Document:

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                                                                   EXHIBIT 10.51

November 1, 2002

Sue Evans

Dear Sue:

This letter sets forth the substance of the separation agreement (the
"Agreement") that Caliper Technologies Corp. (the "Company") is offering to you
to aid in your employment transition.

      1. SEPARATION. Your last day of work with the Company and your employment
termination date will be November 1, 2002 (the "Separation Date").

      2. TRANSITION PERIOD. From September 19, 2002 until the Separation Date
(the "Transition Period"), you will continue to perform services for the Company
in any area of your expertise as requested by Mike Knapp, to ensure a smooth
transition of your job duties. You shall perform your job duties from home or at
the Company's office upon the reasonable request of Mike Knapp. Although you
will be providing services to the Company on a reduced schedule, you will be
paid your full base salary during the Transition Period. You will have no
authority, in the absence of the express written consent of the Chief Executive
Officer of the Company ("CEO"), to bind the Company (or to represent that you
have authority to bind the Company) to any contractual obligations, whether
written, oral or implied. During the Transition Period, you will be paid your
base salary, and you will be eligible for Company benefits, including the
accrual of paid time off and flex leave, in accordance with Company policies and
benefit plans.

      3. ACCRUED SALARY AND PAID TIME OFF. On the Separation Date, the Company
will pay you all accrued salary and all accrued and unused flex leave and
vacation earned through the Separation Date, subject to standard payroll
deductions and withholdings.

      4. SEVERANCE PAYMENTS. Upon completion of the Transition Period, the
Company will make severance payments to you in the form of continuation of your
current base salary of $245,004 per annum until September 18, 2003 (the
"Severance Payments"). As a condition of receiving the Severance Payments, on
the Separation Date you must execute and allow to become effective the general
release of claims attached hereto as Exhibit A (the "Separation Date Release").
The Severance Payments will be made via wire transfer on the last Friday of each
calendar month commencing on November 29, 2002, provided that the final
Severance Payment will be made on September 18, 2003. The Severance Payments
will not be subject to standard payroll deductions and withholdings. You
understand and agree that these Severance Payments and the other consideration
provided herein are in lieu of any severance benefits or change of
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control payments or accelerated vesting specified in your November 13, 2001
offer letter as amended by the November 28, 2001 offer letter addendum (the
"Offer Letter"). The Company will pay you the full amount of the Severance
Payments regardless of whether or when you obtain any future employment.

      5. STOCK OPTIONS. Pursuant to the terms of your stock option grant
agreement and the Company's applicable stock option plan, vesting of your stock
options will cease on the last date of your employment. As part of this
Agreement, your stock options will continue vesting subject to your continued
employment through the Separation Date. Your right to exercise any vested shares
and all other rights and obligations with respect to your stock options, will be
as set forth in your stock option grant agreement and the Company's stock option
plan.

      6. HEALTH INSURANCE. Your group health insurance coverage will terminate
November 30, 2002. To the extent provided by the federal COBRA law and by the
Company's current group health insurance policies, you will be eligible to
continue your group health insurance benefits at your own expense. Later, you
may be able to convert to an individual policy through the provider of the
Company's health insurance, if you wish. After the termination of your group
health insurance coverage, if you timely elect continued coverage under COBRA
and execute and allow to become effective the Separation Date Release, the
Company will pay the COBRA premiums necessary to continue your current health
care coverage through September 30, 2003.

      7. ACCESS TO VOICEMAIL. From the Separation Date until February 28, 2003,
the Company will allow you to maintain your Company voicemail account. You agree
and acknowledge that your continued use of Company voicemail is subject to the
Company's policies regarding voicemail. You also agree that after the Separation
Date you will not identify yourself as employed by or affiliated with the
Company in your use of the Company's voicemail.

      8. EMAIL FORWARDING. From the Separation Date until September 30, 2003,
the Company agrees to implement an email forwarding process to forward emails
received at your Company email account to your new email account. You will not
have access to Company email after the Separation Date. You agree and
acknowledge that your receipt and transmission of email with your Company email
address is subject to the Company's policies regarding use of email. You agree
and acknowledge that email sent to your Company email address is the property of
the Company and the Company may monitor the email to ensure that business issues
are being addressed. You also agree to forward to the Company any emails
relating to Company business matters.

      9. USE OF TECHNICAL PRESENTATION MATERIALS. After the Separation Date, you
may continue to use those certain technical presentation materials that
contained publicly disclosed Company information which you used in previous
professional and industry presentations. Because your presentation of those
materials may be mutually beneficial, we will work together to update those
materials with additional publicly disclosed information, as and when you and
the Company mutually deem it appropriate.
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      10. OTHER COMPENSATION OR BENEFITS. You acknowledge that, except as
expressly provided in this Agreement, you will not receive any additional
compensation, bonus, severance or benefits after the Separation Date.

      11. EXPENSE REIMBURSEMENTS; INDEMNIFICATION. You agree that, within ten
(10) days of the Separation Date, you will submit your final documented expense
reimbursement statement reflecting all business expenses you incurred through
the Separation Date, if any, for which you seek reimbursement. The Company will
reimburse you for these expenses pursuant to its regular business practice. Any
expenses submitted beyond ten (10) days after the Separation Date will not be
reimbursed. You shall be and remain covered under the Company's directors' and
officers' liability and other applicable insurance policies for any acts or
omissions in the course and scope of your duties performed on behalf of the
Company while employed by it. The Company agrees that it shall, to the maximum
extent provided in the Company's by-laws and certificate of incorporation,
indemnify, defend, and hold you harmless from and against any and all actions,
claims, liabilities, fees and expenses relating to any acts or omissions in the
course and scope of your duties performed on behalf of the Company while
employed by it. To the extent that the Company settles any claims relating to
any acts or omissions in the course and scope of your duties performed on behalf
of the Company while employed by it, the Company shall cause you to be fully
released and receive a covenant not to sue from the claimant(s) involved.

      12. RETURN OF COMPANY PROPERTY. You agree that, by the Separation Date,
you will return to the Company all Company documents (and all copies thereof)
and other Company property in your possession or control, including, but not
limited to: Company files, notes, memoranda, correspondence, agreements, draft
documents, notebooks, logs, drawings, records, plans, proposals, reports,
forecasts, financial information, sales and marketing information, research and
development information, personnel information, specifications,
computer-recorded information, tangible property and equipment, credit cards,
entry cards, identification badges and keys; and any materials of any kind that
contain or embody any proprietary or confidential information of the Company
(and all reproductions thereof in whole or in part). You agree to make a
diligent search to ensure that you have returned all such property, wherever it
is located. The Company will allow you to retain the laptop computer belonging
to the Company and currently in your possession until the Separation Date for
the purpose of performing your duties during the Transition Period. YOUR TIMELY
RETURN OF ALL SUCH COMPANY DOCUMENTS AND OTHER PROPERTY IS A CONDITION PRECEDENT
TO YOUR RECEIPT OF THE BENEFITS PROVIDED UNDER THIS AGREEMENT.

      13. PROPRIETARY INFORMATION OBLIGATIONS. You acknowledge your continuing
obligations under your Proprietary Information and Inventions Agreement a copy
of which is attached hereto as Exhibit B.

      14. CONFIDENTIALITY. The provisions of this Agreement will be held in
strictest confidence by you and the Company and will not be publicized or
disclosed in any manner whatsoever; provided, however, that: (a) the parties may
disclose this Agreement in confidence to their respective attorneys,
accountants, auditors, tax preparers, and financial advisors; (b) the Company
may disclose this Agreement as necessary to fulfill standard or legally required
corporate reporting or disclosure requirements; and (c) the parties may disclose
this Agreement
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insofar as such disclosure may be necessary to enforce its terms or as otherwise
required by law. By way of example, and without limitation, you agree not to
disclose the terms of this Agreement to any current or former Company employee.

      15. NONDISPARAGEMENT; REFERENCE/PUBLIC STATEMENT. Both you and the
Company, through its officers and directors, agree not to disparage the other
party, and the other party's officers, directors, employees, shareholders and
agents, in any manner likely to be harmful to them or their business, business
reputation or personal reputation; provided that both you and the Company may
respond accurately and fully to any question, inquiry or request for information
when required by legal process.

      16. NO ADMISSIONS. You understand and agree that the promises and payments
in consideration of this Agreement shall not be construed to be an admission of
any liability or obligation by the Company to you or to any other person, and
that the Company makes no such admission.

      17. RELEASE. In exchange for the consideration under this Agreement to
which you would not otherwise be entitled, except for (a) the Company's breach
of this Agreement, (b) your rights to indemnification under applicable law, the
Company's by-laws and any directors and officers insurance policies maintained
by the Company, and (c) your vested rights under the Company's applicable stock
option plans, 401(k) and/or other retirement plans, you hereby generally and
completely release the Company and its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to your
signing this Agreement. This general release includes, but is not limited to:
(1) all claims arising out of or in any way related to your employment with the
Company or the termination of that employment; (2) all claims related to your
compensation or benefits from the Company, including salary, bonuses,
commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other ownership interests in the Company;
(3) all claims for breach of contract, wrongful termination, and breach of the
implied covenant of good faith and fair dealing, including but not limited to
claims arising under or related to the Offer Letter; (4) all tort claims,
including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (5) all federal, state, and local statutory
claims, including claims for discrimination, harassment, retaliation, attorneys'
fees, or other claims arising under the federal Civil Rights Act of 1964 (as
amended), the federal Americans with Disabilities Act of 1990, the federal Age
Discrimination in Employment Act of 1967 (as amended) ("ADEA"), and the
California Fair Employment and Housing Act (as amended).

      In exchange for the consideration under this Agreement to which the
Company would not otherwise be entitled, except for your breach of this
Agreement, and except for any Unknown Misconduct (as defined below), if any, the
Company hereby generally and completely releases you and your agents, attorneys,
heirs, successors, insurers, affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to your
signing this Agreement. This general release includes, but is not limited to:
(1) all claims arising out of or in any way related to your employment with the
Company or the termination of that employment; (2) all
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claims for breach of contract, wrongful termination, and breach of the implied
covenant of good faith and fair dealing, including but not limited to claims
arising under or related to the Offer Letter; (3) all tort claims, including
claims for fraud, defamation, emotional distress, and discharge in violation of
public policy; and (4) all federal, state, and local statutory claims. As used
herein, the term "Unknown Misconduct" shall mean willful misconduct by you in
the course of or during the term of your employment with the Company, or other
action by you outside the scope of your authority on behalf of the Company,
which misconduct or action results in material liability of the Company to a
third party, including but not limited to any governmental agency, and of which
no other officer or director of the Company had or has knowledge as of the date
of this Agreement.

      18. RELEASE OF ADEA CLAIMS. You acknowledge that you are knowingly and
voluntarily waiving and releasing any rights you may have under the ADEA and
acknowledge that the consideration given for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which you were
already entitled. You further acknowledge that you have been advised by this
writing, as required by the ADEA, that: (a) your waiver and release do not apply
to any rights or claims that may arise after the execution date of this
Agreement; (b) you should consult with an attorney prior to executing this
Agreement (although you may choose not to do so); (c) you have twenty-one (21)
days to consider this Agreement (although you may voluntarily execute this
Agreement earlier); (d) you have seven (7) days following the execution of this
Agreement by the parties to revoke the Agreement; and (e) this Agreement shall
not be effective until the date upon which the revocation period has expired,
which shall be the eighth day after this Agreement is executed by you (the
"Effective Date").

      19. SECTION 1542 WAIVER. In granting the release herein, which includes
claims which may be unknown to you at present, both parties acknowledge that
they have read and understand Section 1542 of the California Civil Code:

      A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
      KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
      RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
      SETTLEMENT WITH THE DEBTOR.

Both Parties hereby expressly waive and relinquish all rights and benefits under
that section and any law or legal principle of similar effect in any
jurisdiction with respect to the releases granted herein, including but not
limited to the release of unknown and unsuspected claims granted in this
Agreement.

