TWT.

                  17.1.1 ACLARA SOLE RESPONSIBILITIES. ACLARA shall indemnify
and hold harmless each of TWT and its Affiliates, and the directors, officers,
and employees of TWT and of such Affiliates, and the successors and assigns of
any of the foregoing (the "TWT INDEMNITEES"), from and against any and all
liabilities, damages, settlements, claims, actions, suits, penalties, fines,
costs and expenses (including, without limitation, reasonable attorneys' fees
and other expenses of litigation) (any of the foregoing, a "CLAIM") incurred by
any TWT Indemnitee, based upon a claim of a third party, to the extent resulting
from: (i) the gross negligence or willful misconduct of ACLARA, or other illegal
commercial practices by ACLARA; (ii) a breach by ACLARA of its representations
or warranties in Article 16; (iii) representations or warranties made by ACLARA
to third parties beyond those approved by the Joint Steering Committee; or (iv)
breaches by ACLARA of its agreements with third parties which were within the
reasonable control of ACLARA to avoid.

                  17.1.2 SHARED RESPONSIBILITIES. ACLARA shall also indemnify
and hold harmless each of the TWT Indemnitees, from and against [ * ] of any and
all Claims incurred by any TWT Indemnitee, to the extent not otherwise covered
by the indemnity under Section 17.1.1 and based upon any claim, action, suit, or
other proceeding brought by a third party against a TWT Indemnitee to the extent
resulting from (i) the exercise of the rights granted to TWT, or the performance
of TWT's responsibilities, under this Agreement, including without limitation,
product liability claims relating to any Approved Products used, sold or
otherwise distributed by TWT, its Affiliates or

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Marketing Distributor; (ii) the exercise or the practice of the rights or
licenses granted to ACLARA under this Agreement; or (iii) the marketing,
promotion, sale, or support of Approved Products by, or other actions or
in-actions of, Joint Distributors. Notwithstanding the foregoing, ACLARA shall
have no obligation under this Section 17.1.2 with respect to Claims within the
scope of the indemnity by TWT to ACLARA under Section 17.2.1 or resulting from
TWT's use of an Approved Product.

         17.2. INDEMNIFICATION OF ACLARA.

                  17.2.1 TWT SOLE RESPONSIBILITIES. TWT shall indemnify and hold
harmless each of ACLARA and its Affiliates, and the directors, officers, and
employees of ACLARA and of such Affiliates, and the successors and assigns of
any of the foregoing (the "ACLARA INDEMNITEES"), from and against any and all
liabilities, damages, settlements, claims, actions, suits, penalties, fines,
costs and expenses (including, without limitation, reasonable attorneys' fees
and other expenses of litigation) (any of the foregoing, a "CLAIM") incurred by
any ACLARA Indemnitee, based upon a claim of a third party, to the extent
resulting from: (i) the gross negligence or willful misconduct of TWT, or other
illegal commercial practices by TWT; (ii) a breach by TWT of its representations
or warranties in Article 16; (iii) representations or warranties made by TWT to
third parties beyond those approved by the Joint Steering Committee; or (iv)
breaches by TWT of its agreements with third parties which were within the
reasonable control of TWT to avoid.

                  17.2.2 SHARED RESPONSIBILITIES. TWT shall also indemnify and
hold harmless each of the ACLARA Indemnitees, from and against [ * ] of any and
all Claims incurred by any ACLARA Indemnitee, to the extent not otherwise
covered by the indemnity under Section 17.2.1 and based upon any claim, action,
suit, or other proceeding brought by a third party against an ACLARA Indemnitee
to the extent resulting from (i) the exercise of the rights granted to ACLARA,
or the performance of ACLARA's responsibilities, under this Agreement, including
without limitation, product liability claims relating to any Approved Products
used, sold or otherwise distributed by ACLARA, its Affiliates or Marketing
Distributor; (ii) the exercise or the practice of the rights or licenses granted
to TWT under this Agreement; or (iii) the marketing, promotion, sale, or support
of Approved Products by, or other actions or in-actions of, Joint Distributors.
Notwithstanding the foregoing, TWT shall have no obligation under this Section
17.2.2 with respect to Claims within the scope of the indemnity by ACLARA to TWT
under Section 17.1.1 or resulting from ACLARA's use of an Approved Product.

         17.3. PROCEDURE. A Party that intends to claim indemnification under
this Article 17 (the "INDEMNITEE") shall promptly notify the other Party (the
"INDEMNITOR") in writing of any Claim, in respect of which the Indemnitee
intends to claim such indemnification. With respect to Claims under Sections
17.1.1 and 17.2.1, the Indemnitor shall have sole control of the defense and/or
settlement thereof. With respect to Claims under Sections 17.1.2 and 17.2.2, the
Indemnitee shall

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have sole control of the defense and/or settlement thereof. The Party that does
not have control, however, shall have the right to participate in each defense
and settlement with counsel of its own choosing at its own expense. The
indemnity arrangements in this Article 17 shall not apply to amounts paid in
settlement of any action with respect to a Claim, if such settlement is effected
without the consent of the Indemnitor to the extent such consent is not withheld
or delayed unreasonably. The failure to deliver written notice to the Indemnitor
within a reasonable time after the commencement of any action with respect to a
Claim, if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 17, but the
omission so to deliver written notice to the Indemnitor shall not relieve the
Indemnitor of any liability that it may have to any Indemnitee otherwise than
under this Article 17. The Party that is not controlling the defense and/or
settlement of the Claim shall cooperate fully with the other Party and such
other Party's legal representatives in the investigation of any action with
respect to a Claim covered by this indemnification. For Claims within the scope
of Section 17.1.1 or 17.1.2, such cooperation shall be at the Indemnitor's
expense.

