Document:

exv10w2

Exhibit 10.2

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)

and 240.24b-2.

COLLABORATION AGREEMENT

between

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

and

GEN-PROBE INCORPORATED

Dated as of June 15, 2010

 

 

COLLABORATION AGREEMENT

     THIS COLLABORATION AGREEMENT (the “Agreement”) is entered into between Pacific
Biosciences of California, Inc., a Delaware corporation (“PacBio”), having a place of
business at 1505 Adams Drive, Menlo Park, California 94025 and Gen-Probe Incorporated, a Delaware
corporation (“Gen-Probe”), having a place of business at 10210 Genetic Center Drive, San
Diego, California 92121. PacBio and Gen-Probe may each sometimes be referred to herein as a
“party” and collectively as the “parties.”

RECITALS

     WHEREAS, the parties each recognize the potential mutual benefit in cooperating in the
potential development of instrumentation and related products for the Diagnostics (as defined
herein) market (the “Collaboration”).

     WHEREAS, PacBio owns or has proprietary rights and expertise in Sample Preparation Systems (as
defined herein) and Third Generation Sequencing Systems (as defined herein) and associated
technologies.

     WHEREAS, Gen-Probe owns or has proprietary rights and expertise in the areas of Diagnostics
workflow, systems integration, and Sample Preparation Systems, and expertise in the areas of
clinical product development and regulatory clearances.

     WHEREAS, the parties desire to collaborate toward the joint development of Products (each as
defined herein) on the terms and subject to the conditions of this Agreement.

     WHEREAS, the parties intend to enter subsequently into one or more Preferred Partnership
Agreements (as defined herein), if warranted, to collaborate toward the further development,
regulatory clearance and commercialization of Products in the Field, including Products developed
under the terms of this Agreement.

     WHEREAS, in connection herewith, the parties are also entering into a stock purchase agreement
(the “Stock Purchase Agreement”), pursuant to which Gen-Probe shall purchase shares of
PacBio’s Series F preferred stock for an aggregate purchase price equal to $50 million.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth
below, the parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

     For purposes of this Agreement, the terms defined in this Article 1 shall have the respective
meanings set forth below:

     1.1 “Action” shall have the meaning set forth in Section 7.10.

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     1.2 “Affiliate” shall mean, with respect to any Person, any other Person which directly or
indirectly controls, is controlled by, or is under common control with, such Person. A Person
shall be regarded as in control of another Person if it owns, or directly or indirectly controls,
more than fifty percent (50%) of the voting stock or other ownership interest of the other Person
(or such lesser percentage as is the maximum percentage permitted under applicable law for foreign
ownership where control is exercised by contract or otherwise), or if it directly or indirectly
possesses the power to direct or cause the direction of the management and policies of the other
Person by any means whatsoever (provided, however, that in the case of an entity organized under
Section 501(c)(3) of the Internal Revenue Code, the direct or indirect power of a party to direct
or cause the direction of the management and policies of the entity shall not in and of itself
cause the entity to be deemed an Affiliate for purposes of this Agreement).

     1.3 “Agreement” shall have the meaning set forth in the Preamble hereto.

     1.4 “Change of Control” shall mean, with respect to a party, any of the following: (a)
the sale or disposition of all or substantially all of the assets of such party or its direct or
indirect parent corporation to a Third Party, (b) the acquisition by a Third Party which
constitutes one person, as such term is used in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), together with any such person’s “affiliates” or
“associates,” as such terms are defined in the Exchange Act, other than an employee benefit plan
(or related trust) sponsored or maintained by such party or any of its Affiliates, of more than 50%
of the outstanding shares of voting capital stock of such party or its direct or indirect parent
corporation, or (c) the merger or consolidation of such party or its direct or indirect parent
corporation with or into another corporation, other than, in the case of this clause (c), an
acquisition or a merger or consolidation of such party or its direct or indirect parent corporation
in which holders of shares of the voting capital stock of such party or its direct or indirect
parent corporation, as the case may be, immediately prior to the acquisition, merger or
consolidation will have at least fifty percent (50%) of the ownership of voting capital stock of
the acquiring Third Party or the surviving corporation in such merger or consolidation, as the case
may be, immediately after the merger or consolidation.

     1.5 “Collaboration” shall have the meaning set forth in the recitals.

     1.6 “Commercially Available” shall mean, with respect to a product and a party, that
such product is made available by such party or its Affiliate to a Third Party through (i)
commercial sale or transfer of such product (including pursuant to an OEM supply arrangement) or
(ii) commercial sale of a service utilizing such product.

     1.7 “Commercially Reasonable Efforts” shall mean the application of efforts and
available resources, not materially inconsistent with the exercise of prudent scientific and
business judgment. “Commercially Reasonable Efforts” shall be deemed to have occurred if a
reasonably prudent business person would have exerted similar efforts after taking into account,
among other factors, in no particular order, and with no particular relative weighting: the
industry; the relative market timing, potential, and size, and the stage in the development or life
of, the relevant product(s) and/or services, and the dependencies and other interrelationships
there between; the size and stage in the development or life of the entity; the current and
projected future availability of sufficient capital and other resources, and the terms on which
such resources are or will be available; and/or any other factor(s) actually considered and/or that
a reasonably prudent business person would consider under similar

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circumstances. Subject to and without limiting the foregoing, “Commercially Reasonable Efforts”
shall require the applicable party to: (i) promptly assign responsibilities for activities for
which it is responsible to specific employee(s) who are held accountable for the progress,
monitoring and completion of such activities, (ii) set and consistently seek to achieve meaningful
objectives for carrying out such activities, and (iii) make and implement decisions and allocate
available resources necessary or appropriate to advance progress with respect to and complete such
activities.

     1.8 “Confidential Information” shall mean, with respect to a party, all information,
whether in written, oral or visual presentation form, of any kind whatsoever (including
compilations, data, formulae, models, patent disclosures, procedures, processes, projections,
protocols, results of experimentation and testing, specifications, strategies, and techniques), and
all tangible and intangible embodiments thereof of any kind whatsoever (including apparatus,
compositions, documents, drawings, machinery, patent applications, records, reports), which is (i)
not generally known, (ii) disclosed by such party to the other party pursuant to and in accordance
with the terms of Article 6 of this Agreement and (iii) is identified as confidential, or is
otherwise treated by the Disclosing Party as confidential or which the other party has a reasonable
basis to believe is confidential at the time of disclosure.

     Notwithstanding the foregoing, Confidential Information of a party shall not include
information which the other party can establish by written documentation (a) to have been publicly
known prior to disclosure of such information by the Disclosing Party to the other party, (b) to
have become publicly known, without fault on the part of the other party, subsequent to disclosure
of such information by the Disclosing Party to the other party, (c) to have been received by the
other party at any time from a source, other than the disclosing party, rightfully having
possession of and the right to disclose such information, (d) to have been otherwise known by the
other party prior to disclosure of such information by the Disclosing Party to the other party or
(e) to have been independently developed by employees or agents of the other party without access
to or use of such information disclosed by the Disclosing Party to the other party.