      20. SEPARATION DATE RELEASE. In exchange for consideration under this
Agreement to which you would otherwise not be entitled, on the Separation Date,
you agree to execute and allow to become effective the Separation Date Release
attached as Exhibit B as a condition of receipt of Severance Payments and COBRA
reimbursement as provided in this Agreement. Upon its acceptance of the
Separation Date Release, the Company shall be deemed to have re-executed its
release of you contained herein, effective through and including the Separation
Date.

      21. MISCELLANEOUS. The Company shall reimburse you for your reasonable
attorney's fees incurred in connection with this Agreement, up to a maximum of
$2,000. This Agreement, including Exhibits A and B, constitutes the complete,
final and exclusive embodiment of the
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entire agreement between you and the Company with regard to this subject matter.
It is entered into without reliance on any promise or representation, written or
oral, other than those expressly contained herein, and it supersedes any other
such promises, warranties or representations, including but not limited to the
Offer Letter. This Agreement may not be modified or amended except in a writing
signed by both you and a duly authorized officer of the Company. This Agreement
will bind the heirs, personal representatives, successors and assigns of both
you and the Company, and inure to the benefit of both you and the Company, their
heirs, successors and assigns. If any provision of this Agreement is determined
to be invalid or unenforceable, in whole or in part, this determination will not
affect any other provision of this Agreement and the provision in question will
be modified by the court so as to be rendered enforceable. This Agreement will
be deemed to have been entered into and will be construed and enforced in
accordance with the laws of the State of California as applied to contracts made
and to be performed entirely within California.

If this Agreement is acceptable to you, please sign below and return the
original to me. On the Separation Date, please sign the Separation Date Release
and return the original to me.

I wish you good luck in your future endeavors.

Sincerely,

CALIPER TECHNOLOGIES CORP.

By: /s/ James L. Knighton
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         James L. Knighton
         President

Exhibit A - Separation Date Release

Exhibit B - Proprietary Information and Inventions Agreement

Agreed and Accepted:

/s/ Sue Evans
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Sue Evans
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                                    EXHIBIT A

                             SEPARATION DATE RELEASE

I understand that, pursuant to the separation letter agreement between me and
the Company, which I signed on November 19, 2002 (the "Agreement"), I am
required to sign this Separation Date Release ("Release") as a condition for
receiving the Severance Payments, COBRA reimbursement, and other consideration
under the Agreement to which I am not otherwise entitled. I further understand
that, regardless of whether I sign this Release, the Company will pay me all
accrued salary, vacation and flex leave earned through my termination date, to
which I am entitled by law.

Except for (a) the Company's breach of the Agreement, (b) my rights to
indemnification under applicable law, the Company's by-laws and any directors
and officers insurance policies maintained by the Company, and (c) my vested
rights under the Company's 401(k) or other retirement plans, I hereby generally
and completely release the Company and its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to my
signing this Agreement. This general release includes, but is not limited to:
(1) all claims arising out of or in any way related to my employment with the
Company or the termination of that employment; (2) all claims related to my
compensation or benefits from the Company, including salary, bonuses,
commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other ownership interests in the Company;
(3) all claims for breach of contract, wrongful termination, and breach of the
implied covenant of good faith and fair dealing; (4) all tort claims, including
claims for fraud, defamation, emotional distress, and discharge in violation of
public policy; and (5) all federal, state, and local statutory claims, including
claims for discrimination, harassment, retaliation, attorneys' fees, or other
claims arising under the federal Civil Rights Act of 1964 (as amended), the
federal Americans with Disabilities Act of 1990, the Age Discrimination in
Employment Act of 1967 ("ADEA"), and the California Fair Employment and Housing
Act (as amended).

I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the ADEA, as amended. I also acknowledge that the
consideration given for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) my waiver and release do not apply to any rights or claims that may
arise after the execution date of this Release; (b) I have been advised hereby
that I have the right to consult with an attorney prior to executing this
Release; (c) I have has at least twenty-one (21) days to consider this Release
(although I may choose to voluntarily execute this Release earlier); (d) I have
seven (7) days following the execution of this Release by the parties to revoke
the Release; and (e) this Release will not be effective until the date upon
which the revocation period

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has expired, which will be the eighth day after this Release is executed by me,
provided that the Company has also executed this Release by that date
("Separation Date Release Effective Date").

I UNDERSTAND THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS. In giving this release, which includes claims that may be unknown to me
at present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any unknown or unsuspected claims I
may have against the Company.

HAVING READ AND UNDERSTOOD THE FOREGOING, I HEREBY AGREE TO THE TERMS AND
CONDITIONS STATED ABOVE.

/s/ Sue Evans                 November 19, 2002
-----------------------       --------------------------------------------
Sue Evans                     Date

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                                    EXHIBIT B

                PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

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                           CALIPER TECHNOLOGIES CORP.

                        EMPLOYEE PROPRIETARY INFORMATION
                            AND INVENTIONS AGREEMENT

      In consideration of my employment or continued employment by CALIPER
TECHNOLOGIES CORP. (the "COMPANY"), and the compensation now and hereafter paid
to me, I hereby agree as follows:

NONDISCLOSURE

      1.1 RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times during my
employment and thereafter, I will hold in strictest confidence and will not
disclose, use, lecture upon or publish any of the Company's Proprietary
Information (defined below), except as such disclosure, use or publication may
be required in connection with my work for the Company, or unless an officer of
the Company expressly authorizes such in writing. I will obtain Company's
written approval before publishing or submitting for publication any material
(written, verbal, or otherwise) that relates to my work at Company and/or
incorporates any Proprietary Information. I hereby assign to the Company any
rights I may have or acquire in such Proprietary Information and recognize that
all Proprietary Information shall be the sole property of the Company and its
assigns.

      1.2 PROPRIETARY INFORMATION. The term "PROPRIETARY INFORMATION" shall mean
any and all confidential and/or proprietary knowledge, data or information of
the Company. By way of illustration but not limitation, "PROPRIETARY
INFORMATION" includes (a) trade secrets, inventions, ideas, processes, formulas,
products, formulations, developmental or experimental work, publications,
clinical data, test data, methods, samples, media and/or call lines, other works
of authorship, know-how, improvements, discoveries, developments, designs and
techniques (hereinafter collectively referred to as "INVENTIONS"); and (b)
information regarding plans for research, development, new products, marketing
and selling, business plans, budgets and unpublished financial statements,
licenses, prices and costs, suppliers and customers; and (c) information
regarding the skills and compensation of other employees of the Company.
Notwithstanding the foregoing, it is understood that, at all such times, I am
free to use information which is generally known in the trade or industry, which
is not gained as result of a breach of this Agreement, and my own, skill,
knowledge, know-how and experience to whatever extent and in whichever way I
wish.

      1.3 THIRD PARTY INFORMATION. I understand, in addition, that the Company
has received and in the future will receive from third parties confidential or
proprietary information ("THIRD PARTY INFORMATION") subject to a duty on the
Company's part to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and
will not disclose to anyone (other than Company personnel who need to know such
information in connection with their work for the Company) or use, except in
connection with my work for the Company, Third Party Information unless
expressly authorized by an officer of the Company in writing.

      1.4 NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS. During
my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or any
other person to whom I have an obligation of confidentiality, and I will not
bring onto the premises of the Company any unpublished documents or any property
belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company.

2.    ASSIGNMENT OF INVENTIONS.

      2.1 PROPRIETARY RIGHTS. The term "PROPRIETARY RIGHTS" shall mean all trade
secret, patent, copyright, mask work and other intellectual property rights
throughout the world.

      2.2 PRIOR INVENTIONS. Inventions, if any, patented or unpatented, which I
made prior to the commencement of my employment with the Company are excluded
from the scope of this Agreement. To preclude any possible uncertainty, I have
set forth on Exhibit B (Previous Inventions) attached hereto a complete list of
all Inventions that I have, alone or jointly with others, conceived, developed
or reduced to practice or caused to be conceived, developed or reduced to
practice prior to the commencement of my employment with the Company, that I
consider to be my property or the property of third parties and that I wish to
have excluded from the scope of this Agreement (collectively referred to as
"PRIOR INVENTIONS"). If disclosure of any such Prior Invention would cause me to
violate any prior confidentiality agreement, I understand that I am not to list
such Prior Inventions in Exhibit B but am only to disclose a cursory name for
each such invention, a listing of the party(ies) to whom it belongs and the fact
that

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<PAGE>
full disclosure as to such inventions has not been made for that reason. A space
is provided on Exhibit B for such purpose. If no such disclosure is attached, I
represent that there are no Prior Inventions. If, in the course of my employment
with the Company, I incorporate a Prior Invention into a Company product,
process or machine, the Company is hereby granted and shall have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license (with rights to
sublicense through multiple tiers of sublicensees) to make, have made, modify,
use and sell such Prior Invention. Notwithstanding the foregoing, I agree that I
will not incorporate, or permit to be incorporated, Prior Inventions in any
Company Inventions without the Company's prior written consent.

      2.3 ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I hereby
assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and to
any and all Inventions (and all Proprietary Rights with respect thereto) whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by me, either alone or jointly with
others, during the period of my employment with the Company. Inventions assigned
to the Company, or to a third party as directed by the Company pursuant to this
Section 2, are hereinafter referred to as "COMPANY INVENTIONS."

      2.4 NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "SECTION 2870"). I have reviewed the
notification on Exhibit A (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.

      2.5 OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, I will promptly disclose to the Company all
patent applications filed by me or on my behalf within a year after termination
of employment. At the time of each such disclosure, I will advise the Company in
writing of any Inventions that I believe fully qualify for protection under
Section 2870; and I will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. The Company will keep in
confidence and will not use for any purpose or disclose to third parties without
my consent any confidential information disclosed in writing to the Company
pursuant to this Agreement relating to Inventions that qualify fully for
protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection
under Section 2870.

      2.6 GOVERNMENT OR THIRD PARTY. I also agree to assign all my right, title
and interest in and to any particular Invention to a third party, including
without limitation the United States, as directed by the Company.

      2.7 WORKS FOR HIRE. I acknowledge that all original works of authorship
which are made by me (solely or jointly with others) within the scope of my
employment and which are protectable by copyright are "works made for hire,"
pursuant to United States Copyright Act (17 U.S.C., Section 101).

      2.8 ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in every
proper way to obtain, and from time to time enforce, United States and foreign
Proprietary Rights relating to Company Inventions in any and all countries. To
that end I will execute, verify and deliver such documents and perform such
other acts (including appearances as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting, evidencing, sustaining
and enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and deliver assignments of such Proprietary Rights to the
Company or its designee. My obligation to assist the Company with respect to
Proprietary Rights relating to such Company Inventions in any and all countries
shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually
spent by me at the Company's request on such assistance.

      In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, which appointment is coupled with an interest, to act for and
in my behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph with
the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Company any and all claims, of any nature whatsoever, which I
now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Company.

3. RECORDS. I agree to keep and maintain adequate and current records (in the
form of notes, sketches, drawings and in any other form that may be required by
the Company) of all Proprietary Information developed by me and all Inventions
made by me during the period of my employment at the Company, which records
shall be

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<PAGE>
available to and remain the sole property of the Company at all times.

4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment by the
Company I will not, without the Company's express written consent, engage in any
employment or business activity which is competitive with, or would otherwise
conflict with, my employment by the Company. I agree further that for the period
of my employment by the Company and for one (l) year after the date of
termination of my employment by the Company I will not induce any employee of
the Company to leave the employ of the Company.

5. NO CONFLICTING OBLIGATION. I represent that my performance of all the terms
of this Agreement and as an employee of the Company does not and will not breach
any agreement to keep in confidence information acquired by me in confidence or
in trust prior to my employment by the Company. I have not entered into, and I
agree I will not enter into, any agreement either written or oral in conflict
herewith.

6. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company, I will
deliver to the Company any and all drawings, notes, memoranda, specifications,
devices, formulas, and documents, together with all copies thereof, and any
other material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company. I further agree that any
property situated on the Company's premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject
to inspection by Company personnel at any time with or without notice. Prior to
leaving, I will cooperate with the Company in completing and signing the
Company's termination statement.

7. LEGAL AND EQUITABLE REMEDIES. Because my services are personal and unique and
because I may have access to and become acquainted with the Proprietary
Information of the Company, the Company shall have the right to enforce this
Agreement and any of its provisions by injunction, specific performance or other
equitable relief, without bond and without prejudice to any other rights and
remedies that the Company may have for a breach of this Agreement.

8. NOTICES. Any notices required or permitted hereunder shall be given to the
appropriate party at the address specified below or at such other address as the
party shall specify in writing. Such notice shall be deemed given upon personal
delivery to the appropriate address or if sent by certified or registered mail,
three (3) days after the date of mailing.

9. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of the
Company, I hereby consent to the notification of my new employer of my rights
and obligations under this Agreement.

10. GENERAL PROVISIONS.

      10.1 GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This Agreement will
be governed by and construed according to the laws of the State of California,
as such laws are applied to agreements entered into and to be performed entirely
within California between California residents. I hereby expressly consent to
the personal jurisdiction of the state and federal courts located in San Diego
County, California for any lawsuit filed there against me by Company arising
from or related to this Agreement.

      10.2 SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.

      10.3 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.

      10.4 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the Company
to any successor in interest or other assignee.

      10.5 EMPLOYMENT. I agree and understand that nothing in this Agreement
shall confer any right with respect to continuation of employment by the
Company, nor shall it interfere in any way with my right or the Company's right
to terminate my employment at any time, with or without cause.

      10.6 WAIVER. No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a waiver of any
other right. The Company shall not be required to give notice to enforce strict
adherence to all terms of this Agreement.

                                       3
<PAGE>
      10.7 ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously employed,
or am in the future employed, by the Company as a consultant if no other
agreement governs nondisclosure and assignment of inventions during such period.
This Agreement is the final, complete and exclusive agreement of the parties
with respect to the subject matter hereof and supersedes and merges all prior
discussions between us. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or changes
in my duties, salary or compensation will not affect the validity or scope of
this Agreement.

      This Agreement shall be effective as of the first day of my employment
with the Company, namely: _____________, 200__.

      I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.

Dated:
      ------------------------------

------------------------------------------------
SIGNATURE

------------------------------------------------
(PRINTED NAME)

ACCEPTED AND AGREED TO:

CALIPER TECHNOLOGIES CORP.

By:
     -----------------------------------------------------

Title:
        --------------------------------------------------

----------------------------------------------------------
(Address)

                                       4
<PAGE>
                                    EXHIBIT A

                         LIMITED EXCLUSION NOTIFICATION

      THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:

      (1) Relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;

      (2) Result from any work performed by you for the Company.

      To the extent a provision in the foregoing Agreement purports to require
you to assign an invention otherwise excluded from the preceding paragraph, the
provision is against the public policy of this state and is unenforceable.

      This limited exclusion does not apply to any patent or invention covered
by a contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.

      I ACKNOWLEDGE RECEIPT of a copy of this notification.

                                         By:
                                            ------------------------------------
                                                  (Printed Name of Employee)

                                        Date:
                                             -----------------------------------

WITNESSED BY:

-------------------------------------
(Printed Name of Representative)

Dated:
      -----------------------------------------------

                                      A-1
<PAGE>
                                    EXHIBIT B

TO:   CALIPER TECHNOLOGIES CORP.

FROM: --------------------------

DATE: --------------------------

SUBJECT: PREVIOUS INVENTIONS

      1. Except as listed in Section 2 below, the following is a complete list
of all inventions or improvements relevant to the subject matter of my
employment by Caliper Technologies Corp. (the "COMPANY") that have been made or
conceived or first reduced to practice by me alone or jointly with others prior
to my engagement by the Company:

      [ ]   No inventions or improvements.

      [ ]   See below:

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

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

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

[ ]   Additional sheets attached.

      2. Due to a prior confidentiality agreement, I cannot complete the
disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies):
<TABLE>
<CAPTION>

        INVENTION OR IMPROVEMENT              PARTY(IES)                          RELATIONSHIP
<S>     <C>                                   <C>                                 <C>

1.      -------------------------------       -----------------------             ------------------

2.      -------------------------------       -----------------------             ------------------

3.      -------------------------------       -----------------------             ------------------

</TABLE>

[ ]   Additional sheets attached.

                                      B-1<PAGE>

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                                                   EXHIBIT 10.52

                    SOLE COMMERCIAL PATENT LICENSE AGREEMENT

         THIS AGREEMENT, made effective on the 1st day of November, 2002 (the
"Effective Date"), by and between UT-Battelle, LLC (hereinafter "UT-Battelle"),
a corporation organized and existing under the laws of the State of Tennessee
and having a place of business at Post Office Box 2008, Oak Ridge, Tennessee
37831-6499, and Caliper Technologies Corp., (hereinafter "Licensee"), a
corporation organized and existing under the laws of the State of Delaware and
whose address for notices is 605 Fairchild Drive, Mountain View, California
94043-2234, both being hereinafter jointly referred to as the "Parties" or
singly as "Party."

                                 W I T N E S S:

     A. Martin Marietta Energy Systems, Inc. (hereinafter "MMES"), a Delaware
corporation, pursuant to Prime Contract No. DE-AC05-84OR21400 with the United
States Government as represented by the Department of Energy (hereinafter "DOE")
originally developed and/or obtained rights to the Original Proprietary Rights
relating to Products subject to the DOE nonexclusive, nontransferable,
irrevocable, paid-up license for the United States Government and certain
march-in rights and any other conditions of waivers granted by the DOE;

     B. MMES and Caliper Microanalytic Systems, Inc. (hereinafter "Caliper
Microanalytic"), a Maryland corporation, executed a sole commercial patent
license agreement to the Original Proprietary Rights having an effective date of
February 14, 1995;

                                       1

<PAGE>

     C. MMES changed its name to Lockheed Martin Energy Systems, Inc.
(hereinafter "LMES"), a Delaware corporation, when the former Lockheed
Corporation and Martin Marietta Corporation merged;

     D. Caliper Microanalytic changed its name to Caliper Technologies, Corp.
(hereinafter "Licensee") and reorganized under the laws of the State of
Delaware;

     E. Caliper Microanalytic assigned its rights and delegated its duties with
respect to the Original Proprietary Rights to Licensee and LMES consented to
said assignment and delegation;

     F. The prior sole commercial patent license agreement between LMES and
Licensee was superceded by two sole commercial patent license agreements
identified as PLA 147 and PLA 148 having respective effective dates of September
1, 1995;

     G. LMES and Licensee amended PLA 147 by virtue of an Amendment A having an
effective date of May 1, 1996;

     H. LMES and Licensee amended PLA 148 by virtue of an Amendment A having an
effective date of May 1, 1996;

     I. Lockheed Martin Energy Research Corporation (hereinafter "LMER"), a
Delaware corporation, succeeded LMES as the management and operating contractor
of the Oak Ridge National Laboratory (hereinafter "ORNL") pursuant to Prime
Contract No. DE-AC05-96OR22464 with the DOE;

     J. LMES, pursuant to Prime Contract No. DE-AC05-84OR21400 with the DOE,
assigned its rights and delegated its duties with respect to the Original
Proprietary Rights to LMER and Licensee consented to said assignment and
delegation;

     K. LMER and Licensee amended PLA 147 by virtue of an Amendment B having an
effective date of June 16, 1997;

     L. LMER and Licensee amended PLA 148 by virtue of an Amendment B having an
effective

                                       2

<PAGE>

date of June 16, 1997;

     M. LMER, pursuant to Prime Contract No. DE-AC05-96OR22464 with the DOE
originally developed and/or obtained rights to the New Proprietary Rights
relating to Products subject to the DOE nonexclusive, nontransferable,
irrevocable, paid-up license for the United States Government and certain
march-in rights and any other conditions of waivers granted by the DOE;

     N. UT-Battelle, LLC (hereinafter "UT-Battelle"), a Tennessee limited
liability company, succeeded LMER as the management and operating contractor of
the ORNL pursuant to Prime Contract No. DE-AC05-00OR22725 with the DOE;

     O. LMER, pursuant to Prime Contract No. DE-AC05-96OR22464 with the DOE,
assigned its rights and delegated its duties with respect to the Original
Proprietary Rights and the New Proprietary Rights to UT-Battelle and Licensee
consented to said assignment and delegation;

     P. UT-Battelle and Licensee amended PLA 147 by virtue of an Amendment C
having an effective date of January 2, 2001;

     Q. UT-Battelle and Licensee amended PLA 148 by virtue of an Amendment C
having an effective date of January 2, 2001;

     R. UT-Battelle and Licensee desire to replace all prior license agreements
between the Parties relating to the Original Proprietary Rights and any and all
amendments thereto (collectively, the "Prior Agreements") with a new amended and
restated sole commercial license agreement to the Original Proprietary Rights;
and

     S. UT-Battelle and Licensee desire to add New Proprietary Rights to the
sole commercial license agreement regarding Original Proprietary Rights on the
terms set forth in this Agreement.

         THEREFORE, in consideration of the foregoing premises and the
respective covenants,

                                       3

<PAGE>

undertakings and agreements contained herein, the Parties hereto agree to be
bound as follows:

1.       DEFINITIONS

1.1      "Proprietary Rights" shall mean the U.S. and foreign patents and U.S.
and foreign patent applications listed in Exhibits A1 and A2 (collectively
referred to as "Exhibit A" elsewhere in this Agreement) attached hereto and
hereby incorporated into this Agreement by reference and all United States and
foreign patents and patent applications issuing from or corresponding to such
United States and foreign patent applications including all continuations,
continuations-in-part, divisions, reissues, reexaminations and temporal
extensions of any of the foregoing.

1.2      "Original Proprietary Rights" shall mean the Proprietary Rights that
were subject to the Prior Agreements, as listed in Exhibit A1 herein and all
United States and foreign patents and patent applications issuing from or
corresponding to those listed on Exhibit A1.

1.3      "New Proprietary Rights" shall mean all Proprietary Rights other than
the Original Proprietary Rights, as listed in Exhibit A2 herein and all United
States and foreign patents and patent applications issuing from or corresponding
to those listed on Exhibit A2.

1.4      "Products" shall mean any and all products manufactured, used, sold or
transferred by Licensee or manufactured, used or sold by Licensee's Affiliates
or Sublicensee(s), covered by one or more Claims of the Proprietary Rights
licensed hereunder.

1.5      "Other Field" shall mean the field of "Analysis of Nucleic Acids for
Diagnostic Applications and Non-Electrophoretic Means of Gene Discovery."

1.6      "Net Sales" shall mean the total amounts received from purchasers
during the accounting period in question for Products sold commercially by
Licensee and Licensee's Affiliates, less allowances for returns of Products,
discounts, commissions, allowances actually granted (including any allowances
for bad debt), transportation and delivery charges, including insurance

                                       4

<PAGE>

premiums, and excise or other taxes on Products. Net Sales in the case of
Products used by Licensee in a service business or other commercial enterprise
(but not Licensee's or Sublicensees' internal research and development) shall
mean the fair market value of Products as if they were sold to an unrelated
third party in similar quantities. It is the Parties' intention that Net Sales
will not include any transfer of Products to any Affiliate, unless the Affiliate
is the end user of such Products.

With respect to any product that is developed and sold by Licensee or its
Affiliates and is comprised in part of one or more Products and of one or more
other products or parts which could be sold separately (a "Combination
Product"), Net Sales shall be determined by multiplying the amounts received by
Licensee or its Affiliates attributable to Combination Products by a fraction,
the numerator of which is the fair market value of the Product included in the
Combination Product, and the denominator of which is the sum of the fair market
value of such Product and the fair market value of the products or parts which
are not Products. Whenever possible, the fair market value of the Product
included in the Combination Product will be the market price at which such
Product is sold on a stand-alone basis; provided that fair market value shall be
determined reasonably and in good faith by Licensee in the event that no market
price is available.