                                   ARTICLE 18

                               DISPUTE RESOLUTION

         18.1. DISPUTES. If the Parties, the Development Committee, or the Joint
Steering Committee are unable to resolve any dispute (including a failure of the
Joint Steering Committee to approve a Commercialization Plan and Budget by
November 1 of the then current calendar year) arising out of or in connection
with this Agreement, either Party may, by written notice to the other, have such
dispute referred to the CEO's of each TWT and ACLARA for attempted resolution by
good faith negotiations within thirty (30) days after such notice is received;
provided that such time period shall be limited to ten (10) business days in the
case of a failure under Section 6.6.1 to approve a Commercialization Plan and
Budget. In such event, each Party shall cause its CEO or the CEO's designated
high-level executive (at the vice president level or higher) to meet and be
available to attempt to resolve such issue. Notwithstanding the foregoing,
neither Party shall be obligated to negotiate for more than the thirty (30) days
or ten (10) days that is applicable in accordance with the foregoing. If the
Parties should resolve such dispute or claim, a memorandum setting forth their
agreement will be prepared and signed by both Parties if requested by either
Party. The Parties shall cooperate in an effort to limit the issues for
consideration in such manner as narrowly as reasonably practicable in order to
resolve the dispute.

         18.2. FULL ARBITRATION. Except with respect to disputes involving the
Intellectual Property Rights of a Party, ACLARA and TWT agree that any dispute
or controversy arising out of or in connection with this Agreement, or the
validity, enforceability, construction, performance or breach hereof, which is
not resolved under Section 18.1, shall be finally settled by binding arbitration
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the then current rules of the American Arbitration Association, subject to the
additional limitations in Sections 18.3 and 18.4 when applicable. The venue of
such arbitration shall be in Madison, Wisconsin for disputes brought by ACLARA
and Santa Clara county, California for disputes brought by TWT. The arbitration
shall be conducted by a single arbitrator appointed in accordance with such
rules, provided that if either Party requests the arbitration shall be conducted
by a panel of three (3) arbitrators, one appointed by each Party and the third
appointed in accordance with such rules. The arbitrator(s) shall determine what
discovery will be permitted, based on the principle of limiting the cost and
time which the parties must expend on discovery; provided, the arbitrator(s)
shall permit such discovery as they deem necessary to achieve an equitable
resolution of the dispute. The decision and/or award rendered by the
arbitrator(s) shall be written, final and non-appealable and may be entered in
any court of competent jurisdiction. The Parties agree that, any provision of
applicable law notwithstanding, they will not request, and the arbitrator shall
have no authority to award, punitive or exemplary damages against any Party. The
costs of any arbitration, including administrative fees and fees of the
arbitrator(s), shall be shared equally by the Parties, unless otherwise
specified by the arbitrator(s). Each Party shall bear the cost of its own
attorneys' and expert fees; provided that the arbitrator(s) may in their
discretion award to the prevailing Party the costs and expenses incurred by the
prevailing Party in connection with the arbitration proceeding. This Section
18.2 shall not be construed to prohibit either Party from seeking preliminary or
permanent injunctive relief, restraining orders, decrees of specific
performance, or other equitable remedies, in any court of competent
jurisdiction. For avoidance of doubt, any such equitable remedies shall be
cumulative and not exclusive and are in addition to any other remedies which
either Party may have under this Agreement or applicable law.

         18.3. SHORT FORM ARBITRATION. The matters expressly identified in this
Agreement, and otherwise by the Parties agree in writing, for resolution using
short form arbitration shall, subject to the additional limitations in this
Section 18.3 and if not resolved in accordance with Section 18.1, be finally
determined by binding arbitration in accordance with Section 18.2. Only one (1)
arbitrator shall be used notwithstanding the provisions in Section 18.2 or any
request to the contrary. In such arbitration, the arbitrator shall be an
independent expert relating to the subject matter of such dispute mutually
acceptable to the Parties. If the Parties are unable to agree on an arbitrator,
the arbitrator shall be an independent expert as described in the preceding
sentence selected by the chief executive of the New York City office of the
American Arbitration Association. Each Party to the arbitration shall prepare a
written proposal setting forth its position with respect to the substance of the
dispute. Without delaying the arbitration procedures, for a period not to exceed
three (3) days commencing no later than fifteen (15) days after the arbitrator
has been selected, the Parties shall exchange and discuss the respective written
proposal in good faith in an effort to resolve the matter. The arbitrator shall
select one of the requested positions as his decision, and shall not have
authority to render any substantive decision other than to so select the
position of either TWT or ACLARA. If one Party does not submit to the arbitrator
a written proposal setting forth its position within the time period established
by the arbitrator therefor, the arbitrator shall select the other Party's
position. The costs of such arbitration shall be shared equally by the Parties,
and each Party shall bear its own expenses in connection with the arbitration.
The parties shall use good faith efforts to complete arbitration under this
Section 18.3 within sixty (60) days following a request by any Party for such
arbitration.

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Likewise, the arbitrator shall limit discovery as reasonably practicable to
complete the arbitration in the foregoing time frames.