     1.9 “Confidentiality Agreement” shall mean the Confidentiality Agreement, dated as of
February 12, 2010, between Gen-Probe and PacBio.

     1.10 “Development Plans” shall have the meaning set forth in Section 2.1.2.

     1.11 “Diagnostics” shall mean the in vitro testing of human specimens (including
processed human specimens) for the purpose of medical care of the human from whom the specimen was
taken and/or medical care of a human who is the potential recipient of tissue from the human from
whom the specimen was taken. For the avoidance of doubt, “medical care” shall include, by way of
example and not of limitation, diagnosis, prognosis, treatment, prevention, or monitoring the
progress of any and all possible human disease (including infectious, genetic, traumatic,
metabolic, degenerative, and neoplastic disease) as well as compatibility of donor and recipient
with respect to tissue. At Gen-Probe’s sole option, exercisable upon written notice to PacBio,
“Diagnostics” shall also mean the in vitro testing of human specimens for the purpose of medical
care of a human who is the potential recipient of human blood, plasma or other blood products from
the human from whom the specimen was taken. For the avoidance of doubt, such medical care shall
include, by way of example and not of limitation, diagnosis of possible disease prior to transplant
or transfusion, as well as compatibility of donor and recipient with respect to human blood,
plasma, and other blood products.

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     1.12 “Disclosing Party” shall have the meaning set forth in Section 6.1

     1.13 “DNA” shall mean any and all forms of deoxyribonucleic acid, including without
limitation methylated and other modified deoxyribonucleic acid sequences and complementary
deoxyribonucleic acid synthesized from ribonucleic acid.

     1.14 “Effective Date” shall mean June 15, 2010.

     1.15 “Essential Ancillaries” shall mean the reagents and other consumables (including
chips) that are necessary for the effective use of V2 [...***...] or Sample Preparation [...***...], in
each case to the extent Commercially Available, respectively, from PacBio or Gen-Probe.

     1.16 “Field” shall mean the field of nucleic acid sequencing products and services
expressly marketed for Diagnostics use, including the parties’ own internal research and
development of Products that are intended to be expressly marketed for Diagnostics use. For the
avoidance of doubt, solely for purposes of determining whether Gen-Probe and its Affiliates have
complied with the exclusivity obligations set forth in Section 4.1, “nucleic acid sequencing” shall
not include methods utilizing multiplexed beads (e.g., [...***...]) or capillary electrophoresis, as
such methods are incorporated in a product offered by Gen-Probe or its Affiliates as of the
Effective Date.

     1.17 “Front End Sample Preparation” shall mean the isolation, extraction and/or
purification of nucleic acid from tissue and bodily fluids obtained directly or indirectly from a
human for sequencing, but excluding steps that are integral and specific to the sequencing process
itself.

     1.18 “Gen-Probe” shall have the meaning set forth in the Preamble hereto.

     1.19 “Gen-Probe Copyrights” shall mean all rights under the copyright laws of any
jurisdiction in the world and similar laws granting rights for written expression, together with
all rights commonly referred to as “moral rights,” to the extent that Gen-Probe has the right to
grant licenses, immunities or other rights thereunder as of the Effective Date or thereafter.

     1.20 “Gen-Probe Derivative IP” shall have the meaning set forth in Section 7.5.1.

     1.21 “Gen-Probe Intellectual Property Rights” shall mean, collectively, the Gen-Probe
Copyrights, Gen-Probe Know-How and Gen-Probe Patent Rights.

     1.22 “Gen-Probe Inventions” shall have the meaning set forth in Section 7.1.

     1.23 “Gen-Probe Know-How” shall mean information, expertise or data developed by or
for Gen-Probe (including formulae, procedures, protocols, techniques, data and results of
experimentation and testing) to the extent that Gen-Probe has the right, under the laws of any
jurisdiction in the world, to grant licenses, immunities or other rights thereunder as of the
Effective Date or thereafter.

     1.24 “Gen-Probe Patent Rights” shall mean patents and patent applications in any
jurisdiction of the world as to which Gen-Probe has an ownership or other licensable interest
(other than a license from PacBio pursuant to this Agreement) as of the Effective Date or
thereafter, including with respect to any Gen-Probe Invention.

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     1.25 “Initial Development Plan” shall have the meaning set forth in Section 2.1.1.

     1.26 “JAMS” shall have the meaning set forth in Section 9.3.

     1.27 “Joint Copyrights” shall have the meaning set forth in Section 7.3.1.

     1.28 “Joint Intellectual Property” shall have the meaning set forth in Section 7.6.

     1.29 “Joint Inventions” shall have the meaning set forth in Section 7.1.

     1.30 “Joint Know-How” shall have the meaning set forth in Section 7.4.

     1.31 “Licensed GP IP” shall have the meaning set forth in Section 2.4.1.

     1.32 “Licensed PacBio IP” shall have the meaning set forth in Section 2.4.2.

     1.33 “PacBio” shall have the meaning set forth in the preamble hereto.

     1.34 “PacBio Copyrights” shall mean all rights under the copyright laws of any
jurisdiction in the world and similar laws granting rights for written expression, together with
all rights commonly referred to as “moral rights,” to the extent that PacBio has the right to grant
licenses, immunities or other rights thereunder as of the Effective Date or thereafter.

     1.35 “PacBio Derivative IP” shall have the meaning set forth in Section 7.5.1.

     1.36 “PacBio Intellectual Property Rights” shall mean, collectively, the PacBio
Copyrights, PacBio Know-How and PacBio Patent Rights.

     1.37 “PacBio Inventions” shall have the meaning set forth in Section 7.1.

     1.38 “PacBio Know-How” shall mean information, expertise or data developed by or for
PacBio (including formulae, procedures, protocols, techniques, data and results of experimentation
and testing) which relates to the Products to the extent that PacBio has the right, under the laws
of any jurisdiction in the world, to grant licenses, immunities or other rights thereunder as of
the Effective Date or thereafter.

     1.39 “PacBio Patent Rights” shall mean patents and patent applications in any
jurisdiction of the world claiming technology as to which PacBio has an ownership or other
licensable interest (other than a license from Gen-Probe pursuant to this Agreement) as of the
Effective Date or thereafter, including with respect to any PacBio Invention.

     1.40 “Person” shall mean an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization, governmental authority or any other form of
entity not specifically listed herein, and including Gen-Probe and PacBio.

     1.41 “Preferred Access Products” shall mean the products supplied by the parties
pursuant to Section 2.2.

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     1.42 “Preferred Partnership Agreements” shall have the meaning set forth in Section
2.5.

     1.43 “Product Development Plans” shall have the meaning set forth in Section 2.1.2.

     1.44 “Products” shall mean one or more integrated system products integrating nucleic
acid sequencing and Front End Sample Preparation, in each case for use in the Field.

     1.45 “Proof of Concept” shall mean, with respect to any product, the demonstration of
the reasonable technical and commercial efficacy and feasibility of such product for its intended
application.

     1.46 “Receiving Party” shall have the meaning set forth in Section 6.1.

     1.47 “Sample Preparation” shall mean the isolation, extraction and/or purification of
nucleic acid from tissue and bodily fluids obtained directly or indirectly from a human for
sequencing.