1.7      "Affiliate" shall mean any entity which controls, is controlled by or
is under common control with Licensee, where "control" means beneficial
ownership of more than fifty percent (50%) of the outstanding shares or
securities.

1.8      "Sublicensee" shall mean third parties (other than Affiliates) to whom
Licensee has granted a sublicense under the Proprietary Rights.

1.9      "Sublicensing Revenue" shall mean the amount actually paid to Licensee
by a Sublicensee, in consideration for the sublicense, including any license
fees, royalties and

                                       5

<PAGE>

milestone payments. Sublicensing Revenue shall not mean research and development
support payments (other than in consideration for the Proprietary Rights) and
any payments to Licensee by a Sublicensee to compensate Licensee for the grant
of rights to any other intellectual property of Licensee.

1.10     "Claim" shall mean a claim of an issued and unexpired patent within the
Proprietary Rights that has not been held unenforceable, unpatentable, or
invalid by a decision of a court of competent jurisdiction, and that has not
been admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise. "Claim" shall also mean a pending claim of any patent application
that is added to the Proprietary Rights after the Effective Date of this
Agreement by amendment of this Agreement (i.e. that would not fall within the
above definition of Proprietary Rights but for an amendment of this Agreement).

1.11     "Original Field of Use" shall mean all fields of application of the
Proprietary Rights excluding "Analysis of Nucleic Acids for Diagnostic
Applications and Non-Electrophoretic Means of Gene Discovery."

1.12     "All Fields of Use" shall mean all fields of application of the
Proprietary Rights.

2.       GRANTS

2.1      Subject to the terms and conditions of this Agreement, UT-Battelle
hereby grants to Licensee and its Affiliates the exclusive (non-governmental)
commercial right and license under the Original Proprietary Rights to
manufacture, have manufactured for Licensee and its Affiliates, use, sell, offer
for sale and import the Products in the Original Field of Use, including the
exclusive (non-governmental) commercial right to grant sublicenses in the
Original Field of Use under non-financial terms and conditions consistent with
those set forth in this Agreement and subject to sublicense royalties as
provided in Exhibit B. Licensee agrees to provide UT-

                                       6

<PAGE>

Battelle a copy of each sublicense within thirty (30) days of the effective date
thereof.

2.2      Subject to the terms and conditions of this Agreement, UT-Battelle
hereby grants to Licensee and its Affiliates the exclusive (non-governmental)
commercial right and license under the New Proprietary Rights to manufacture,
have manufactured for Licensee and its Affiliates, use, sell, offer for sale and
import the Products in All Fields of Use, including the exclusive
(non-governmental) right to grant sublicenses in All Fields of Use under
non-financial terms and conditions consistent with those set forth in this
Agreement and subject to sublicense royalties as provided in Exhibit B. Licensee
agrees to provide UT-Battelle a copy of each sublicense within 30 days of the
effective date thereof.

2.3      In the event that any rights under the Original Proprietary Rights in
the Other Field revert to UT-Battelle, UT-Battelle shall so notify Licensee. If
all of said rights revert to UT-Battelle and, thus, UT-Battelle can make said
rights available to Licensee on an exclusive (non-governmental) commercial basis
then Licensee shall have the right to include such rights in the Other Field in
the license granted to Original Proprietary Rights under this Agreement, upon
payment to UT-Battelle of an amount equal to the remaining installment of the
up-front fee owed to UT-Battelle by a third party, and, by amendment of Exhibit
B, the addition of the minimum royalty still owed to UT-Battelle by the third
party, to the minimum royalty agreed to in this Agreement by Licensee. Such
addition shall occur to the extent that the installment or minimum royalty
payments owed UT-Battelle by the third party are reduced or eliminated. However,
if less than all of said rights revert to UT-Battelle (e.g., the previous
licensee retains non-exclusive rights) and, thus, UT-Battelle cannot make said
rights available to Licensee on an exclusive (non-governmental) commercial
basis, then: (1) UT-Battelle shall make said rights available to Licensee under
the financial terms and conditions described in this Section to the maximum
extent it is able to do so (e.g., by including such rights in the Other Field in
the license granted to

                                       7

<PAGE>

Original Proprietary Rights under this Agreement, subject only to the prior
licensee's retained, non-exclusive rights in the Other Field); (2) UT-Battelle
shall not further license or make said rights available to any other third
parties; and (3) the terms and conditions of Exhibit D shall apply to said
rights.

2.4      UT-Battelle hereby agrees not to grant to any other party right and
license to Proprietary Rights in accordance with the grants hereinabove, unless:
(1) any grant described herein is converted to a nonexclusive grant or
terminated consistent with the terms of this Agreement; or (2) UT-Battelle is
required to so grant such right and license in accordance with Federal Statutory
or Regulatory enactments conditioning the waiver of rights to UT-Battelle by the
DOE, particularly as set forth in 10 CFR 784.12; 10 CFR Part 781; or 37 CFR Part
404.

2.5      Licensee agrees that any Products for use or sale in the United States
shall be manufactured substantially in the United States, its territories and
possessions.

2.6      Should Licensee fail to meet the developmental commitments described in
Exhibit C herein with respect to the New Proprietary Rights, UT-Battelle shall
have the option, to be exercised on [*] written notice anytime during [*] to
convert the license grant under New Proprietary Rights set forth in Paragraph
2.2 to a nonexclusive license pursuant to the terms of Paragraph 2.9 below.

2.7      Licensee agrees to affix appropriate markings of the applicable
UT-Battelle Proprietary Rights upon or in association with Licensee's Products
or the packaging thereof, as required under 35 U.S.C. 287. Licensee further
agrees to use commercially reasonable efforts to require that Licensee's
Affiliates and future Sublicensees (excluding existing Sublicensees as of the
Effective Date) also mark the Products consistent with the terms of this
Agreement.

2.8      Licensee shall have the option, to be exercised at any time on [*] to
convert the license grant set forth in Section 2.2 to nonexclusive with respect
to any patents or patents applications

                                       8

<PAGE>

included in the New Proprietary Rights on the terms set forth in Section 2.9.

2.9      If the license to New Proprietary Rights granted under Section 2.2 is
converted into a nonexclusive license with respect to any or all patents and
patent applications pursuant to Sections 2.6 or 2.8, then as of the effective
date of such conversion, with respect to such patents or patent applications (i)
Licensee shall no longer be obligated to reimburse patent expenses under Article
20 (but UT-Battelle shall retain any reimbursements previously paid), (ii)
royalties and sublicense royalties due under this Agreement shall be reduced by
[*] (iii) Article 6 Infringement by Third Parties shall be replaced by the
Article 6 set forth in Exhibit D attached hereto, and (iv) Licensee shall have
no further rights to sublicense such patents or patent applications but
previously granted sublicenses will continue pursuant to Paragraph 9.8. If the
license is converted to non-exclusive with respect to all New Proprietary
Rights, then in addition the developmental commitments of Exhibit C shall no
longer apply.

3.       ROYALTIES AND COMMERCIALIZATION PLAN

3.1      In consideration of the right and license granted herein, Licensee
agrees to the provisions of Exhibit B and Exhibit C attached hereto and hereby
incorporated herein by reference, as well as the provisions of Section 20.3
regarding New Proprietary Rights.

3.2      No royalties shall be owing on any Products produced for or under any
Federal Governmental agency contract pursuant to the DOE nonexclusive license
for Federal Governmental purposes but only to the extent that Licensee can show
that the Federal Government received a discount on Product sales which discount
is equivalent to or greater than the amount of any such royalty that would
otherwise be due. Any sales for Federal Governmental purposes shall be reported
under the Records and Reports Section hereinbelow by providing: (a) a Federal
Government contract number; (b) identification of the Federal

                                       9

<PAGE>

government agency; and (c) a description as to how the benefit of the royalty
free sale was passed onto the Federal Government.

3.3      The royalty provisions of Exhibit B shall be offset by any advances
made by Licensee in Article 6, Infringement by Third Parties, hereinbelow.

3.4      Upon termination of this Agreement for any reason whatsoever, any
royalties that remain unpaid, and any pro-rata portion that is due UT-Battelle
per Article 9.7, shall be properly reported and paid to UT-Battelle within
thirty (30) days of any such termination.

3.5      In the event that Licensee is required to withhold taxes under the laws
of any foreign country for the account of UT-Battelle, then such payments will
be made by Licensee on behalf of UT-Battelle to the appropriate governmental
authority, and Licensee shall furnish proof of payment of such tax together with
official or other appropriate evidence issued by the appropriate government
authority. Any such tax actually paid on UT-Battelle's behalf shall be deducted
from royalty payments then due and owing UT-Battelle.

3.6      Licensee shall make all payments to UT-Battelle in U.S. Dollars. In
instances where Licensee receives Net Sales or Sublicensing Revenue in foreign
currency, Licensee shall convert such currency to U.S. dollars for purposes of
payments to UT-Battelle in a manner consistent with any commercially reasonable
mechanism that Licensee employs for its own financial reporting purposes.

4.       RECORDS AND REPORTS

4.1      Licensee agrees to keep for three (3) years adequate and sufficiently
detailed records of utilization of the Proprietary Rights by Licensee,
Licensee's Affiliates and Sublicensees to enable royalties and Sublicensing
Revenue payable hereunder to be determined and to provide such records for
inspection by authorized representatives of UT-Battelle at any time upon
reasonable

                                       10

<PAGE>

advance notice during regular business hours of Licensee up to a maximum of two
(2) times per calendar year. Licensee agrees that any additional available
records of Licensee, Licensee's Affiliates and Sublicensees, as UT-Battelle may
reasonably determine are necessary to verify the above records, shall also be
made accessible to UT-Battelle for inspection during such three (3) year period.
If the inspection discloses that UT-Battelle was underpaid royalties by at least
five percent (5%) for any calendar year, then Licensee shall reimburse
UT-Battelle for any documented and reasonable UT-Battelle costs associated with
the inspection, together with an amount equal to the additional royalties to
which UT-Battelle is entitled as disclosed by the inspection.

4.2      Within Ninety (90) calendar days after the close of each calendar year
during the term of this Agreement (i.e. March 31), Licensee will furnish
UT-Battelle a written report providing: (a) the aggregate amount of all domestic
Net Sales in U.S. Dollars during the preceding calendar year period including
sales to any Federal governmental agency under Section 3.2 hereinabove and the
aggregate amount of all export Net Sales, and if none, Licensee will so indicate
and (b) the aggregate amount of royalties due in U.S. Dollars for the preceding
calendar year period pursuant to the provisions hereof; and (c) payment of the
aggregate amount of the royalties due in U.S. Dollars for the preceding calendar
year payable to the order of UT-Battelle, LLC, pursuant to the report to be
transmitted to UT-Battelle in accordance with the Notices Section hereinbelow.
If UT-Battelle wishes to contest the methods described in any royalty report to
calculate royalties due, it shall do so in writing to Licensee no later than six
(6) months after the date of receipt of such report by UT-Battelle. Promptly
thereafter, the Parties shall confer and resolve any issues raised.
Notwithstanding, this provision shall not prohibit UT-Battelle from later
contesting any Net Sales or Sublicensing Revenue figures in such report to the
extent such figures could only reasonably be verified through inspection of
Licensee records not provided with the royalty report. With the exception of
UT-Battelle's ongoing audit of Licensee's

                                       11

<PAGE>

litigation bills incurred during litigation activities conducted under the Prior
Agreements (but not the analysis set forth in previous royalty reports regarding
methods of calculating royalty credits for litigation expenses), these
provisions regarding contesting any royalty report shall apply retroactively to
all royalty reports delivered pursuant to the Prior Agreements.