         18.4. COMMERCIALIZATION PLAN AND BUDGET DISPUTE RESOLUTION. Any failure
of the Joint Steering Committee to approve a Commercialization Plan and Budget
that is referred by a Party in accordance with Section 6.6.1 for resolution
under this Article 18 shall, subject to the additional limitations in this
Section 18.4 and if not resolved in accordance with Section 18.1, be finally
determined by binding arbitration in accordance with Section 18.2. In such
arbitration, the arbitrator shall be an independent expert in marketing, sales
and support of research products in the biopharmaceutical industry, with
experience in the particular issue of the dispute mutually acceptable to the
Parties. If the Parties are unable to agree on an arbitrator, the arbitrator
shall be an independent expert as described in the preceding sentence selected
by the chief executive of the New York City office of the American Arbitration
Association. However, if either Party requests, the arbitration shall be
conducted by a panel of three (3) arbitrators as set forth in Section 18.2. Each
Party to the arbitration shall prepare a detailed proposal with respect to the
matter(s) in dispute under the Commercialization Plan and Budget for
consideration by the arbitrator(s). Without delaying the arbitration
proceedings, for a period not to exceed three (3) days commencing no later than
fifteen (15) days after the arbitrator(s) have been selected, the Parties shall
exchange and discuss such proposals in good faith in an effort to resolve the
matter. If one Party does not submit a detailed proposal to the arbitrator(s)
within the time period established by the arbitrator(s) therefor, the
arbitrator(s) shall select the other Party's position. It is acknowledged that
the arbitrator(s) may desire to consider the unresolved matters in the context
of the entire Commercialization Plan and Budget, provided that the decision by
the arbitrator(s) shall be limited to resolution of the matter(s) that have not
been resolved by the Joint Steering Committee. No discovery shall be permitted
by the Parties; provided that the arbitrator(s) shall have the right to gather
such additional information from the Parties as reasonably necessary to render a
decision hereunder, taking into consideration the need for expediency. The
arbitrator(s) shall select one of the proposed positions in the
Commercialization Plan and Budgets proposed by a Party in accordance with the
foregoing, and shall not have authority to render any substantive decision other
than to so select the position of either TWT or ACLARA. The arbitrator(s) shall
have no authority to make decisions for the Joint Steering Committee, beyond
resolving disputes regarding the contents of the Commercialization Plan and
Budget in accordance with this Section 18.4. The arbitrator shall resolves all
disputes regarding the contents of the Commercialization Plan and Budget in
accordance with the conditions and principles set forth on Exhibit 6.6.2 and
shall in no case modify the terms or conditions or intent of this Agreement. All
decisions of the arbitrator(s) under 18.4 with respect to the Commercialization
Plan and Budget be subject to and guided by the guidelines set forth on Exhibit
6.6.2.

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                                   ARTICLE 19

                              TERM AND TERMINATION

         19.1. TERM. Unless terminated earlier pursuant to this Article 19, the
term of this Agreement shall commence on the Effective Date and continue in full
force and effect for [ * ] years after the first Commercial Launch of an
Approved Product under this Agreement, expiring at the end of such [ * ] year
period unless extended by mutual written agreement of the Parties. This
Agreement may be terminated only in accordance with this Article 19.

         19.2. NO APPROVAL FOR COMMERCIAL LAUNCH. If no Approved Product has
been approved by the Development Committee for Commercial Launch within [ * ]
after expiration of the Development Term, then each Party thereafter shall be
entitled to terminate this Agreement by written notice to the other Party,
unless an Approved Product has otherwise been approved by the Development
Committee for Commercial Launch prior to the date of the notice.

         19.3. TERMINATION FOR CAUSE. In the event of a material breach of this
Agreement, the non-breaching Party shall be entitled to terminate this Agreement
by written notice to the breaching Party, if such breach is not cured within
ninety (90) days after written notice is given by the non-breaching Party to the
breaching Party describing the breach in reasonable detail. During such ninety
(90) day period, the Parties shall cooperate reasonably and in good faith in an
effort to determine a course of action that will cure the breach in a manner
that is acceptable to both Parties. Additionally, it is acknowledged and agreed
that this Agreement establishes a framework for cooperation between the Parties
in collaboratively developing and commercializing Approved Products that the
Parties intend will remain in place, notwithstanding the less substantial
disagreements and difficulties that the Parties expect will arise from time to
time. Accordingly, materiality for the purposes of termination of this Agreement
will be judged in light of the entire scope and term of the relationship
contemplated herein and whether the particular breach is significant enough to
cause a substantial adverse impact on all activities contemplated hereunder.
Notwithstanding anything to the contrary, in the event the Party receiving
notice of termination disputes the other Party's right to terminate hereunder by
written notice within five (5) days after receipt of such notice of termination
("NOTICE OF A DISPUTE"), the Agreement shall not be terminated until the issue
of whether the Party providing notice of termination has the right to terminate
hereunder has been finally resolved in accordance with Article 18 against the
other Party in accordance with this Section 19.3, which resolution includes (i)
a decision by the arbitrator(s) that this Agreement has been materially breached
by such other Party, or (ii) a stipulation by such other Party that the Party
providing notice of termination may terminate, and further provided that in the
case of (i) above, such other Party does not cure the breach within ninety (90)
days after the arbitrator(s) decision.

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         19.4. [Intentionally Omitted]

         19.5. EFFECT OF TERMINATION

                  19.5.1 NO RELEASE. Termination or expiration of this Agreement
for any reason shall not release either Party hereto from any liability which at
the time of such termination or expiration has already accrued to the other
Party, including liability arising out of a breach of Article 16 that occurred
prior to such time. Without limiting the foregoing, no payment that became
payable prior to termination or expiration of this Agreement shall be affected
by such termination or expiration. Rather, such payments shall remain payable
after termination or expiration in accordance with the terms and conditions of
this Agreement that were in effect immediately prior to the date of termination
or expiration.