     1.48 “Sample Preparation [...***...]” shall mean, individually and collectively, the major
[...***...] of Sample Preparation System instruments.

     1.49 “Sample Preparation Systems” shall mean the reagents, methods, instruments and
associated consumables that are used for Sample Preparation, including those that are used for
Front End Sample Preparation.

     1.50 “Steering Committee” shall mean the committee comprising representatives of
Gen-Probe and PacBio as described in Section 3.1 below.

     1.51 “Stock Purchase Agreement” shall have the meaning set forth in the recitals.

     1.52 “Term” shall mean the period set forth in Section 8.1.

     1.53 “Third Generation Sequencing Systems” shall mean the reagents, methods,
instruments and associated consumables (including chips) that are used for single molecule
sequencing of nucleic acid, as developed by or on behalf of PacBio including without limitation
Single Molecule Real Time (SMRTTM) sequencing, the current PacBio RS system and the contemplated
PacBio [...***...] “V2” SMRT DNA sequencing platforms. Gen-Probe acknowledges that, as of the
Effective Date, PacBio’s Third Generation Sequencing Systems are designed to sequence DNA (and not RNA).

     1.54 “Third Party” shall mean any Person other than Gen-Probe and PacBio and their
respective Affiliates.

     1.55 “V2 [...***...]” shall mean the primary [...***...] contained, or intended to be
contained, in the V2 System.

     1.56 “V2 Proof of Concept” shall have the meaning set forth on Exhibit C

     1.57 “V2 [...***...]” shall mean, individually and collectively, the V2 [...***...] and other
major sequencing [...***...] contained, or intended to be contained, in the V2 System.

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     1.58 “V2 System” shall mean the reagents, methods and instruments that are used for single
molecule sequencing of nucleic acids, as developed by or on behalf of PacBio, in the contemplated
“V2” SMRT DNA sequencing platform.

ARTICLE 2

PRODUCT DEVELOPMENT

     2.1 Development Plans.

          2.1.1 The initial program for the development of the Products is set forth in Exhibit
A (the “Initial Development Plan”).

          2.1.2 It is anticipated that progress made under the Initial Development Plan may necessitate
changes to the Initial Development Plan or, for any Products identified as warranting further
development activities, the adoption of additional development plans (the “Product Development
Plans,” and, together with the Initial Development Plan, the “Development Plans”).
Product Development Plans may be adopted and the Development Plans may be amended from time to
time by the Steering Committee in accordance with the provisions of Article 3. Such actions must
be in writing to be effective hereunder. The Development Plans may include, without limitation:
work schedules of activities that specify the development phases; time schedules for completion of
such phases; deliverables; key assumptions; itemized budgets by development phase, including agreed
costs; test methods; the timing of reimbursement payments, if any, tied to the completion of
milestones; scale-up activities; product specifications; the final activity that completes the
Development Plans; and the respective responsibilities of the parties.

          2.1.3 Each party shall designate a contact, which may be a member of the Steering Committee,
at their respective offices to receive and transmit communications concerning the Development
Plans.

          2.1.4 Gen-Probe and PacBio shall conduct their respective development obligations under the
Development Plans diligently and in accordance with the Development Plans and in compliance with
applicable laws, regulations and standards for good development practices. Gen-Probe and PacBio
each shall allocate sufficient personnel, equipment, facilities and other resources to the
Development Plans to carry out their respective obligations and use Commercially Reasonable Efforts
to accomplish the objectives thereof.

          2.1.5 Unless the Steering Committee determines otherwise, each party shall bear its own
expenses incurred in performing its obligations under this Agreement.

     2.2 Preferred Access Products.

          2.2.1 PacBio shall provide to Gen-Probe access to prototype versions of PacBio’s contemplated
Third Generation Sequencing System product families, through one or more collaborative research
projects to be performed using such prototype systems. Such collaborative research projects shall
be of nature and scope, and on such terms and conditions, as are mutually agreed by the parties;
provided that [...***...]

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[...***...].

          2.2.2 If, during the Term, PacBio initiates a beta testing program for any Third Generation
Sequencing System (whether stand-alone or incorporated into a Product), Gen-Probe shall be
permitted to serve as a beta test site for such system, subject to the then-current terms and
conditions for such beta test sites that have been established by PacBio for such Third Generation
Sequencing System, consistently applied, and subject to Gen-Probe’s continued fulfillment of its
obligations as a beta test site in accordance with such terms and conditions.

          2.2.3 During the Term and thereafter, Gen-Probe shall be entitled to purchase from PacBio, on
terms (including warranty terms) that are commercially reasonable for
both parties [...***...], any
Third Generation Sequencing System (whether stand-alone or incorporated into a Product) then
Commercially Available from PacBio to its customers generally; provided that such
entitlement shall survive a Change of Control of PacBio to the extent any such Third Generation
Sequencing System was, immediately prior to such Change in Control: (i) Commercially Available from
PacBio to its customers generally or (ii) (a) in active development by PacBio following a
successful Proof of Concept and (b) then intended by PacBio to be Commercially Available to its
customers generally in the future (provided, however, that PacBio shall not be
obligated to provide Gen-Probe such access earlier than when such Third Generation Sequencing
System is Commercially Available to PacBio’s customers generally).

          2.2.4 During the Term and thereafter, PacBio shall be entitled to purchase from Gen-Probe, on
terms (including warranty terms) that are commercially reasonable for
both parties [...***...], any
Sample Preparation System (whether stand-alone or incorporated into a Product) then Commercially
Available from Gen-Probe to its customers generally; provided that such entitlement shall
survive a Change of Control of Gen-Probe to the extent any such Sample Preparation System was,
immediately prior to such Change in Control: (i) Commercially Available from Gen-Probe to its
customers generally or (ii) (a) in active development by Gen-Probe following a successful Proof of
Concept and (b) then intended by Gen-Probe to be Commercially Available to its customers generally
in the future (provided, however, that Gen-Probe shall not be obligated to provide
PacBio such access earlier than when such Sample Preparation System is Commercially Available to
Gen-Probe’s customers generally).