4.3      Should Licensee fail to make any payment to UT-Battelle within the time
period prescribed for such payment, then the unpaid amount shall bear interest
at the lesser of: (i) the rate of one and one half percent (1.5%) per month or,
(ii) the greatest amount permitted by law, from the date when payment was due
until payment in full, with interest, is made.

5.       TECHNICAL ASSISTANCE

5.1      UT-Battelle agrees, upon the written request of Licensee, to assist
Licensee in seeking necessary DOE approvals for UT-Battelle to provide technical
assistance to Licensee at UT-Battelle facilities under appropriate agreements.
The cost of such technical assistance shall be paid for by the Licensee.

5.2      UT-Battelle agrees to permit its employees, within UT-Battelle
corporate policy guidelines then in effect and subject to DOE requirements then
in effect, to provide consulting services to Licensee with reference to
Licensee's use and commercial exploitation of the Proprietary Rights as
contemplated herein. Licensee shall make payment directly to the individual
consultant(s) for all such services.

6.       INFRINGEMENT BY THIRD PARTIES

6.1      Licensee shall give notice to UT-Battelle of any discovered third party
infringement of the rights granted herein of which Licensee has actual
knowledge. In the event that UT-Battelle does not take appropriate action to
stop or prevent such infringement within ninety (90) days after receiving such
notice and diligently pursue such action, Licensee has the right to take

                                       12

<PAGE>

appropriate action to stop and prevent the infringement, including the right to
file suit.

6.2      Except for any liability resulting from any negligent acts or omissions
of UT-Battelle, in the event that Licensee files suit to stop infringement or
defends any action against the validity of the patent, Licensee shall indemnify
and hold UT-Battelle harmless against all liability, expense and costs,
including attorneys' fees incurred as a result of any such suit, except that
Licensee may credit litigation expenses against royalties due to UT-Battelle as
provided below in this Article 6.

6.3      Pursuant to sections 6.1 and 6.2 above, Licensee may file an action to
stop alleged infringement of the Proprietary Rights by third parties, such
actions including, by way of example and not limitation, litigation,
arbitration, or other non-judicial dispute resolution activities (collectively
referred to hereinafter as "Dispute Resolution"). The provisions of this Article
6 shall not apply, however, in the case of customary sublicense negotiations;
they shall only apply after a formal filing has been made seeking third party
Dispute Resolution of the matter. Licensee may deduct all costs and expenses for
Dispute Resolution, including but not limited to fees of attorneys, experts,
arbitrators and other third parties, taken against alleged infringers of the
Proprietary Rights or challengers to the validity of the Proprietary Rights from
any royalties (including sublicense royalties) that Licensee may owe to
UT-Battelle during the term of Dispute Resolution or thereafter. Licensee shall
only be permitted to retain all or a portion of a deduction as described in this
Section upon conclusion of the Dispute Resolution if: (1) upon such conclusion
Licensee receives a settlement, judgment, or compensatory recovery ("J" below),
if any, that does not exceed the sum of said costs and expenses ("C(L)" below)
plus Licensee's damages plead and proved ("D(PP)" below); and (2) Licensee
either provides UT-Battelle with, or makes available to UT-Battelle upon
request, verified bills of said costs and expenses that are actually incurred in
accordance with the Records and Reports Section of this Agreement. Licensee
shall deposit any royalties that Licensee may owe UT-Battelle during the

                                       13

<PAGE>

term of Dispute Resolution in an interest-bearing escrow account and shall
provide UT-Battelle with quarterly statements of said escrow account in
accordance with the Records and Reports Section of this Agreement. Upon
conclusion of Dispute Resolution, the amount that shall immediately become due
and payable to UT-Battelle by Licensee shall be calculated as follows:

[*]

         wherein: R(UTB) = Amount owed to UT-Battelle;

         E(G) = Gross funds available in the interest bearing escrow account at
the time that funds are distributed, said funds including royalties deposited
plus interest;

         C(L) = Licensee's costs for Dispute Resolution as described herein; and

         J = Amount of the compensatory recovery, judgment, settlement, or the
like to which Licensee is entitled as described herein, including but not
limited to D(PP). Where "J" consists of payments made over time, each payment
shall be counted for purposes of this Agreement only when it is actually
received by Licensee.

         D(PP) = Actual or consequential Damages that Licensee pleads and proves
during the course of the dispute resolution activity and which are accounted for
in said settlement, judgment, or entitlement to compensatory recovery

For purposes of this Article 6, a Dispute Resolution shall be considered
"concluded" when the last costs or expenses have been incurred, the total amount
of "J" above (recovery, etc.) has been finally determined, at least the first
installment of "J" above has been received, and no appeal may be taken or the
time period for any possible appeal has elapsed. If R(UTB) as calculated above
is a negative number, then Licensee shall not be obliged to pay any amount to
UT-Battelle upon conclusion of the Dispute Resolution and may apply any negative
R(UTB) amount as a reduction of any royalties (including sublicense royalties)
due to UT-Battelle thereafter.

                                       14

<PAGE>

6.4      If, on the other hand, upon conclusion of Dispute Resolution Licensee
becomes entitled to receive a settlement, judgment, or compensatory recovery
from Dispute Resolution that exceeds said costs and expenses, Licensee shall
immediately owe UT-Battelle all funds accrued in the interest bearing escrow
account described above plus [*] of the difference between: (1) any settlement,
judgment, or entitlement to compensatory recovery resulting from Dispute
Resolution; and (2) the costs and expenses that Licensee actually incurs for
pursuing said Dispute Resolution plus any actual or consequential damages that
Licensee pleads and proves during Dispute Resolution and which are accounted for
in said settlement, judgment, or entitlement to compensatory recovery, as set
forth in the following formula:

[*]

         wherein: R(UTB) = Amount owed to UT-Battelle by Licensee;

         E(G) = Gross funds available in the interest bearing escrow account at
the time that funds are distributed, said funds including royalties deposited
plus interest;

         J = Amount of the compensatory recovery, judgment, settlement, or the
like to which Licensee is entitled as described herein, including but not
limited to D(PP); and

         C(L) = Licensee's costs for Dispute Resolution as described herein.

         D(PP) = Actual or consequential Damages that Licensee pleads and proves
during the course of the dispute resolution activity and which are accounted for
in said settlement, judgment, or entitlement to compensatory recovery

6.5      The Parties hereby agree to cooperate with each other in the
prosecution of any such legal actions or settlement actions undertaken under
this Section and each will provide to the other all pertinent data in its
possession which may be helpful in the prosecution of such actions; provided,
however, that the Party in control of such action shall reimburse the other
Party for any and all costs and expenses in providing data and other information
necessary to the conduct of

                                       15

<PAGE>

the action.

6.6      The Party having filed such action shall be in control of such action
and shall have the right to dispose of such action in whatever reasonable manner
consistent with the terms of this Agreement that it determines to be in the best
interest of the Parties hereto, except that any settlement which affects or
admits issues of patent validity shall require the advance written approval of
UT-Battelle and any settlement which involves either (i) a grant of license
rights within the scope of Licensee's licenses under this Agreement or (ii) a
release of claims for past infringement within the scope of Licensee's licenses
under this Agreement, shall require the advance written approval of Licensee.

6.7      In the event any Product becomes the subject of a claim for patent or
proprietary-right infringement anywhere in the world by virtue of the
incorporation of the Proprietary Rights herein, the Parties shall promptly give
notice one to the other and meet to consider the claim and the appropriate
course of action. Licensee shall have the right to conduct the defense of any
such suit brought against Licensee and shall have the sole right and authority
to settle any such suit, provided that any settlement which affects or admits
issues of the validity of UT-Battelle's Proprietary Rights shall require advance
written approval of UT-Battelle. UT-Battelle shall cooperate with Licensee, as
reasonably requested by Licensee, in connection with defense of such claim, at
Licensee's expense.

6.8      Each Party shall notify the other if at any time a Party becomes
engaged in a patent proceeding wherein the issue is raised as to whether any of
the Proprietary Rights have priority of invention over any third party
intellectual property (a "Priority Action"), whether in the context of a patent
interference declared by the USPTO, defense of a patent infringement action or
any other context. The Parties recognize that such a challenge to the
Proprietary Rights could result in the Proprietary Rights being invalidated, or
dominated by third party intellectual property, to

                                       16

<PAGE>

the detriment of both Parties. Accordingly, the Parties shall cooperate in any
such Priority Action as provided for other actions in this Article 6. If
Licensee pays the costs and expenses of such a Priority Action, then Licensee
may deduct all such costs and expenses, including but not limited to fees of
attorneys, experts, arbitrators and other third parties, from any royalties
(including sublicense royalties) that Licensee may owe to UT-Battelle during the
term of such Priority Action or thereafter. Licensee shall only be permitted to
retain all or a portion of a deduction as described in this Section upon
conclusion of the Priority Action if: (1) upon such conclusion, Licensee
receives a settlement, judgment, or compensatory recovery, if any, that does not
exceed said costs and expenses; and (2) Licensee either provides UT-Battelle
with, or makes available to UT-Battelle upon request, verified bills of said
costs and expenses that are actually incurred in accordance with the Records and
Reports Section of this Agreement. Licensee shall deposit any royalties that
Licensee may owe UT-Battelle during the term of such Priority Action in an
interest-bearing escrow account and shall provide UT-Battelle with quarterly
statements of said escrow account in accordance with the Records and Reports
Section of this Agreement. In the unlikely event that upon conclusion of such
Priority Action Licensee receives a settlement, judgment, or compensatory
recovery that exceeds said costs and expenses, then Licensee shall make payments
to UT-Battelle in accordance with the formula set forth in Section 6.4 above.

7.       REPRESENTATIONS AND WARRANTIES

7.1      UT-Battelle represents and warrants that Exhibit A contains a complete
and accurate listing of all the Proprietary Rights licensed and that UT-Battelle
has the right to grant the rights, licenses, and privileges granted herein.
UT-Battelle also represents and warrants that as of the Effective Date of this
Agreement, it has no other active licenses to practice Proprietary Rights in the
Original Field of Use with parties other than Licensee and the Affiliates
thereof.

7.2      UT-Battelle represents and warrants that UT-Battelle has no knowledge
of any claims of

                                       17

<PAGE>

infringement filed against UT-Battelle for practicing the Exhibit A Proprietary
Rights anywhere in the world.

7.3      Except as set forth hereinabove, UT-Battelle makes NO REPRESENTATIONS
OR WARRANTIES, express or implied, with regard to the infringement of
proprietary rights of any third party.

7.4      Licensee acknowledges that the export of any of the Proprietary Rights
from the United States or the disclosure of any of the Proprietary Rights to a
foreign national may require some form of license from the U.S. Government.
Failure to obtain any required export licenses by Licensee may result in
Licensee subjecting itself to criminal liability under U.S. laws.

8.       DISCLAIMERS

8.1      Neither UT-Battelle, the DOE, nor any persons acting on their behalf
shall be responsible for any injury to or death of persons or other living
things or damage to or destruction of property or for any other loss, damage, or
injury of any kind whatsoever resulting from the manufacture, manufacture for,
use, sale, or offer for sale of any Products or Proprietary Rights hereunder by
Licensee, Licensee's Affiliates, or any Sublicensee of Licensee or Licensee's
Affiliates. In no event will UT-Battelle, the DOE, or any person acting on
behalf of any of them be liable for any incidental, special or consequential
damages resulting from the license granted pursuant to this Agreement or the use
or commercial development of the Proprietary Rights.