                  19.5.2 BREACH PRIOR TO APPROVAL FOR COMMERCIAL LAUNCH. If this
Agreement is terminated by a Party for material breach by the other Party prior
to approval of any Approved Product by the Development Committee for Commercial
Launch, then the breaching Party shall reimburse the non-breaching Party for all
of the non-breaching Party's Development Costs incurred under the Development
Program in performing its responsibilities under the Development Plan and Budget
for the particular Approved Product which were not previously reimbursed and all
of the non-breaching Party's Commercialization Costs, if any, incurred in
accordance with the Commercialization Plan and Budget which were not previously
reimbursed. Such Development Costs and Commercialization Costs shall be
reimbursed by the breaching Party to the non-breaching Party within thirty (30)
days after the date of termination (except for excess Development Costs and
Commercialization Costs to the extent set forth in Sections 5.5 and 6.7.3,
respectively). Survival of the provisions of this Agreement if terminated by a
Party for material breach by the other Party prior to approval of any Approved
Product by the Development Committee for Commercial Launch shall otherwise be in
accordance with survival upon expiration of the Agreement under Section
19.5.4(iii). If any Approved Product has been approved by the Development
Committee for Commercial Launch, then termination for material breach shall be
in accordance with Section 19.5.3.

                  19.5.3 BREACH AFTER APPROVAL FOR COMMERCIAL LAUNCH. If this
Agreement is terminated by a Party for material breach by the other Party, and
if the Development Committee approved prior to such termination an Approved
Product for Commercial Launch, then the terms and conditions of this Agreement
shall continue in force to the extent set forth in, and subject to, this Section
19.5.3 and, as applicable, Section 19.5.4(i) or 19.5.4(ii). The terms and
conditions in this Section 19.5.3 shall apply only in the event of such
termination.

                           (i)  APPROVED  PRODUCTS.  With  respect  to  Approved
Products not approved by the Development Committee for Commercial Launch,
Development Costs not previously reimbursed will be reimbursed by the breaching
Party to the non-breaching Party in accordance with Section 19.5.2. With respect
to Approved Products approved by the Development Committee for Commercial
Launch, Development Costs will be reimbursed in accordance with Section 5.6 in
the same manner as prior to termination, except that reports shall be exchanged,
and reconciliation and reimbursement shall be completed, within thirty (30) days
after the date of termination.

                                      -75-

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                                                                    CONFIDENTIAL

                           (ii)  LICENSES  TO   NON-BREACHING   PARTY.   If  the
non-breaching Party is TWT, then TWT shall continue to have the right to
exercise its rights in accordance with Article 10 with respect to Approved
Products approved for Commercial Launch, and to continue to exercise its rights
under Article 7 with respect to such Approved Products. If the non-breaching
Party is ACLARA, then ACLARA shall have the right to distribute Approved
Products obtained in accordance with Section 19.5.3(vii) below in accordance
with this Agreement. Only the non-breaching Party shall continue to have the
right to internally use Approved Products under Section 7.15. In lieu of all
payments in accordance with Section 8.3, the amount payable by the non-breaching
Party to the breaching Party for distribution of Approved Products and Software
shall be [ * ]. Payment of such royalty shall be net thirty days after the end
of the applicable calendar quarter. Payments and offsets under Sections 8.4 and
8.5 shall continue in the same manner as prior to the date of termination. The
exercise of rights by the non-breaching Party after such termination shall
continue to be subject to termination by the breaching Party in accordance with
the terms and conditions of this Article 19, except that, in light of the
changed circumstances, the materiality standard will no longer be the heightened
standard described in Section 19.3. In the event of such termination of the
surviving rights of the non-breaching Party, this Agreement shall be treated as
if it had expired, and survival shall be as set forth in Section 19.5.4(iii).

                           (iii)  LICENSES TO BREACHING  PARTY.  All licenses of
the breaching Party pursuant to this Agreement shall terminate upon termination
by the non-breaching Party, except as provided in this Section 19.5.3(iii). If
TWT is the breaching Party, TWT's licenses to manufacture Approved Products
under Article 10 shall continue to survive but only for purposes of supply of
Approved Products to ACLARA that are distributed by ACLARA as set forth in
Section 19.5.3(ii). If TWT is the breaching Party, its licenses under Sections
7.4 and 11.11 shall terminate, provided that TWT shall be relieved of any
obligation to supply Approved Products to ACLARA as described in Section
19.5.3(vii) to the extent resulting from a failure of ACLARA to supply ACLARA
Components to TWT. If ACLARA is the breaching Party, any licenses granted to
ACLARA pursuant to Section 7.5, and the license set forth in Section 12.11, each
shall terminate. Notwithstanding the foregoing, the breaching Party shall have
the right to use and distribute Approved Products in its possession solely to
the extent set forth in Section 19.5.3(v).

                          (iv) [Intentionally Omitted]

                           (v) BREACHING PARTY APPROVED  PRODUCT  INVENTORY.  If
requested by the non-breaching Party, the breaching Party shall transfer to the
non-breaching Party in accordance with the non-price terms and conditions for
supply of Approved Products by TWT under Article 12 all Approved Products in the
possession of the breaching Party or its Affiliates. To the extent that the
non-breaching Party does not wish to receive such Approved Products, the
breaching Party shall have the right to distribute and use the Approved
Products, in the same manner as it was authorized to distribute and use Approved
Products prior to termination, for no more than ninety (90) days

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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                      -76-

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                                                                    CONFIDENTIAL

immediately following termination of the Agreement; provided that it shall be
required to make payment to the non-breaching Party for such use and
distribution in the same manner as it was required to make payment prior to
termination.