          2.2.5 In addition to, and not in derogation of, Section 2.2.3, during the Term and thereafter,
Gen-Probe shall be entitled to purchase from PacBio, on terms (including warranty terms) that are
commercially reasonable for both parties [...***... ], any V2 [...***...] (whether stand-alone or embodied in
a system) and any Essential Ancillaries therefor, in each case, then Commercially Available from
PacBio; provided that such entitlement to purchase shall survive a Change of Control of
PacBio (i) with respect to the V2 [...***...] (and any Essential Ancillaries therefor), following a
successful V2 Proof of Concept and (ii) with respect to any other V2 [...***...] (and any Essential
Ancillaries therefor), to the extent any such V2 [...***...] was, immediately prior to such Change in
Control: (a) part of a V2 System

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Commercially Available from PacBio or (b) part of a V2 System in active development by PacBio in
its Collaboration with Gen-Probe hereunder following a successful Proof of Concept of such V2
[...***...] or V2 System; provided, further that any purchase pursuant to this Section
2.2.5 shall be for the sole purpose of Gen-Probe incorporating such V2 [...***...] into a Product
(regardless of whether such Product was developed under the Collaboration) to be sold in the Field,
and in no circumstances for the stand-alone resale of such V2 [...***...]. Upon written request in
accordance with Section 10.2 by PacBio to Gen-Probe after expiration or termination of this
Agreement or any such Change in Control, Gen-Probe shall, within ninety (90) days of receipt of
such request, provide to PacBio a good faith, commercially reasonable estimate of the likely
quantities and delivery dates for any V2 [...***...] (and any Essential Ancillaries therefor) which
Gen-Probe contemplates purchasing pursuant to this Section 2.2.5 over the course of the following
[...***...] calendar quarters. Gen-Probe shall continue to provide a rolling [...***...] calendar quarter
estimate, on a quarterly basis, so long as Gen-Probe desires to purchase any V2 [...***...] (and any
Essential Ancillaries therefor) pursuant to this Section 2.2.5.

          2.2.6 In addition to, and not in derogation of, Section 2.2.4, during the Term and thereafter,
PacBio shall be entitled to purchase from Gen-Probe, on terms (including warranty terms) that are
commercially reasonable for both parties [...***...], any Sample Preparation [...***...] (whether
stand-alone or embodied in a system) that is intended to be a part of any Product contemplated by
the Collaboration and any Essential Ancillaries therefor, in each case, then Commercially Available
from Gen-Probe; provided that such entitlement to purchase shall survive a Change of
Control of Gen-Probe with respect to any such Sample Preparation [...***...] (and any Essential
Ancillaries therefor), to the extent any such Sample Preparation [...***...] was, immediately prior to
such Change in Control, an intended part of a Product in active development by Gen-Probe following
a successful Proof of Concept of such Sample Preparation [...***...] or Product; provided,
further that any purchase pursuant to this Section 2.2.6 shall be for the sole purpose of
PacBio incorporating a Sample Preparation [...***...] into a Product (regardless of whether such
Product was developed under the Collaboration) to be sold in the Field, and in no circumstances for
the stand-alone resale of such Sample Preparation [...***...]. Upon written request in accordance with
Section 10.2 by Gen-Probe to PacBio after expiration or termination of this Agreement or any such
Change in Control, PacBio shall, within ninety (90) days of receipt of such request, provide to
Gen-Probe a good faith, commercially reasonable estimate of the likely quantities and delivery
dates for any Sample Preparation [...***...] (and any Essential Ancillaries therefor) which PacBio
contemplates purchasing pursuant to this Section 2.2.6 over the course of the following [...***...]
calendar quarters. PacBio shall continue to provide a rolling [...***...] calendar quarter estimate,
on a quarterly basis, so long as PacBio desires to purchase any Sample Preparation [...***...] (and any
Essential Ancillaries therefor) pursuant to this Section 2.2.6.

          2.2.7 The rights and obligations of the parties under this Section 2.2 shall apply equally to
the Affiliates of the parties and the provisions of this Section 2.2 shall be interpreted mutatis
mutandis with respect to the Affiliates of the parties, it being understood that each party may
elect to perform any or all of its obligations under this Section 2.2 exclusively through one or
more of its Affiliates (e.g., sale of products outside the U.S. via a non-U.S. Affiliate). Each
party shall cause its

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Affiliates, to the extent applicable, to comply with the provisions of this Section 2.2 as if they
were party to this Agreement.

     2.3 Access to Information.

          2.3.1 Gen-Probe shall provide PacBio access to relevant Diagnostics market research data that
Gen-Probe has generated, or will generate during the Term, including, without limitation, the
[...***...].

          2.3.2 PacBio shall provide Gen-Probe access to relevant Diagnostics market research data that
PacBio has generated, or will generate during the Term.

          2.3.3 Diagnostics market research data provided by one party to another under this Section 2.3
shall be considered Confidential Information pursuant to Article 6 of this Agreement. Without
limiting the foregoing, neither party shall reference or disclose Third Party study data
(including, without limitation, the [...***...]) without the prior written consent of such Third Party.

     2.4 Limited License Grants for Development Plans.

          2.4.1 License Grant by Gen-Probe. Gen-Probe hereby grants to PacBio a limited,
royalty-free, non-exclusive license, for the duration of the Term, to all of the Gen-Probe
Intellectual Property Rights reasonably required for PacBio to perform its obligations under the
Development Plans (the “Licensed GP IP”) and solely for such purposes. PacBio shall not
have the right to grant sublicenses under such license, without the express prior written consent
of Gen-Probe.

          2.4.2 License Grant by PacBio. PacBio hereby grants to Gen-Probe a limited,
royalty-free, non-exclusive license, for the duration of the Term, to all of the PacBio
Intellectual Property Rights reasonably required for Gen-Probe to perform its obligations under the
Development Plans (the “Licensed PacBio IP”) and solely for such purposes. Gen-Probe shall
not have the right to grant sublicenses under such license, without the express prior written
consent of PacBio.

     2.5 Subsequent Agreements. During the Term, the parties shall negotiate in good faith
one or more definitive agreements that shall set forth the economic and other terms and obligations
of the parties in furtherance of the continued development, commercialization and regulatory
clearance of the Products (the “Preferred Partnership Agreements”). Such Preferred
Partnership Agreements shall take into account the technological, commercial, regulatory and
reimbursement findings developed by the parties pursuant to this Agreement. Except as otherwise
provided in this Agreement, no party or its Affiliate shall take any steps, during the Term, to
commercialize in the Field any Product developed under the Collaboration or pursue any regulatory
clearances in the Field in respect of such Product prior to the execution of a Preferred
Partnership Agreement in respect of such Product.

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     2.6 Acknowledgements. Notwithstanding the parties’ intentions and obligations,
Gen-Probe and PacBio each: (i) expressly disclaims any representation or warranty that any
development activities taken pursuant to this Agreement will be successfully completed and (ii)
expressly acknowledges the possibility that any or all development or commercialization activities
may be unsuccessful despite the use of Commercially Reasonable Efforts. Both parties shall plan
accordingly.

ARTICLE 3

GOVERNANCE

     3.1 Steering Committee.

          3.1.1 The development of Products under the Development Plans shall be coordinated and
supervised by the Steering Committee, provided that a Development Plan, and any
modification of a Development Plan, shall not be considered to have been approved unless the budget
for a Development Plan or a modified Development Plan shall have been approved in writing by the
Chief Financial Officer of each party. The Steering Committee’s duties shall include
(i) determining the priorities of the Collaboration with respect to research activities, which
Products to develop and other development matters, (ii) maintaining the Development Plans,
including schedules of work and deliverable commitments by each party, (iii) maintaining an
accounting of the expenses borne by each party, (iv) facilitating open communication between the
parties on matters relating to the development findings and commercialization of Products in the
Field, and (v) engaging experts as necessary to identify the market, regulatory and reimbursement
requirements for integrating Sample Preparation Systems with Third Generation Sequencing Systems.
The Steering Committee shall have the power and authority to appoint joint project teams to oversee
and administer activities under this Agreement and shall set the roles and responsibilities for any
such project teams.