8.2      EXCEPT AS SET FORTH HEREINABOVE, NEITHER UT-BATTELLE, THE DOE, NOR
PERSONS ACTING ON THEIR BEHALF MAKE ANY WARRANTY, EXPRESS OR IMPLIED: (1) WITH
RESPECT TO THE MERCHANTABILITY, ACCURACY, COMPLETENESS, OR USEFULNESS OF ANY
SERVICES, MATERIALS, OR INFORMATION FURNISHED HEREUNDER; (2) THAT THE USE OF ANY
SUCH SERVICES, MATERIALS, OR INFORMATION WILL NOT INFRINGE PRIVATELY

                                       18

<PAGE>

OWNED RIGHTS; (3) THAT THE SERVICES, MATERIALS, OR INFORMATION FURNISHED
HEREUNDER WILL NOT RESULT IN INJURY OR DAMAGE WHEN USED FOR ANY PURPOSE; OR (4)
THAT THE SERVICES, MATERIALS, OR INFORMATION FURNISHED HEREUNDER WILL ACCOMPLISH
THE INTENDED RESULTS OR ARE SAFE FOR ANY PURPOSE, INCLUDING THE INTENDED OR
PARTICULAR PURPOSE. FURTHERMORE, UT-BATTELLE AND THE DOE HEREBY SPECIFICALLY
DISCLAIM ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, FOR ANY PRODUCTS
MANUFACTURED, MANUFACTURED FOR, USED, OR SOLD BY LICENSEE, Licensee's
Affiliates, or any Sublicensee of Licensee or Licensee's Affiliates. NEITHER
UT-BATTELLE NOR THE DOE SHALL BE LIABLE FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES
IN ANY EVENT.

8.3      Licensee agrees to indemnify UT-Battelle, the DOE, and persons acting
on their behalf for all damages, costs, and expenses, including attorney's fees,
arising from Licensee's, it's Affiliates' or Sublicensees' manufacturing,
manufacturing for, using, selling, or offering for sale of any Proprietary
Rights or Products, in whatever form furnished hereunder by Licensee, Licensee's
Affiliates, or any Sublicensee of Licensee or Licensee's Affiliates.

9.       TERM OF AGREEMENT AND EARLY TERMINATION

9.1      This Agreement shall extend from the effective date of this Agreement
to the date of expiration of the last-to-expire item in the Proprietary Rights
of Exhibit A. This Agreement is subject to early termination as set forth
hereinbelow.

9.2      Either Party shall have the right to terminate this Agreement without
judicial resolution upon written notice to the other Party after any material
breach of this Agreement by the other Party has gone uncorrected for sixty (60)
days after the other Party has been notified in writing of

                                       19

<PAGE>

such breach.

9.3      This Agreement shall terminate automatically upon the extinguishment of
all of the Exhibit A Proprietary Rights, for any reason, but only after the time
for appealing said extinguishment has expired.

9.4      Any assignment of this Agreement by Licensee shall require prior
written concurrence of UT-Battelle, which shall not be unreasonably withheld.
The Parties agree that it would be unreasonable for UT-Battelle to withhold its
concurrence to any assignment of this Agreement (particularly an assignment from
Licensee to any of its Affiliates, any purchaser of all or substantially all of
its assets or to any successor corporation, including a successor corporation
resulting from any merger or consolidation of Licensee with or into such
corporation) unless such assignment would: (1) cause UT-Battelle to breach any
provision of its Prime Contract with the DOE; (2) be inconsistent with DOE
policy that is in effect at the time such assignment request is received by
UT-Battelle, made applicable to UT-Battelle, and relates to technology transfer
and foreign owned or controlled individuals, organizations, or entities; or (3)
materially alter any of UT-Battelle's rights or duties under this Agreement. Any
assignee of Licensee must abide by the terms and conditions of this Agreement,
in conformance with all UT-Battelle obligations to DOE under the Prime Contract.
Upon written notice to Licensee, UT-Battelle may transfer its Administration of
this Agreement to DOE or its designee, and UT-Battelle shall have no further
responsibilities except for the confidentiality and/or non-disclosure
obligations of this Agreement.

9.5      Licensee shall provide notice to UT-Battelle of its intention to file a
voluntary petition in bankruptcy, or of another party's intention to file an
involuntary petition in bankruptcy for Licensee to the extent Licensee is aware
of such intent, said notice to be received by UT-Battelle at least twenty (20)
days prior to filing such a petition. Licensee's failure to provide such notice

                                       20

<PAGE>

to UT-Battelle of such intentions shall be deemed a material, pre-petition,
incurable breach of this Agreement.

9.6      Licensee agrees that it may only offer Licensee's rights under this
Agreement as collateral to a third party with UT-Battelle's written consent, not
to be unreasonably withheld.

9.7      The Parties agree that Licensee, if not then in breach of any portion
of this Agreement, may voluntarily terminate this Agreement upon sixty (60) days
notice to UT-Battelle and payment to UT-Battelle of a pro rata share of any
minimum royalty due UT-Battelle in the year of such termination.

9.8      Termination under any of the provisions of this Article of the rights
granted to Licensee under Articles 2.1 and 2.2 of this Agreement shall terminate
all sublicenses which may have been granted by Licensee, provided that any
Sublicensee may elect to continue its sublicense by advising UT-Battelle in
writing, within sixty (60) days of the Sublicensee's receipt of written notice
of such termination, of its election, and of its agreement to assume, in respect
to UT-Battelle, all the obligations (including obligations for payment)
contained in its sublicensing agreement with Licensee to the extent they pertain
to the sublicense of Proprietary Rights. Any sublicense granted by Licensee
shall contain provisions corresponding to those of this paragraph respecting
termination and the conditions of continuance of sublicenses.

10.      RIGHTS OF PARTIES AFTER TERMINATION

10.1     After expiration or termination of this Agreement, neither Party shall
be relieved of any obligation or liability under this Agreement arising from any
act or omission committed prior to the effective date of such termination. In
the event of expiration of this Agreement or termination of this Agreement for
any reason whatsoever, the rights and obligations of the Parties under Sections
9 and 18 shall survive any expiration or termination of this Agreement.

                                       21

<PAGE>

10.2     From and after any termination of this Agreement, Licensee shall have
the right to sell any Products that Licensee had already manufactured or had
manufactured for Licensee prior to termination, but not manufacture, nor have
manufactured, use or import any further Products, provided that all royalties
and reports required herein above shall be timely submitted to UT-Battelle.

10.3     The rights and remedies granted herein, and any other rights or
remedies which the Parties may have, either at law or in equity, are cumulative
and not exclusive of others. On any termination, Licensee shall duly account to
UT-Battelle and transfer to it all rights to which UT-Battelle may be entitled
under this Agreement.

11.      FORCE MAJEURE

11.1     No failure or omission by UT-Battelle or by Licensee in the performance
of any obligation under this Agreement shall be deemed a breach of this
Agreement or create any liability if the same shall arise from acts of God, acts
or omissions of any government or agency thereof, compliance with, rules,
regulations, or orders of any governmental authority or any office, department,
agency or instrumentality thereof, fire, storm, flood, earthquake, accident,
acts of the public enemy, war, rebellion, insurrection, riot, sabotage,
invasion, quarantine, restriction, transportation embargoes, or failures or
delays in transportation.

12.      NOTICES

12.1     All notices and reports shall be addressed to the Parties hereto as
         follows:

         If to UT-Battelle:
         Finance Manager-Technology Transfer                      Facsimile No.
         UT-Battelle, LLC                                         (865) 576-9465

                                       22

<PAGE>

         Post Office Box 2008                                     Verify No.
         Oak Ridge, Tennessee 37831-6499                          (865) 241-2353

         If to Licensee:
         General Counsel                                          Facsimile No.
         Caliper Technologies Corp.                               (650) 623-0500
         605 Fairchild Drive                                      Verify No.
         Mountain View, California 94043-2234                     (650) 623-0700

12.2     All minimum and royalty payments due UT-Battelle shall be sent to:

         UT-Battelle, LLC
         Royalty Account
         P. O. Box 888071
         Knoxville, TN 37995-8071

12.3     Any notice, report or any other communication required or permitted to
be given by one Party to the other Party by this Agreement shall be in writing
and either (a) served personally on the other Party, (b) sent by express,
registered or certified first-class mail, postage prepaid, addressed to the
other Party at its address as indicated above, or to such other address as the
addressee shall have previously furnished to the other Party by proper notice,
(c) delivered by commercial courier to the other Party, or (d) sent by facsimile
to the other Party at its facsimile number indicated above or to such other
facsimile number as the Party shall have previously furnished to the other Party
by proper notice, with machine confirmation of transmission.

13.      NON-ABATEMENT OF ROYALTIES

13.1     UT-Battelle and Licensee acknowledge that certain of the Proprietary
Rights may expire prior to the conclusion of the term of this Agreement;
however, UT-Battelle and Licensee agree that the royalty rates provided for
hereinabove shall be uniform and undiminished except as otherwise provided
pursuant to this Agreement.

                                       23

<PAGE>

14.      WAIVERS

14.1     The failure of either Party at any time to enforce any provisions of
this Agreement or to exercise any right or remedy shall not be construed to be a
waiver of such provisions or of such rights or remedy or the right of either
Party thereafter to enforce each and every provision, right or remedy.

15.      MODIFICATIONS

15.1     It is expressly understood and agreed by the Parties hereto that this
instrument contains the entire agreement between the Parties with respect to the
subject matter hereof and that all prior representations, warranties, or
agreements relating hereto, including but not limited to the Prior Agreements,
have been merged into this document and are thus superseded in totality by this
Agreement. This Agreement may be amended or modified only by a written
instrument signed by the duly authorized representatives of both of the Parties.

16.      HEADINGS

16.1     The headings for the sections set forth in this Agreement are strictly
for the convenience of the Parties hereto and shall not be used in any way to
restrict the meaning or interpretation of the substantive language of this
Agreement.

17.      LAW

17.1     This Agreement shall be construed according to the laws of the State of
Tennessee and the United States of America.

18       CONFIDENTIALITY

18.1     The Parties agree that during the term of this Agreement and for a
period of three (3)

                                       24

<PAGE>

years after it terminates, a Party receiving information of the other Party,
which is marked "Confidential," will not use or disclose such confidential
information to any third party without prior written consent of the disclosing
Party, except to those necessary to enable the Parties to perform under this
Agreement or as may be required by the UT-Battelle Prime Contract with the DOE
under the same restrictions as set forth herein.

18.2     A Party shall have no obligations with respect to any portion of such
confidential information of the other Party which:

     a)  is publicly disclosed through no fault of any Party hereto, either
before or after it becomes known to the receiving Party; or

     b)  was known to the receiving Party prior to the date of this Agreement
which knowledge was acquired independently and not from the other Party; or

     c)  is subsequently disclosed to the receiving Party in good faith by a
third party which has a right to make such a disclosure; or

     d)  has been published by a third party as a matter of right; or

     e)  is subsequently independently invented or discovered by the receiving
Party without reference to the other Party's confidential information.

19.      SEVERABILITY

19.1     If any term, condition or provision of this Agreement is held to be
unenforceable other than as provided in Article 11, all other terms, conditions,
and provisions of this Agreement shall be deemed valid and enforceable to the
extent possible.

20.      PATENT PROSECUTION

20.1     UT-Battelle shall, during the term of this Agreement, seek patent
protection for the

                                       25

<PAGE>

Proprietary Rights listed in Exhibit A. The securing of patent protection for
all Proprietary Rights shall be the sole responsibility and at the sole
discretion of UT-Battelle; provided, however that (i) Licensee shall have a
reasonable opportunity to review and comment on patent filings in advance and to
consult and cooperate with UT-Battelle in securing patent protection, and (ii)
UT-Battelle will timely keep Licensee advised of the status of such prosecution
and maintenance by providing Licensee with copies of all official
communications, amendments and responses with respect to the patent applications
and patents contained in the Proprietary Rights. Licensee may request and
UT-Battelle, at its sole discretion, may seek patent extension for patents
licensed under the Proprietary Rights listed in Exhibit A, under such applicable
laws and regulations where such patent extension rights are available currently
or are available in the future. In the event that UT-Battelle elects to abandon
a patent application included in the Proprietary Rights or elects not to seek an
extension of a patent included in the Proprietary Rights, it will so notify
Licensee at least ninety (90) days prior to any applicable deadline. Upon
receipt of such notice, and to the extent allowed by the UT-Battelle Prime
Contract with DOE, Licensee may, following written notice to UT-Battelle, seek,
at its own expense a waiver from DOE to continue the prosecution of such
application or extend such application at Licensee's expense.