                           (vi)  SUPPLY  OF ACLARA  COMPONENTS.  In the event of
termination by TWT for material breach by ACLARA, ACLARA shall continue to
supply ACLARA Components to TWT in accordance with the supply terms in effect as
of the date of the termination, including under Article 11; provided that all
such supply shall be at [ * ] of ACLARA Components so supplied. Additionally,
within thirty (30) days after TWT provides notice of termination to ACLARA for
material breach by ACLARA, ACLARA shall enter into an escrow agreement with TWT,
and deposit the ACLARA Deposit Materials in escrow under such escrow agreement,
in the manner contemplated in Section 11.11 of this Agreement. In the event that
ACLARA fails to supply (as defined in Section 11.11.1) any ACLARA Component in
any one (1) calendar month after such termination, TWT shall have the right to
exercise its rights under the Component Manufacturing License with respect to
all ACLARA Components. The terms and conditions in Section 11.11.1 requiring TWT
to discontinue the exercise of its rights upon demonstration by ACLARA of its
ability to supply the ACLARA Component shall not apply, however, and TWT shall
be entitled to continue to exercise the Component Manufacturing License
notwithstanding ACLARA's ability, or demonstration of its ability, to supply the
ACLARA Components to TWT. ACLARA Components supplied by ACLARA to TWT after
termination shall continue to be restricted to use in Approved Products
manufactured by TWT for internal use or distribution by TWT in accordance with
Article 7.

                           (vii)  SUPPLY OF APPROVED  PRODUCTS.  In the event of
termination by ACLARA for material breach by TWT, TWT shall continue to supply
Approved Products to ACLARA in accordance the supply terms in effect as of the
date of the termination, including under Article 12; provided that all such
supply shall be at [ * ] of Approved Products so supplied. Additionally, within
thirty (30) days after ACLARA provides notice of termination to TWT for material
breach by TWT, TWT shall enter into an escrow agreement with ACLARA, and deposit
the TWT Deposit Materials in escrow under such escrow agreement, in the manner
contemplated in Section 12.11 of this Agreement. In the event that TWT fails to
supply (as defined in Section 12.11.1) any Approved Product in any one (1)
calendar month after such termination, ACLARA shall have the right to exercise
its rights under the Backup Manufacturing License with respect to all Approved
Products that ACLARA is authorized to distribute to Customers. The terms and
conditions in Section 12.11.1 requiring ACLARA to discontinue the exercise of
its rights upon demonstration by TWT of its ability to supply the ACLARA
Component shall not apply, however, and ACLARA shall be entitled to continue to
exercise the Backup Manufacturing License notwithstanding TWT's ability, or
demonstration of its ability, to supply the Approved Products to ACLARA.
Approved Products supplied by TWT to ACLARA after termination shall continue to
be

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requested with respect to the omitted portions.

                                      -77-

<PAGE>

                                                                    CONFIDENTIAL

restricted to internal use by ACLARA in accordance with Section 7.15, and
distribution by ACLARA in accordance with this Agreement.

                           (viii)  BRANDING AND JOINT MARKS.  The  non-breaching
Party shall remain obligated to brand the Approved Products using the marks of
the breaching Party, and the Joint Marks approved by the Joint Steering
Committee, each in the same manner as required prior to the date of termination,
provided that the non-breaching Party shall be authorized to use the Joint Marks
in the same manner as prior to termination of the Agreement. The breaching Party
shall discontinue all use of the Joint Marks upon such termination of the
Agreement.

                           (ix) INDEMNITY.  With respect to actions and inaction
of a Party that occurred prior to the date of termination, the indemnity
obligations in Article 17 shall survive and continue to apply to Claims arising
after termination in the same manner as such obligations applied prior to
termination. With respect to actions and inaction of a Party on or after the
date of termination, the indemnity obligations in Article 17 shall be modified
as follows. The indemnity obligation in Section 17.1.1 or 17.2.1, as applicable,
of the non-breaching Party shall continue to apply in accordance with Article 17
except that it shall extend to all Claims to the extent resulting from any
action or inaction of the non-breaching Party after the date of termination in
connection with this Agreement, including marketing, sales, promotional
activities, support, warranties, and infringement, but excluding Claims to the
extent resulting from the negligence or willful misconduct of the breaching
Party. The indemnity obligations of the breaching Party under Article 17 shall
be deemed terminated with respect to Claims to the extent based on actions or
inactions occurring after the effective date of termination.

                  19.5.4 OTHER EFFECTS OF TERMINATION OR EXPIRATION. Any
Development Plan and Budget, and any Commercialization Plan and Budget, in
effect as of the date of any termination or expiration of this Agreement shall
be deemed terminated at such time. Except as otherwise specified in Section
19.5.2, Commercialization Costs incurred prior to the date of termination or
expiration shall be reimbursed in accordance with Section 6.7.4, except that
reimbursement shall be completed within thirty (30) days after the date of
termination or expiration

                           (i) BREACH BY TWT. The terms and  conditions  in this
Section 19.5.4(i) shall apply only in the event of termination by ACLARA for
breach by TWT if the Joint Steering Committee approved an Approved Product for
Commercial Launch prior to such termination. Articles [ * ] shall survive
termination of this Agreement for breach by TWT. Upon such termination, TWT
shall return or destroy, as requested by ACLARA, all Confidential Information of
ACLARA in TWT's possession or control and TWT shall provide to ACLARA, within
thirty (30) days after the date of such termination, written certification that
it has complied with such requirement. It is acknowledged and agreed that ACLARA
and only ACLARA would be the Commercializing Party under the applicable
surviving provisions. For clarity, such surviving

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requested with respect to the omitted portions.