          3.1.2 The Steering Committee shall be comprised of three (3) named representatives of
Gen-Probe and three (3) named representatives of PacBio. PacBio and Gen-Probe shall each appoint
its respective representatives to the Steering Committee and each party may, from time to time and
in its sole discretion, substitute one or more of its representatives by giving notice to the other
party of such change. The initial members of the Steering Committee are set forth on Exhibit
B. Each party shall bear its own costs for its representatives’ participation on the Steering
Committee.

     3.2 Meetings. The Steering Committee shall convene not less than once each calendar
quarter during the Term. All meetings shall be set at times and places convenient to the members
of the Steering Committee as determined by the chair of the Steering Committee. Each party shall
bear its own travel costs in connection with travel to any meetings of the Steering Committee.

     3.3 Committee Actions. A party’s representatives on the Steering Committee shall
collectively have one vote as to all matters. All Steering Committee actions may only be taken by
unanimous vote of the parties. Any approval, determination or other action agreed to by both
parties’ representatives shall be the approval, determination or other action of the Steering
Committee. Except as may be otherwise specifically set forth in this Agreement, any matters as to
which the Steering Committee cannot reach a unanimous vote shall be presented to the respective
executives of the parties for consideration, in accordance with Article 9.

11

 

     3.4 Reports. Within thirty (30) days following each Steering Committee meeting, the
chairperson shall prepare and provide to each party a reasonably detailed written summary report
that shall describe any approval, determination or other action by the Steering Committee.

     3.5 Committee Procedures. Meetings of the Steering Committee shall be coordinated and
chaired by a representative of one of the parties. The position of chair shall rotate between the
parties each nine (9) months. PacBio shall have the right to appoint a representative to serve as
the chair of the Steering Committee for the first nine (9) months of the Term.

     3.6 Steering Committee Action Prior to End of Development Plans.

          3.6.1 In the event that either party reasonably concludes prior to the end of a Development
Plan that (i) the development schedule or development budget for a Product will materially exceed
the schedule or budget set forth in such Development Plan, (ii) development will not be able to be
conducted or be successfully concluded materially consistently with such Development Plan, or (iii)
based on anticipated market demand or for any other reason that the commercialization of such
Product in the Field would not likely be successful, such party shall promptly notify the Steering
Committee, which shall discuss all relevant circumstances and considerations and determine whether
any changes are needed to such Development Plan and, if so, make a decision on whether the
development work should continue with respect to such Product and whether to modify or terminate
such Development Plan.

          3.6.2 In the event a Development Plan is terminated under this Section 3.6, the termination
notice shall be effective on the date it is received. Such termination shall not in any way
relieve either party of obligations already incurred under the Development Plans prior to
termination, including obligations, if any, to reimburse the other party for any expense determined
to be reimbursable by the Steering Committee.

     3.7 Reports and Records. Once each calendar quarter prior to the Steering Committee
meeting, each party shall prepare a written summary report describing the work performed to date by
such party under all active Development Plans and provide such report to the other party. If
agreed by the parties, the foregoing reports may be oral reports given at the Steering Committee
meeting. Each party shall maintain complete and accurate records that fully and properly reflect
all work done and results achieved by it in the performance of the Development Plans (including all
data in the form required under all applicable laws and regulations).

     3.8 Inspection of Records. To the extent reasonably required for the performance of a
Development Plan, Gen-Probe and PacBio each shall have the right, during normal business hours and
upon reasonable notice, to inspect and copy records of the other party created in the course of
performing such Development Plan, to the extent such records are directly related to, and within
the scope of, the Collaboration. The parties shall develop reasonable procedures for requesting
and delivering copies of such records to each other. Each party shall maintain such records and
the information of the other party contained therein as Confidential Information hereunder.

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     3.9 Subcontracts. Upon approval of the Steering Committee, which shall not be
unreasonably withheld by either party, each party may subcontract portions of any Development Plan
hereunder in the normal course of its business; provided, however, that unless the
other party gives its prior written consent, subcontracting with a Third Party shall not involve
the transfer or license (including any sublicense) of the other party’s intellectual property
rights and/or Confidential Information. If the other party consents to a subcontractor’s access to
Confidential Information of the other party, the subcontractor shall be required to enter into an
agreement including confidentiality terms that are at least as restrictive as the confidentiality
terms of Article 6 herein along with provisions for the assignment of inventions or intellectual
property rights arising from the subcontracted work. The subcontracting party shall supervise the
work of any subcontractor to ensure, in part, that the subcontractor’s work is in compliance in all
material respects with all requirements of the Development Plans and all applicable laws and
regulations. For purposes of this Section 3.9, subcontractors requiring approval of the Steering
Committee shall not include subcontractors that provide services on-site of either party in the
ordinary course of such party’s business; provided, however, that such excluded
subcontractors shall otherwise be subject to the requirements of this Section 3.9 to the extent
they work on any portion of any Development Plan or have access to the Confidential Information of
the other party.

     3.10 Withdrawal. Notwithstanding anything to the contrary in this Agreement, either
party may, upon thirty (30) days written notice to the other party, withdraw from participation in
the Steering Committee, in which case, the Steering Committee shall be dissolved and the parties
shall administer the Agreement without such committee, and shall make such amendments to the
Agreement as may be necessary or advisable in connection therewith. All decisions in this
Agreement that prior to such notice required the agreement of the Steering Committee, shall
following such notice be subject to the mutual agreement of the parties.

ARTICLE 4

EXCLUSIVITY

     4.1 Exclusivity. During the Term, neither party, and neither party’s Affiliates,
shall (i) jointly develop Products in the Field with any Third Party or (ii) directly or indirectly
grant to a Third Party an express license or an express immunity from suit with respect to any
technology used or useful in the Collaboration that would permit such Third Party to develop
Products in the Field using such technology either on its own, jointly with such party or with any
other Third Party; provided that a party shall not be precluded from joint development with
or out-licensing to a Third Party in respect of a particular Product if: (a) the parties, jointly
and in good faith, determine that one or both parties do not have sufficient capabilities required
for the development of a particular Product in the Field, (b) either party requests that the
Collaboration include the development of a particular Product in the Field and proposes fair terms
with respect to allocation of development costs, and the other party expressly disclaims
any interest in such development, or (c) such a license is granted in good faith in connection with
the [...***...]. Subject to the foregoing restrictions and the other party’s intellectual property
rights in a Product, each party shall be permitted to develop, promote, market and sell such
Product.

***Confidential Treatment Requested

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES

     5.1 Representations and Warranties. Each of Gen-Probe and PacBio hereby represents
and warrants as of the Effective Date (except as specifically otherwise indicated below) as
follows:

          5.1.1 Corporate Existence and Power. Such party (a) is a corporation duly organized,
validly existing and in good standing under the laws of the state in which it is incorporated; (b)
has the corporate power and authority and the legal right to own and operate its property and
assets, to lease the property and assets it operates under lease, and to carry on its business as
it is now being conducted; and (c) to its knowledge, is in compliance with all requirements of
applicable law, except to the extent that any noncompliance would not have a material adverse
effect on the properties, business, financial or other condition of such party and would not
materially adversely affect such party’s ability to perform its obligations under this Agreement.