20.2     Reimbursement of all UT-Battelle's external costs and fees, and a
reasonable allocation of internal costs, relating to the securing of patent
protection for the Proprietary Rights after August 1, 2002 ("Patent Costs")
shall be the responsibility of Licensee. UT-Battelle shall bill Licensee for
Patent Costs on a bi-annual basis, and Licensee shall reimburse UT-Battelle
within thirty (30) days of receipt of the invoice.

20.3     Licensee agrees to reimburse UT-Battelle a total of [*] as costs not
previously reimbursed under the Prior Agreements related to patent protection of
the Original and New Proprietary

                                       26

<PAGE>

Rights listed on Exhibits A1 and A2 incurred by UT-Battelle prior to August 1,
2002. Such payment will be made by Licensee to UT-Battelle within thirty (30)
days of execution of this Agreement. UT-Battelle acknowledges receipt of payment
from Licensee for UT-Battelle's last invoice for reimbursement of patent costs
under Licensee's Prior Agreements. Such invoice was numbered 6329266 and was
dated July 18, 2002.

21.      CONTINUING RIGHTS AND DUTIES FROM PRIOR AGREEMENT(S)

21.1     The Parties agree that this Agreement, upon execution, shall supercede
and terminate all Prior Agreements between the Parties. Prior Agreements
include, but are not limited to, the license agreements identified as PLA 147
and 148.

21.2     Notwithstanding termination of Prior Agreements, the Parties hereto
further agree that the rights and duties that accrued under Prior Agreements but
which have not been fully performed as of the Effective Date shall survive until
fully performed and shall be carried forward and applied pursuant to the terms
of this Agreement. In particular, the Parties agree that (i) the royalty credit
balance described in the most RECENT royalty report shall be carried forward and
(ii) the $5 million license fee, and two subsequent $2.5 million minimum royalty
payments, due from Aclara to Caliper under the litigation settlement agreements
in effect on the Effective Date, shall be treated as Sublicense Revenue pursuant
to the terms of this Agreement, when and if such payments are actually received.
Should Aclara default on any such payment to Licensee, Licensee agrees to take
timely legal and management action to enforce its litigation settlement
agreements with Aclara. Caliper acknowledges that the first such payment was
received by Caliper prior to the Effective Date.

                                       27

<PAGE>

         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed in their respective names by their duly authorized
representatives.

"UT-Battelle"
UT-BATTELLE, LLC

By: /s/ Alexander R. Fischer
    ------------------------

Name:   Alexander R. Fischer

Title: Director, Technology Transfer & Economic Development

Date: 11/13/02

"Licensee"
CALIPER TECHNOLOGIES CORP.

By: /s/ Michael R. Knapp
    --------------------

Name:   Michael R. Knapp

Title: CEO

Date: 11/27/2002

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       28

<PAGE>

EXHIBIT A1, ORIGINAL PROPRIETARY RIGHTS

1)       U.S. Patent 6,001,229; Issued December 14, 1999 (1401.0) "Apparatus and
         Method for Performing Microfluidic Manipulations for Chemical Analysis"
         Inventor: J. M. Ramsey

2)       U.S. Patent 6,342,142; Issued January 29, 2002 (1401.2)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis" Inventor: J. M. Ramsey

3)       U.S. Patent Application Serial No. 09/909,638 filed at the USPTO July
         20, 2001 on (1401.3)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis" Inventor: J. M. Ramsey

4)       U.S. Patent 5,858,195; Issued January 12, 1999 (1781.0)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

5)       U.S. Patent 6,033,546; Issued March 7, 2000 (1781.1)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

6)       U.S. Patent 6,010,607; Issued January 4, 2000 (1781.2)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

7)       U.S. Patent 6,010,608; Issued January 4, 2000 (1781.3)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

8)       U.S. Patent Application Serial No. 09/477,585 filed at the USPTO
         January 4, 2000 (1781.4)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

9)       Canadian Patent No. 2,196,429; Issued May 8, 2001 (1781)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

10)      Australian Patent No. 701,348; Issued April 28, 1999 (1781)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

11)      Chinese Patent No. 54022; Issued January 22, 2000 (1781)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey.

                                       29

<PAGE>

                EXHIBIT A1, ORIGINAL PROPRIETARY RIGHTS CONTINUED

12)      Mexican Patent No. 194,601; Issued December 13, 1999 (1781)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

13)      Japanese Patent Application Serial No. 8-506614; filed August 1, 1995
         (1781)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

14)      Korean Patent Application Serial No. 700763/97; filed August 1, 1995
         (1781)
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

15)      EPO Patent Application Serial No. 95927492.9; filed August 1, 1995
         (1781.10) and registered in Netherlands (NL).
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

16)      EPO Patent Application Serial No. 95927492.9; filed August 1, 1995
         (1781.11) and registered in France (FR).
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

17)      EPO Patent Application Serial No. 95927492.9; filed August 1, 1995
         (1781.12) and registered in Germany (DE).
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

18)      EPO Patent Application Serial No. 95927492.9; filed August 1, 1995
         (1781.6) and registered in Denmark (DK).
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

19)      EPO Patent Application Serial No. 95927492.9; filed August 1, 1995
         (1781.7) and registered in Italy (IT).
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

20)      EPO Patent Application Serial No. 95927492.9; filed August 1, 1995
         (1781.8) and registered in Sweden (SE).
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

21)      EPO Patent Application Serial No. 95927492.9; filed August 1, 1995
         (1781.9) and registered in Spain (ES).

                                       30

<PAGE>

         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

22)      EPO Patent Application Serial No. 01203481.5; filed September 14, 2001
         (1781.5).
         "Apparatus and Method for Performing Microfluidic Manipulations for
         Chemical Analysis and Synthesis" Inventor: J. M. Ramsey

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       31

<PAGE>

EXHIBIT A2, NEW PROPRIETARY RIGHTS

1)       U. S. Patent 6,120,666; Issued September 19, 2000 (0504.0)
           "Microfabricated Device and Method for Multiplexed Electrokinetic
         Focusing of Fluid Streams and A Transport Cytometry Method Using Same"
         Inventors: S. C. Jacobson and J. M. Ramsey

2)       Australian Patent application serial No 45696/99 filed June 16, 1999
         (0504.2)
         "Microfabricated Device and Method for Multiplexed Electrokinetic
         Focusing of Fluid Streams and A Transport Cytometry Method Using Same"
         Inventors: S. C. Jacobson and J. M. Ramsey

3)       Canadian Patent application serial No 2,334,749 filed June 16, 1999
         (0504.3)
         "Microfabricated Device and Method for Multiplexed Electrokinetic
         Focusing of Fluid Streams and A Transport Cytometry Method Using Same"
         Inventors: S. C. Jacobson and J. M. Ramsey

4)       European (EPO) Regional Patent application serial No 99928693.3 filed
         June 16, 1999 (0504.4)
         "Microfabricated Device and Method for Multiplexed Electrokinetic
         Focusing of Fluid Streams and A Transport Cytometry Method Using Same"
         Inventors: S. C. Jacobson and J. M. Ramsey

5)       Japanese Patent application serial No 2000-555086 filed June 16, 1999
         (0504.5)
         "Microfabricated Device and Method for Multiplexed Electrokinetic
         Focusing of Fluid Streams and A Transport Cytometry Method Using Same"
         Inventors: S. C. Jacobson and J. M. Ramsey

6)       U.S. Patent Application Serial No. 09/759,590 filed at the USPTO
         January 12, 2001 on (0532.1)
         "A Microfluidic Device and Method for Focusing, Segmenting, and
         Dispensing of a Fluid Stream" Inventors: S. C. Jacobson and J. M.
         Ramsey

7)       U.S. Patent 6,062,261; Issued May 16, 2000 (0270.0)
         "Microfluidic Circuit Designs for Performing Electrokinetic
         Manipulations that Reduce the Number of Voltage Sources and Fluid
         Reservoirs" Inventors: S. C. Jacobson and J. M. Ramsey

8)       U.S. Patent 6,213,151B1; Issued April 10, 2001 (0270.2)
         "Microfluidic Circuit Designs for Performing Electrokinetic
         Manipulations that Reduce the Number of Voltage Sources and Fluid
         Reservoirs" Inventors: S. C. Jacobson and J. M. Ramsey

9)       Australian Patent application serial No 28445/00 filed December 15,
         1999 (0270.3)
         "Microfluidic Circuit Designs for Performing Electrokinetic
         Manipulations that Reduce the Number of Voltage Sources and Fluid
         Reservoirs" Inventors: S. C. Jacobson and J. M. Ramsey

                                       32

<PAGE>

                  EXHIBIT A2, NEW PROPRIETARY RIGHTS CONTINUED

10)      Canadian Patent application serial No 2,355,084 filed December 15, 1999
         (0270.4)
         "Microfluidic Circuit Designs for Performing Electrokinetic
         Manipulations that Reduce the Number of Voltage Sources and Fluid
         Reservoirs" Inventors: S. C. Jacobson and J. M. Ramsey

11)      European (EPO) Regional Patent application serial No 99969278.3 filed
         December 15, 1999 (0270.5)
         "Microfluidic Circuit Designs for Performing Electrokinetic
         Manipulations that Reduce the Number of Voltage Sources and Fluid
         Reservoirs" Inventors: S. C. Jacobson and J. M. Ramsey

12)      Japanese Patent application serial No 2000-588583 filed December 15,
         1999 (0270.6)
         "Microfluidic Circuit Designs for Performing Electrokinetic
         Manipulations that Reduce the Number of Voltage Sources and Fluid
         Reservoirs" Inventors: S. C. Jacobson and J. M. Ramsey

13)      U.S. Patent 5,858,187; Issued January 12, 1999 (1906.0)
         "Apparatus and Method for Performing Electrodynamic Focusing on a
         Microchip" Inventors: J. M. Ramsey and S. C. Jacobson

14)      U.S. Patent 6,110,343; Issued August 29, 2000 (0216.0)
         "Material Transport Method and Apparatus" Inventors: J. M. Ramsey and
         R. S. Ramsey

15)      U.S. Patent 6,231,737B1; Issued May 15, 2002 (0216.1)
         "Material Transport Method and Apparatus" Inventors: J. M. Ramsey and
         R. S. Ramsey

16)      U.S. Patent Application Serial No. 09/408,060 filed at the USPTO on
         September 29, 1999 (0686.1)
         "Microfluidic Devices for the Controlled Manipulation of Small Volumes"
         Inventor: S. C. Jacobson and J. M. Ramsey

17)      U.S. Patent Application Serial No. (To Be Assigned) filed at the USPTO
         on (Not Yet Filed) (0686.10)
         "Microfluidic Devices for the Controlled Manipulation of Small Volumes"
         Inventors: S. C. Jacobson and J. M. Ramsey

18)      Australian Patent application serial No 77586/00 filed August 10, 2000
         (0686.3)
         "Microfluidic Devices for the Controlled Manipulation of Small Volumes"
         Inventors: S. C. Jacobson and J. M. Ramsey

19)      Canadian Patent application serial No 2,380,614 filed August 10, 2000
         (0686.4)
         "Microfluidic Devices for the Controlled Manipulation of Small Volumes"
         Inventors: S. C. Jacobson and J. M. Ramsey

                                       33

<PAGE>

                  EXHIBIT A2, NEW PROPRIETARY RIGHTS CONTINUED

20)      European Patent application serial No 00967377.3 filed August 10, 2000
         (0686.6)
         "Microfluidic Devices for the Controlled Manipulation of Small Volumes"
         Inventors: S. C. Jacobson and J. M. Ramsey

                                        Initials

                                        UT-Battelle: /s/ ARF
                                                     -----------

                                        Date: 11/13/02

                                        Licensee: /s/ MRK
                                                  -----------

                                        Date: 11/27/2002

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       34

<PAGE>

EXHIBIT B, EXECUTION FEE, EARNED ROYALTIES, SUBLICENSE ROYALTY AND MINIMUM
ANNUAL ROYALTIES AMOUNTS

(1)      Execution Fees: In consideration of the rights and licenses granted
herein with respect to New Proprietary Rights, Licensee agrees to pay
UT-Battelle [*] according to the following schedule of payments:

         (i)      [*] within thirty (30) days of the execution of this Agreement
                  by the Parties; and

         (ii)     [*] on or before March 31, 2003; and

         (iii)    [*] on or before September 30, 2003

(2)      Earned Royalties: The Running Royalty Rate for sales of Products shall
         be:

         (i)      [*] of the Net Sales of Chips; provided however that if
                  Licensee must pay royalties to one or more third parties on
                  sales of Chips ("Third Party Payments"), then the royalty
                  payable to UT-Battelle on Chips shall be reduced by [*] of the
                  Third Party Payments but not lower than [*] of Net Sales of
                  Chips in any quarter. "Chips" shall mean chips consisting of a
                  glass or polymer base with reservoirs, microchannels or
                  similar features and a glass or polymer cover, which chips are
                  covered by one or more Claims of the Proprietary Rights
                  licensed hereunder.