                                      -78-

<PAGE>

                                                                    CONFIDENTIAL

provisions shall survive only during the original term of the Agreement, plus an
additional period of time equal to the time between (A) when TWT provides ACLARA
a Notice of a Dispute under Section 19.3 above and (B) such time as the
associated dispute has been resolved under Section 19.3(i) or 19.3(ii); provided
that such additional period of time shall in no event exceed [ * ]. After the
original term of the Agreement plus such additional period of time, the
Agreement will expire as set forth in Section 19.5.4(iii).

                           (ii) BREACH BY ACLARA.  The terms and  conditions  in
this Section 19.5.4(ii) shall apply only in the event of termination by TWT for
breach by ACLARA if the Joint Steering Committee approved an Approved Product
for Commercial Launch prior to such termination. Articles [ * ] shall survive
termination of this Agreement for breach by ACLARA. Upon such termination,
ACLARA shall return or destroy, as requested by TWT, all Confidential
Information of TWT in ACLARA's possession or control and ACLARA shall provide to
TWT, within thirty (30) days after the date of such termination, written
certification that it has complied with such requirement. All rights and
licenses granted to ACLARA pursuant to Section 7.3 shall be deemed terminated as
of the date of such termination. It is acknowledged and agreed that only TWT
would be the Commercializing Party under the applicable surviving provisions.
For clarity, such surviving provisions shall survive only during the original
term of the Agreement, plus an additional period of time equal to the time
between (A) when ACLARA provides TWT a Notice of Dispute under Section 19.3
above and (B) such time as the associated dispute has been resolved under
Section 19.3(i) or 19.3(ii); provided that such additional period of time shall
in no event exceed [ * ]. After the original term of the Agreement plus such
additional period of time, at which point the Agreement will expire as set forth
in Section 19.5.4(iii).

                           (iii)  EXPIRATION.  Articles  [ *  ],  shall  survive
expiration of this Agreement. Upon expiration of this Agreement, each Party
shall return or destroy, as requested by the other Party, all Confidential
Information of the other Party in its possession or control and each Party shall
provide to the other Party, within thirty (30) days after such expiration,
written certification that it has complied with such requirement. Upon
expiration of the Agreement, neither Party shall have the right to use the Joint
Marks except to the extent otherwise agreed by the Parties in writing.

                           (iv) ANY EXPIRATION OR  TERMINATION.  Notwithstanding
anything to the contrary, each Customer that obtained a license to use Software
with an Approved Product in accordance with this Agreement prior to such
termination or expiration shall retain the right to use such Software in
accordance with, and subject to, the terms and conditions of the applicable
Customer agreement.

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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

                                      -79-

<PAGE>

                                                                    CONFIDENTIAL

                                   ARTICLE 20

                                     GENERAL

         20.1. NO OTHER RIGHTS. Nothing herein shall be construed as granting,
whether by implication, estoppel, reliance, or otherwise, any right or license
to or under any Intellectual Property Rights of a Party other than under the
ACLARA Technology, TWT Technology, and Intellectual Property Rights to Software,
as expressly set forth herein, or as granting any right or license to a Party
other than those expressly granted to such Party in this Agreement. Without
limiting the foregoing, nothing shall be construed as granting any right or
license with respect to any products or Technology other than Approved Products
and Software. ALL RIGHTS WITH RESPECT TO TECHNOLOGY OR INTELLECTUAL PROPERTY
RIGHTS OF A PARTY THAT ARE NOT SPECIFICALLY GRANTED HEREIN ARE RESERVED TO THE
PARTY OWNING THE RESPECTIVE TECHNOLOGY OR INTELLECTUAL PROPERTY RIGHT.
Activities of a Party beyond the scope of the licenses granted herein which
infringe the Intellectual Property Rights of the other Party shall be deemed to
be a breach of this Section 20.1. Except with respect to Joint Inventions to the
extent set forth in Article 14, nothing in this Agreement shall imply or create
any obligation for either Party to enforce, obtain, maintain, or otherwise bring
or prosecute any action based upon its Intellectual Property Rights against any
party. Except for compliance with Article 15, nothing in this Agreement is
intended to impair or otherwise restrict either Party from acquiring, licensing,
developing itself, or having developed by others, or otherwise obtaining access
to, Technology for use in connection with products, components, and services
other than the Approved Products, which Technology performs the same or similar
functions as the technology provided by the other Party pursuant to this
Agreement. Without limiting the foregoing, the development, promotion,
marketing, distribution, and other exploitation of any products, components, or
services based upon or incorporating such other Technology, and the effects of
such activities, shall not be considered when determining whether a Party has
complied with its diligence obligations under this Agreement.

         20.2. GOVERNING LAW AND JURISDICTION. THIS AGREEMENT, AND ALL DISPUTES
ARISING OUT OF OR RELATING TO THIS AGREEMENT, SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES OF CALIFORNIA OR ANY
OTHER JURISDICTION.

         20.3. ASSIGNMENT. Neither Party hereto may assign or otherwise transfer
this Agreement or any of its rights or licenses hereunder without the prior
written consent of the other Party hereto, except to a party that succeeds to
all or substantially all of such Party's business or assets, whether by sale,
merger, operation of law or otherwise; provided that such assignee or transferee
agrees in writing to be bound by the terms and conditions of this Agreement. Any
other attempt to transfer or assign shall be void without the prior written
consent of the other Party. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the successors or permitted assigns of
the Parties.

                                      -80-

<PAGE>

                                                                    CONFIDENTIAL

         20.4. INDEPENDENT CONTRACTORS. The relationship of ACLARA and TWT
established by this Agreement is that of independent contractors. Nothing in
this Agreement shall be construed to create any relationship other than
independent contractors. Neither Party shall have any right, power or authority
to assume, create or incur any expense, liability or obligation, express or
implied, on behalf of the other, and neither Party shall attempt, or create the
appearance that it is able, to do so.