          5.1.2 Authorization and Enforcement of Obligations. Such party (a) has the corporate
power and authority and the legal right to enter into this Agreement and to perform its obligations
hereunder and (b) has taken all necessary corporate action on its part to authorize the execution
and delivery of this Agreement and the performance of its obligations hereunder. This Agreement
has been duly executed and delivered on behalf of such party, and constitutes a legal, valid and
binding obligation, enforceable against such party in accordance with its terms.

          5.1.3 Consents. All necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained by such party in connection with
the execution of this Agreement have been obtained on or before the Effective Date.

          5.1.4 No Conflict. To its knowledge, the execution and delivery of this Agreement and
the performance of such party’s obligations hereunder (a) do not conflict with or violate any
requirement of applicable laws or regulations, and (b) do not conflict with, or constitute a
default under, any material contractual obligation of such party.

          5.1.5 No Notice of Infringement. As of the Effective Date, except as otherwise
disclosed in writing to the other party, neither Gen-Probe nor PacBio has received any written
notice from a Third Party alleging that any technology of such party expected to be utilized in any
Product (each as and to the extent defined as of the Effective Date) to be developed pursuant to
this Agreement would infringe the issued patents of such Third Party.

     5.2 DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A
REPRESENTATION MADE, OR WARRANTY GIVEN, BY GEN-PROBE OR PACBIO THAT ANY PATENT WILL ISSUE BASED
UPON ANY PENDING PATENT APPLICATION WITHIN THE GEN-PROBE PATENT RIGHTS OR THE PACBIO PATENT RIGHTS,
THAT ANY PATENT WITHIN THE GEN-PROBE PATENT RIGHTS OR THE PACBIO PATENT RIGHTS WHICH ISSUES WILL BE
VALID, OR THAT THE USE OF ANY LICENSE GRANTED HEREUNDER, OR THAT THE USE OF ANY GEN-PROBE PATENT
RIGHTS OR PACBIO PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS
OF ANY OTHER PERSON. FURTHERMORE, EACH OF GEN-PROBE

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AND PACBIO DOES NOT MAKE, AND EXPRESSLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED, WITH RESPECT TO THE GEN-PROBE INTELLECTUAL PROPERTY RIGHTS AND THE PACBIO INTELLECTUAL
PROPERTY RIGHTS, RESPECTIVELY, OR TO THE PRODUCTS, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.

ARTICLE 6

CONFIDENTIALITY

     6.1 Confidential Information. For the period commencing on the Effective Date and
ending seven (7) years following the expiration or earlier termination hereof, a party and its
Affiliates and their respective directors, officers, employees and consultants (the “Receiving
Parties”) shall maintain in confidence the Confidential Information of the other party and its
Affiliates, and shall not disclose to Third Parties the Confidential Information of the other party
or its Affiliates (the “Disclosing Parties”) except to Affiliates of the Receiving Parties
and their respective directors, officers, employees and consultants involved in the performance of
obligations under this Agreement. To the extent that disclosure to any Third Party is authorized
by this Agreement, prior to disclosure, the Receiving Party shall obtain written agreement of such
Third Party to hold in confidence and not disclose, use or grant the use of the Confidential
Information of the other party except as expressly permitted under this Agreement. The parties
agree that the term of the non-disclosure and non-use obligations of a Third Party shall be
co-extensive with the confidentiality obligations of the parties hereunder. A Receiving Party
shall notify the applicable Disclosing Party promptly upon discovery of any unauthorized use or
disclosure of the Disclosing Party’s Confidential Information. Upon the expiration or earlier
termination of this Agreement, each Receiving Party shall return to the applicable Disclosing Party
all tangible items regarding the Confidential Information of the Disclosing Party and all copies
thereof; provided, however, that a Receiving Party shall have the right to retain
one (1) copy for its legal files for the sole purpose of determining its obligations hereunder.
Each party shall cause its Affiliates, to the extent applicable, to comply with the provisions of
this Section 6.1 as if they were party to this Agreement.

     6.2 Terms of this Agreement. For the period commencing on the Effective Date and
ending on the expiration or earlier termination hereof, without the prior express written consent
of the other party, which shall not be unreasonably withheld or delayed, neither party nor its
Affiliates shall (a) disclose any financial terms or conditions of this Agreement to any Third
Party, except as reasonably required in connection with such party’s activities hereunder and under
appropriate confidentiality restrictions; or (b) originate any initial disclosure to any Third
Party of the existence or terms of this Agreement; or (c) originate any initial publicity, news
release or any other public announcement (written or oral) relating to this Agreement or the
existence of an arrangement among the parties. Notwithstanding the foregoing, the parties shall be
allowed to issue mutually agreed upon individual or joint press releases disclosing the general
nature of the Collaboration. Either party shall thereafter be free to disclose any information
contained in the public disclosure approved pursuant to this Section 6.2 or which is made without
confidentiality restrictions pursuant to Section 6.3.

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     6.3 Permitted Disclosures. The confidentiality obligations under this Article 6 shall not
apply to the extent that a party is required to disclose information by applicable law, regulation
or order of a governmental agency or a court of competent jurisdiction; provided that such
party shall provide written notice thereof to the other party and sufficient opportunity to contest
any such disclosure or to request confidential treatment thereof.

ARTICLE 7

DEVELOPED INTELLECTUAL PROPERTY; INTELLECTUAL PROPERTY RIGHTS;

 ENFORCEMENT

     7.1 Ownership of Inventions. Except as set forth in this Article 7, the entire
worldwide right, title and interest in all patentable discoveries, inventions and technology, made
or developed in the course of the Collaboration, and in any patents or patent applications therein,
(a) solely by employees of Gen-Probe or others acting on behalf of Gen-Probe (the “Gen-Probe
Inventions”) shall, as between Gen-Probe and PacBio, be owned solely by Gen-Probe, (b) solely
by employees of PacBio or others acting on behalf of PacBio (the “PacBio Inventions”)
shall, as between PacBio and Gen-Probe, be owned solely by PacBio, and (c) jointly by employees of
Gen-Probe or others acting on behalf of Gen-Probe and employees of PacBio or others acting on
behalf of PacBio (the “Joint Inventions”) shall, as between Gen-Probe and PacBio, be owned
jointly by Gen-Probe and PacBio. Any dispute as to which party owns any such patentable
discoveries, inventions, technology, patents or patent applications shall be resolved pursuant to
Article 9. Each party hereby assigns any such right, title and interest that it may have to the
other party to effect the foregoing allocation of ownership rights and, for such purpose, it shall
execute such documents, including assignment agreements and take such steps as reasonably requested
by the other party.

     7.2 Patent Applications and Payment of Related Expenses.

          7.2.1 PacBio shall be responsible for and shall control, at its sole discretion and expense,
the preparation, filing, prosecution, maintenance and enforcement of all PacBio Patent Rights that
are the subject of this Agreement. Gen-Probe shall be responsible for and shall control, at its
sole expense, the preparation, filing, prosecution, maintenance and enforcement of all Gen-Probe
Patent Rights that are the subject of this Agreement.