         (ii)     [*] of the Net Sales of Products for Products other than
                  Chips.

                                   N O T I C E

         THIS EXHIBIT CONTAINS FINANCIAL AND COMMERCIAL INFORMATION THAT IS
BUSINESS CONFIDENTIAL AND THE PARTIES HEREBY AGREE NOT TO USE OR DISCLOSE THIS
EXHIBIT TO ANY THIRD PARTY WITHOUT THE ADVANCE WRITTEN APPROVAL OF THE OTHER
PARTY HERETO, EXCEPT TO THOSE NECESSARY TO ENABLE THE PARTIES TO PERFORM UNDER
THIS AGREEMENT OR AS MAY BE REQUIRED BY THE UT-BATTELLE CONTRACT WITH THE DOE
UNDER THE SAME RESTRICTIONS AS SET FORTH HEREIN.

         NOTWITHSTANDING THE FOREGOING, EITHER PARTY MAY DISCLOSE THE PROVISIONS
OF THIS EXHIBIT UNDER STANDARD OBLIGATIONS OF CONFIDENTIALITY AND NON-USE ON A
NEED-TO-KNOW BASIS, TO INVESTORS AND THEIR REPRESENTATIVES IN A PRIVATE OR
PUBLIC EQUITY FINANCING TRANSACTION, OR TO POTENTIAL ACQUIRERS OR TARGETS AND
THEIR REPRESENTATIVES IN A CORPORATE CHANGE OF CONTROL TRANSACTION, OR TO OTHER
THIRD PARTIES IN CONNECTION WITH POTENTIAL COMMERCIAL TRANSACTIONS INVOLVING THE
SUBJECT MATTER OF THIS AGREEMENT (E.G., COLLABORATION AGREEMENTS, DISTRIBUTION
ARRANGEMENTS, ETC.).

                                       35

<PAGE>

         EXHIBIT B, EXECUTION FEE, EARNED ROYALTIES, SUBLICENSE ROYALTY
                 AND MINIMUM ANNUAL ROYALTIES AMOUNTS CONTINUED

(3)      Sublicense Royalties: In order to maximize the commercialization of the
Products and UT-Battelle's overall income from this Agreement, in accordance
with Articles 2.1 and 2.2 of this Agreement, Licensee may grant sublicenses to
third parties under this Agreement. Licensee agrees to pay UT-Battelle a
"Sublicense Royalty" of [*] of the total "Sublicensing Revenue" owed Licensee
under said sublicenses.

(4)      Annual Minimum Royalties: If the Earned Royalties for a Calendar Year
do not equal the Minimum Annual Royalty amount as shown below, Licensee shall
pay UT-Battelle the difference between the amount of actual royalties paid and
the Minimum Annual Royalty by March 31 of the following Calendar Year:

Calendar Year Minimum Annual Royalty (U.S. Dollars)

2001 onward: [*]

                                   N O T I C E

         THIS EXHIBIT CONTAINS FINANCIAL AND COMMERCIAL INFORMATION THAT IS
BUSINESS CONFIDENTIAL AND THE PARTIES HEREBY AGREE NOT TO USE OR DISCLOSE THIS
EXHIBIT TO ANY THIRD PARTY WITHOUT THE ADVANCE WRITTEN APPROVAL OF THE OTHER
PARTY HERETO, EXCEPT TO THOSE NECESSARY TO ENABLE THE PARTIES TO PERFORM UNDER
THIS AGREEMENT OR AS MAY BE REQUIRED BY THE UT-BATTELLE CONTRACT WITH THE DOE
UNDER THE SAME RESTRICTIONS AS SET FORTH HEREIN.

         NOTWITHSTANDING THE FOREGOING, EITHER PARTY MAY DISCLOSE THE PROVISIONS
OF THIS EXHIBIT UNDER STANDARD OBLIGATIONS OF CONFIDENTIALITY AND NON-USE ON A
NEED-TO-KNOW BASIS, TO INVESTORS AND THEIR REPRESENTATIVES IN A PRIVATE OR
PUBLIC EQUITY FINANCING TRANSACTION, OR TO POTENTIAL ACQUIRERS OR TARGETS AND
THEIR REPRESENTATIVES IN A CORPORATE CHANGE OF CONTROL TRANSACTION, OR TO OTHER
THIRD PARTIES IN CONNECTION WITH POTENTIAL COMMERCIAL TRANSACTIONS INVOLVING THE
SUBJECT MATTER OF THIS AGREEMENT (E.G., COLLABORATION AGREEMENTS, DISTRIBUTION
ARRANGEMENTS, ETC.).

                                        Initials

                                        UT-Battelle: /s/ ARF
                                                     -------

                                        Date: 11/13/02

                                        Licensee: /s/ MRK
                                                  -------

                                        Date: 11/27/2002

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       36

<PAGE>

                EXHIBIT C, DEVELOPMENT AND COMMERCIALIZATION PLAN

         Licensee agrees to invest in the development of technology and market
for Products practicing one or more Claims within the New Proprietary Rights by
committing Licensee's resources, at a minimum, to achieving at least one of the
following two requirements:

1)       Funding minima for development of technology and markets for Products
practicing one or more Claims within the New Proprietary Rights.

              1st year after signing: [*]

              2nd year after signing: [*]

              3rd year after signing: [*]

Excess amounts invested in one year may be carried forward and applied against
future requirements.

                                       OR

2)       Commence sales (and royalty payments) on at least one Product
practicing one or more Claims within the New Proprietary Rights within [*] of
the Effective Date.

Progress and substantiation of Licensee meeting these requirements shall be
provided to UT-Battelle in the form of a written report to be presented at a
meeting between the Parties to be held at the mutual convenience of said Parties
but no later than the first anniversary and each anniversary thereafter of the
effective date thereof.

                                   N O T I C E

         THIS EXHIBIT CONTAINS FINANCIAL AND COMMERCIAL INFORMATION THAT IS
BUSINESS CONFIDENTIAL AND THE PARTIES HEREBY AGREE NOT TO USE OR DISCLOSE THIS
EXHIBIT TO ANY THIRD PARTY WITHOUT THE ADVANCE WRITTEN APPROVAL OF THE OTHER
PARTY HERETO, EXCEPT TO THOSE NECESSARY TO ENABLE THE PARTIES TO PERFORM UNDER
THIS AGREEMENT OR AS MAY BE REQUIRED BY THE UT-BATTELLE CONTRACT WITH THE DOE
UNDER THE SAME RESTRICTIONS AS SET FORTH HEREIN.

         NOTWITHSTANDING THE FOREGOING, EITHER PARTY MAY DISCLOSE THE PROVISIONS
OF THIS EXHIBIT UNDER STANDARD OBLIGATIONS OF CONFIDENTIALITY AND NON-USE ON A
NEED-TO-KNOW BASIS, TO INVESTORS AND THEIR REPRESENTATIVES IN A PRIVATE OR
PUBLIC EQUITY FINANCING TRANSACTION, OR TO POTENTIAL ACQUIRERS OR TARGETS AND
THEIR REPRESENTATIVES IN A CORPORATE CHANGE OF CONTROL TRANSACTION, OR TO OTHER
THIRD PARTIES IN CONNECTION WITH POTENTIAL COMMERCIAL TRANSACTIONS INVOLVING THE
SUBJECT MATTER OF THIS AGREEMENT (E.G., COLLABORATION AGREEMENTS, DISTRIBUTION
ARRANGEMENTS, ETC.).

                                        Initials

                                        UT-Battelle: /s/ ARF
                                                     -------
                                        Date: 11/13/02

                                        Licensee: /s/ MRK
                                                  -------

                                        Date: 11/27/2002

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       37

<PAGE>

         EXHIBIT D. INFRINGEMENT OF NONEXCLUSIVE RIGHTS BY THIRD PARTIES

In the event any license granted to Proprietary Rights under this Agreement
should be converted to non-exclusive in accordance with the terms of this
Agreement, the following provisions shall apply to the nonexclusive grant.

6.1      Licensee shall give notice to UT-BATTELLE of any discovered third party
infringement of the rights granted herein of which Licensee has actual
knowledge.

6.2      UT-BATTELLE shall exercise its sole discretion to dispose of such
infringement in whatever reasonable manner it determines to be in its best
interest or to seek authorization for initiating litigation against such
infringement from the DOE Contracting Officer. UT-BATTELLE shall not have any
duty to consult with or confer with any of its licensees having a nonexclusive
right to practice Proprietary Rights in UT-BATTELLE's disposition of such
infringement. UT-BATTELLE's licensees having a nonexclusive right to practice
Proprietary Rights shall not: (1) have any right to participate in or have
access to any matters involving or relating to any disposition of infringement
conducted by UT-BATTELLE consistent with this clause; and (2) share in any
judgment, award, settlement, or the like that UT-BATTELLE may receive as a
result of any disposition of infringement conducted by UT-BATTELLE consistent
with this clause.

6.3      If authorization for initiating litigation to dispose of such
infringement obtained from the DOE Contracting Officer then UT-BATTELLE, at its
sole discretion, shall initiate such action in accordance with the Litigation
and Claims section of its prime contract DE-AC05-00OR22725. UT-BATTELLE's
licensees having a nonexclusive right to practice Proprietary Rights shall not:
(1) have any right to participate in or have access to any matters involving or
relating to litigation

                                       38

<PAGE>

conducted by UT-BATTELLE consistent with this clause; and (2) share in any
judgment, award, settlement, or the like that UT-BATTELLE may receive as a
result of said litigation conducted by UT-BATTELLE consistent with this clause.

6.4      If UT-BATTELLE obtains authorization to initiate litigation
proceedings, but not at the expense of the Government, then UT-BATTELLE, at its
sole discretion, may proceed with whatever actions it deems necessary to advance
and resolve said litigation in UT-BATTELLE's best interests. UT-BATTELLE's
licensees having a nonexclusive right to practice Proprietary Rights shall not:
(1) have any right to participate in or have access to any matters involving or
relating to litigation conducted by UT-BATTELLE consistent with this clause; and
(2) share in any judgment, award, settlement, or the like that UT-BATTELLE may
receive as a result of said litigation conducted by UT-BATTELLE consistent with
this clause.

6.5      Licensee hereby agrees to cooperate with UT-BATTELLE in the prosecution
of any such legal actions or settlement actions undertaken under this section
and each will provide to the other all materially pertinent data in its
possession which may be helpful in the prosecution of such actions.

6.6      UT-BATTELLE shall be in control of any such litigation proceedings and
shall have the right to dispose of such proceedings at any time in whatever
reasonable manner it determines to be in the best and sole interests of
UT-BATTELLE.

                                        Initials

                                        UT-Battelle: /s/ ARF
                                                     -------
                                        Date: 11/26/02

                                        Licensee: /s/ MRK
                                                  -------

                                        Date: 11/27/2002

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

                                       39

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