         20.5. FORCE MAJEURE. Except with respect to the payment of money,
neither Party shall be liable to the other for delays or failures in performance
resulting from causes beyond the reasonable control of that Party, including
acts of God; inability to obtain materials or supplies, including failures or
breaches by suppliers; acts of government or its agencies, including laws,
regulations, and judicial action; strikes or other labor disputes or
disturbances; power disruptions; riots or civil disturbances; acts of war; or
communication, utility or transportation failures. The obligation of the Party
unable to perform, as set forth in this Section 20.5, ("DELAYED PARTY") shall be
suspended, and non-performance shall be excused, during such force majeure
event, subject to the Delayed Party's compliance with the following. The Delayed
Party shall give the other Party written notice of its inability to perform and
a description, in reasonable detail, of the cause of the inability and will use
reasonable commercial efforts to remedy the situation and remove, so far as is
commercially reasonable and as soon as practicable, the cause of such inability.
The Delayed Party shall give the other Party prompt notice of the cessation of
the event of force majeure. For clarity, this Section 20.5 shall not prevent
either Party from exercising its manufacturing license granted in Section 11.11
or Section 12.11, as applicable, to the extent that the conditions set forth the
applicable Section are met as a result of the force majeure event, provided that
the exercise of such rights shall be solely to the extent reasonably necessary
to make up for the supply shortages resulting from the force majeure event.

         20.6. NOTICES. Any notice or other communication required by this
Agreement shall be made in writing and given by (i) prepaid, first class,
certified mail, return receipt requested, (ii) facsimile, or (iii) overnight
courier, and shall be deemed to have been served on the date received by the
addressee at the following address or such other address as may from time to
time be designated to the other Party in writing in accordance with this Section
20.6:

         If to: ACLARA
         ACLARA BioSciences, Inc.
         1288 Pear Avenue
         Mountain View, CA 94043

         Attn: President and CEO
         Telefax:  (650) 210-9271



                                      -81-

<PAGE>

                                                                    CONFIDENTIAL

         With a copy to:
         Vice President, Legal Affairs

         If to: TWT
         Third Wave Technologies, Inc.
         502 South Rosa Road

         Madison, WI 53719

         Attn: President
         Telefax:  (608) 273-8618

         With a copy to:

         Wilson Sonsini Goodrich & Rosati
         650 Page Mill Road
         Palo Alto, CA 94304-1050
         Attn: Kenneth A. Clark, Esq.
         Telefax: (650) 493-6811

         20.7. COMPLIANCE WITH LAWS. Notwithstanding anything to the contrary
contained herein, all rights and obligations of TWT and ACLARA are subject to
prior compliance with, and each Party shall comply with, all United States and
foreign export and import laws, regulations, and orders, and such other United
States and foreign laws, regulations, and orders as may be applicable, including
obtaining all necessary approvals required by the applicable agencies of the
governments of the United States and foreign jurisdictions.

         20.8. ARTICLE AND SECTION HEADINGS, LANGUAGE AND CONSTRUCTION. The
article and Section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All references in this Agreement to "Articles," "Sections" and
"Exhibits" refer to the articles, sections and exhibits of this Agreement. The
words "hereof," "herein" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any subdivision contained in this
Agreement. The words "include" and "including" when used herein are not
exclusive and mean "include, without limitation" and "including, without
limitation," respectively. This Agreement has been negotiated by the Parties and
their respective counsel. Accordingly, this Agreement will be interpreted fairly
in accordance with its terms and without any strict construction in favor of or
against either Party.

         20.9.  MODIFICATION  AND WAIVER.  No amendment or  modification  of any
provision of this Agreement  shall be effective  unless in writing signed by all
Parties hereto. No provision of this Agreement shall be varied,  contradicted or
explained by any oral agreement, course of dealing or



                                      -82-

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                                                                    CONFIDENTIAL

performance or any other matter not set forth in an agreement in writing and
signed by all Parties. A Party's failure to enforce any provision of this
Agreement shall not constitute a waiver of any terms or conditions of this
Agreement or with respect to any other or subsequent breach, nor a waiver by
such party of its right at any time thereafter to require exact and strict
compliance with the terms hereof or of any other right hereunder.

         20.10. SEVERABILITY. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the Parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the Parties and all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the Parties hereto
as nearly as may be possible. Such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of such provision in
any other jurisdiction.

         20.11. ENTIRE AGREEMENT. The Parties acknowledge that this Agreement
and the Exhibits of this Agreement, and that certain other Agreement and the
Exhibit thereto executed by the Parties on even date herewith set forth the
entire agreement and understanding of the Parties as to the subject matter
hereof and thereof, and supersede all prior and contemporaneous discussions,
agreements and writings in respect hereto and thereto, including without
limitation, the term sheet. The Exhibits to this Agreement are hereby
incorporated into this Agreement by this reference.

         20.12. FURTHER ASSURANCES. Each Party shall, without demanding any
further consideration therefor, at the request and expense of the other Party,
do (and cause its employees to do) all lawful and just acts that may be or
become necessary for evidencing, maintaining, recording and perfecting
assignments to such other Party of Patent Rights in accordance with this
Agreement, including but not limited to, execution and acknowledgement of (and
causing its employees to execute and acknowledge) assignments and other
instruments in a form reasonably required by such other Party or the relevant
governmental or other authorities for each applicable jurisdiction.