          7.2.2 The Steering Committee shall establish a strategy for, including the appointment of a
party to lead, the preparation, filing, prosecution and maintenance of patent applications and
patents for Joint Inventions. Unless otherwise agreed, the parties shall share equally in the
costs, fees and expenses associated with the preparation, filing and prosecution of any patent
application claiming a Joint Invention and for the maintenance of such Joint Inventions. In the
event Gen-Probe or PacBio fails or elects not to pay its share of any of the foregoing costs, fees
or expenses, it shall assign its entire interest in such Joint Inventions to the other party.
Unless otherwise agreed, patent applications claiming Joint Inventions shall be prepared and
prosecuted promptly by mutually acceptable outside counsel. In the preparation and prosecution of
patent applications claiming Joint Inventions, each party shall be solely responsible for
communicating its interests to the outside counsel, and no employee of any party shall in any way
act as the attorney, agent, or representative of any other party, or otherwise in any way be
responsible for representing or protecting the interests of any other party. All decisions of the
outside counsel shall be final and binding. To the extent not inconsistent with this Agreement,

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neither party may assert any claims against the other party for any act or omission in the
preparation, filing, prosecution, issuance, maintenance, licensing, enforcement or defense of
patent applications or patents issuing therefrom claiming Joint Inventions.

          7.2.3 The parties shall cooperate with one another to the extent necessary in connection with
the filing of patent applications for their respective inventions and for Joint Inventions. Within
a reasonable period of time after a party files any patent application during or after the Term
claiming a Joint Invention conceived during and as a result of the performance of this Agreement,
the party filing such an application shall provide the other party with a copy of the application
and shall identify with reasonable specificity any Confidential Information of such other party
that may be included therein. The party receiving the copy of the application shall then have one
(1) month to review the application and notify the filing party as to whether any of the receiving
party’s Confidential Information is disclosed. If the patent application contains any such
Confidential Information or if the filing party shall be required to disclose any Confidential
Information pursuant to filing such application, then the filing party shall withdraw such
application (without retaining a residual right to claim priority) before any publication, unless
the filing party is given the permission of the other party, which permission shall only be
withheld if disclosure of such Confidential Information has a adverse impact upon the interests of
the party having the right to prevent the disclosure of such Confidential Information.

     7.3 Copyrights.

          7.3.1 Ownership. Except as set forth in this Article 7, the entire worldwide right,
title and interest in all copyrightable works created in the course of the Collaboration (a) solely
by employees of Gen-Probe or others acting n behalf of Gen-Probe shall be owned solely by
Gen-Probe, (b) solely by employees of PacBio or others acting on behalf of PacBio shall be owned
solely by PacBio, and (c) jointly by employees of Gen-Probe or others acting on behalf of Gen-Probe
and employees of PacBio or others acting on behalf of PacBio (the “Joint Copyrights”) shall
be owned jointly by Gen-Probe and PacBio.

          7.3.2 Copyright Protection. In order to protect against infringement of a party’s
copyrights or of Joint Copyrights, the parties shall cooperate to apply an appropriate copyright
mark to all materials identified by each of the parties as copyrightable materials that are created
in the course of the Collaboration. Each party shall cooperate with the other party, take such
actions and execute such documents, as reasonably requested by the other party and at the other
party’s expense, to assist the other party in the protection of the other party’s copyrights. Each
party hereby covenants to take no action or make no omission which would constitute an infringement
of the other party’s claim of copyright protection with respect to such items. Any dispute as to
which party owns a copyright shall be resolved pursuant to Article 9. Each party hereby assigns
any such right, title and interest that it may have to the other party to effect the foregoing
allocation of ownership rights and, for such purpose, it shall execute such documents, including
assignment agreements and take such steps as reasonably requested by the other party.

     7.4 Know-How. Except as set forth in this Article 7, the entire worldwide right,
title and interest in any know-how, trade secrets, information, expertise or data (including
formulae, procedures, protocols, techniques, data and results of experimentation and testing) not
otherwise addressed in Sections 7.1 or 7.3.1 and developed or created in the course of the
Collaboration (a) solely by

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employees of Gen-Probe or others acting on behalf of Gen-Probe shall be owned solely by
Gen-Probe, (b) solely by employees of PacBio or others acting on behalf of PacBio shall be owned
solely by PacBio, and (c) jointly by employees of Gen-Probe or others acting on behalf of Gen-Probe
and employees of PacBio or others acting on behalf of PacBio (the “Joint Know-How”) shall
be owned jointly by Gen-Probe and PacBio. Any dispute as to which party owns any such know-how,
trade secrets, information, expertise or data (including formulae, procedures, protocols,
techniques, data and results of experimentation and testing) shall be resolved pursuant to Article
9. Each party hereby assigns any such right, title and interest that it may have to the other
party to effect the foregoing allocation of ownership rights and, for such purpose, it shall
execute such documents, including assignment rights and take such steps as reasonably requested by
the other party.

     7.5 Derivative Intellectual Property.

          7.5.1 Notwithstanding Sections 7.1, 7.3, 7.4 and 7.6, the entire worldwide right, title and
interest in any discoveries, inventions, technology, know-how, trade secrets, information,
expertise or data (including formulae, procedures, protocols, techniques, data, results of
experimentation and testing), and copyrightable works developed or created in the course of the
Collaboration that are based on, or constitute improvements, enhancements or modifications of, (a)
the Licensed GP IP (the “Gen-Probe Derivative IP”) shall be owned solely by Gen-Probe, and
(b) the Licensed PacBio IP (the “PacBio Derivative IP”) shall be owned solely by PacBio;
provided that any discoveries, inventions, technology, know-how, trade secrets,
information, expertise or data (including formulae, procedures, protocols, techniques, data,
results of experimentation and testing), and copyrightable works developed or created in the course
of the Collaboration that use, are based on or incorporate any of, or constitute improvements,
enhancements or modifications of both the Licensed GP IP and the Licensed PacBio IP shall be deemed
Joint Intellectual Property, and as applicable, Joint Inventions, Joint Copyrights, or Joint
Know-How.

          7.5.2 Each party shall assign any right, title and interest that it may have to the other
party to effect the allocation of ownership rights set forth in Section 7.5.1 and shall cooperate
with the other party, execute such documents, including assignment agreements, and take such steps,
as reasonably requested by the other party and at the other party’s expense, to assist the other
party in the protection of the other party’s rights pursuant to Section 7.5.1.

     7.6 Rights over Joint Intellectual Property. Each party shall own an equal undivided
interest in all Joint Inventions, Joint Copyrights and Joint Know-How (including Diagnostic market
requirements developed during the course of performing the Collaboration, to the extent not
otherwise included in the foregoing) (collectively, the “Joint Intellectual Property”) and
shall have the right, subject to the provisions of this Agreement, to use, pledge, license, assign
or otherwise transfer, its rights in any such Joint Intellectual Property hereunder without the
permission, consent of, or compensation or accounting to, the other party, except to the extent
that such use or application of Joint Intellectual Property would require a license from the other
party (e.g., under a claim other than that which claims the Joint Intellectual Property).