                                      -83-

<PAGE>

                                                                    CONFIDENTIAL

         20.13. BANKRUPTCY.

                  20.13.1 CONCERNING LICENSOR. All rights and licenses granted
hereunder or pursuant hereto are, and shall be deemed to be, for purposes of
Section 365(n) of the United States Bankruptcy Code, licenses to rights of
"intellectual property," as defined thereunder. Any escrow agreement entered
into pursuant to this Agreement shall be considered an "agreement supplementary
to" such rights and licenses as provided in Section 365(n). Notwithstanding any
provision contained herein to the contrary, if the Party granting such rights is
under any proceeding under the United States Bankruptcy Code and the trustee in
bankruptcy of such Party, or such Party, as a debtor in possession, rightfully
elects to reject this Agreement, the licensed Party shall have the right,
pursuant to Sections 365(n)(1) and 365(n)(2) of the United States Bankruptcy
Code, to retain any and all of the rights licensed to it hereunder, to the
maximum extent permitted by law, subject to any royalty payments due to the
licensor Party as specified herein.

                  20.13.2 CONCERNING LICENSEE. Notwithstanding anything to the
contrary, a Party granting a license to the other Party under this Agreement
hereby consents to the assumption of this Agreement by such licensee Party in
any case under chapter 11 of the United States Bankruptcy Code to the extent
that such consent is required under 11 U.S.C. ss.365(c)(1), but only if the
licensee Party is otherwise entitled to assume this Agreement under the
requirements of the Bankruptcy Code. The sole purpose of the foregoing consent
is to overcome any restriction imposed by 11 U.S.C. ss.365(c)(1) on the licensee
Party's assumption of this Agreement in a chapter 11 case concerning such
licensee Party. It is not intended to limit any other rights of the licensor
Party under this Agreement or any provision of the Bankruptcy Code, including,
without limitation, 11 U.S.C. ss. 365(c)(1). The foregoing consent applies only
to the assumption of the Agreement by the licensee Party and does not apply to
such Party's assignment of this Agreement or any rights hereunder to a third
party, which shall remain subject to all of the terms and conditions of Section
20.3 of this Agreement.

         20.14.  COUNTERPARTS.  This Agreement may be executed in  counterparts,
each of which  shall be deemed an  original,  but both of which  together  shall
constitute one and the same instrument.

                           [Intentionally Left Blank]

                                      -84-

<PAGE>

                                                                    CONFIDENTIAL

         IN WITNESS WHEREOF, the Parties hereto have caused their duly
authorized representatives to execute this Agreement.

THIRD WAVE TECHNOLOGIES, INC.              ACLARA BIOSCIENCES, INC.

("TWT")                                    ("ACLARA")
<TABLE>
<CAPTION>
<S>     <C>                               <C>     <C>

By:    /s/ Ian B. Edvalson                By:    /s/ Philip A. Petersen
       ----------------------------------        -------------------------------------

Name:  IAN B. EDVALSON                    Name:  PHILIP A. PETERSEN
       ----------------------------------        -------------------------------------

Title: SR VP, CORPORATE DEVELOPMENT       Title: VICE PRESIDENT, CORPORATE DEVELOPMENT
       ----------------------------------        -------------------------------------

</TABLE>



Exhibits to this Agreement:

EXHIBIT 1.2 - ACLARA MARKS EXHIBIT 1.7 - [ * ] INSTRUMENTS EXHIBIT 1.8 -
CLEAVASE ENZYMES EXHIBIT 1.11 - COMMERCIALIZATION COSTS EXHIBIT 1.69 - TWT MARKS

EXHIBIT 3.1 - INITIAL DEVELOPMENT PLAN AND BUDGET
EXHIBIT 6.6.2 -COMMERCIALIZATION PLAN AND BUDGETS GUIDELINES
EXHIBIT 8.3 - ACCOUNTING BASED ON TWT SALES



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requested with respect to the omitted portions.

<PAGE>

                                                                    CONFIDENTIAL

                                   EXHIBIT 1.2

                                  ACLARA MARKS

         o  ACLARA(R)BioSciences, Inc.
         o  eTag(TM)





<PAGE>

                                                                    CONFIDENTIAL

                                   EXHIBIT 1.7

                                [ * ] INSTRUMENTS

                                      [ * ]


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requested with respect to the omitted portions.

<PAGE>

                                                                    CONFIDENTIAL

                                   EXHIBIT 1.8

                                CLEAVASE ENZYMES

                                     [ * ]


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requested with respect to the omitted portions.

<PAGE>

                                                                    CONFIDENTIAL

                                  EXHIBIT 1.11

                             COMMERCIALIZATION COSTS

                                      [ * ]



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requested with respect to the omitted portions.

<PAGE>

                                                                    CONFIDENTIAL

                                  EXHIBIT 1.69

                                    TWT MARKS

         o  Third Wave Technologies, Inc.
         o  Invader(R)
         o  Cleavase(R)






<PAGE>

                                                                    CONFIDENTIAL

                                   EXHIBIT 3.1

                       INITIAL DEVELOPMENT PLAN AND BUDGET

                                INITIAL WORK PLAN

                                     [ * ]



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requested with respect to the omitted portions.

<PAGE>

                                                                    CONFIDENTIAL

                                  EXHIBIT 6.6.2

                  COMMERCIALIZATION PLAN AND BUDGET GUIDELINES

Unless otherwise agreed in writing by the Parties the Commercialization Plan and
Budget shall include the following:

                                     [ * ]



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requested with respect to the omitted portions.

<PAGE>

                                                                    CONFIDENTIAL

                                   EXHIBIT 8.3

                       REVENUE SHARING CALCULATION EXAMPLE

         The following is for example purposes only.

                                     [ * ]









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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.