     7.7 No Other Technology Rights. Except as otherwise expressly provided in this
Agreement, under no circumstances shall a party, as a result of this Agreement, obtain any
ownership interest or other right in any discovery, invention or other technology, data or
information (or any patent, copyright, trademark, or other intellectual property rights therein) of
the other party, including

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items transferred by the other party to such party at any time pursuant to this Agreement.
There are no implied licenses or rights granted by this Agreement and no implied licenses or
rights, and no licenses or rights by estoppel, shall be created by the parties’ course of
performance hereunder. Except as expressly provided in this Agreement, neither party shall be
under any obligation to grant to the other party any rights in any patent, copyright, trademark, or
other intellectual property.

     7.8 Third Party Technology. The Steering Committee shall discuss Third Party
intellectual property rights that may be necessary for the Products. Any such discussions shall,
to the extent advisable, take place with legal counsel present in order to preserve legal
privileges available to the parties. The Steering Committee shall consider the costs of acquiring
rights in such Third Party intellectual property rights in connection with such Products, allocate
the costs as appropriate, and agree upon methods for implementing such cost allocations. The
Steering Committee shall also consider which party shall take the lead in initiating contact with
and negotiating with the Third Party. The parties recognize that if the Steering Committee cannot
agree on such cost allocation, neither party shall be under any obligation to separately acquire
such rights for use pursuant to this Agreement.

     7.9 Enforcement. In the event that either party learns of any Third Party
infringement of the Joint Intellectual Property, such party shall promptly provide written notice
to the other party, including any evidence of infringement in the possession of the disclosing
party.

          7.9.1 Except as set forth in this Section 7.9.1, PacBio and Gen-Probe shall jointly defend and
enforce any rights in any Joint Intellectual Property so that the legal fees, costs and expenses of
both parties and any damage awards are shared equally, and with any damages payable to a Third
Party or any recoveries from a Third Party resulting from the enforcement or defense of such rights
being shared equally. To the extent necessary, the parties shall appoint a party to lead the
defense and enforcement of such rights. The parties shall cooperate fully with one another in
legal matters relating to Joint Intellectual Property, including, but not limited to, providing
testimony and executing documents. Both parties have the right, but not the obligation, to
participate in any action or proceeding with respect to Joint Intellectual Property by counsel of
its own choice. Absent further agreement of the parties, and subject to Section 7.9.2, each party
may elect not to participate in any enforcement action or proceeding and may elect not to pay its
shares of the legal fees, costs and expenses incurred in connection with such action or proceeding.
Neither party shall settle any enforcement action or proceeding without the other party’s prior
written consent if the proposed settlement will impact the other party’s rights under the Joint
Intellectual Property (e.g., by admitting invalidity). In any event, if both parties are
participating in an enforcement action or proceeding, then neither party shall settle such action
or proceeding without the other party’s prior written consent.

          7.9.2 Subject to 7.9.1, any recovery or other relief for infringement of Joint Intellectual
Property shall first be allocated to reimburse the reasonable and actual expenses incurred in the
enforcement process in a manner that results in equal net expenses to PacBio and to Gen-Probe. Any
remainder shall be shared equally by PacBio and Gen-Probe if they both participated (i.e., such
that the legal fees, costs and expenses of both parties and any damage awards are shared equally)
in the enforcement process. If only one party participated in the enforcement process, the
participating party shall be solely entitled to the relief obtained in the enforcement action or
proceeding.

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     7.10 Third Party Infringement. In the event that any Third Party makes a written claim or
demand, or brings an action, suit or proceeding (collectively, an “Action”), against either
party, alleging infringement, unauthorized use or misappropriation of such Third Party’s patents,
copyrights, technology, other intellectual property rights or confidential information, and an
adverse result from such Action is reasonably likely to have a material impact on the development
of any Products in the Field in the good faith determination of such party, such party shall
promptly notify the other party in writing, and provide copies of all materials or papers received
by or served on such party from or by such Third Party. For the avoidance of doubt, the parties’
respective obligations to each other with respect to any Third Party Actions arising out of, in
connection with or relating to either party’s sale or use of any Product or Preferred Access
Product shall be as set forth in the Preferred Partnership Agreement for such Product or the
supply agreement for such Preferred Access Product, respectively.

          7.10.1 If an Action relates primarily to the Gen-Probe Intellectual Property Rights, Gen-Probe
shall be primarily responsible for responding to the Action, including controlling any litigation
and, unless otherwise agreed by the parties, paying the fees, costs and expenses relating thereto
or in settlement thereof.

          7.10.2 If an Action relates primarily to the PacBio Intellectual Property Rights, PacBio shall
be primarily responsible for responding to the Action, including controlling any litigation and,
unless otherwise agreed by the parties, paying any fees, costs and expenses relating thereto or in
settlement thereof.

          7.10.3 The principles of Section 7.9.1 shall apply with respect to any Action that reasonably
relates to any Joint Intellectual Property.

     7.11 Nothing herein shall require a party to acquire Third Party intellectual property, and
the parties acknowledge that a Third Party claim of infringement is subject to Section 7.8 as to
the prospective use of the Third Party technology. In the event that any Third Party intellectual
property rights are judicially determined to preclude the manufacture, use or sale of any Product
in the Field and the parties are unable to obtain prospective rights to such Third Party
intellectual property rights on commercially reasonable terms, either party shall have the right to
terminate development activities with respect to such Product. The termination of development
activities by either party under this Section 7.11 shall mean that the Product shall cease to be an
object of development efforts for all purposes under this Agreement and each party shall be
permitted to develop, promote, market and sell such Product, subject to the other party’s
intellectual property rights in such Product, notwithstanding any provision of this Agreement to
the contrary (including without regard to the exclusivity provisions of Article 4).

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ARTICLE 8

TERM AND TERMINATION

     8.1 Expiration. Unless terminated earlier pursuant to Section 8.2 below, this
Agreement shall expire on the earlier of: (i) six (6) months after delivery by PacBio to Gen-Probe
of a summary report establishing successful V2 Proof of Concept and (ii) thirty (30) months after
the Effective Date, provided that in no event shall the Agreement expire prior to eighteen (18)
months after the Effective Date (the “Term”). Upon the further written agreement by the
parties effected prior to the expiration of the then-applicable Term, PacBio and Gen-Probe may
renew this Agreement and extend the original Term.

     8.2 Termination.

          8.2.1 Breach. Each party may terminate this Agreement after the material breach of
this Agreement by the other party, unless the breaching party has cured such breach within sixty
(60) days after notice thereof from the non-breaching party. Any dispute with respect to the right
of a party to terminate all or a portion of this Agreement shall be subject to resolution pursuant
to Article 9.

          8.2.2 Voluntary Bankruptcy. Each party may terminate this Agreement if the other
party shall (a) seek the liquidation, dissolution, or winding up of itself (other than a
liquidation of a solvent company for organizational purposes) or the readjustment of all or
substantially all of its debts, (b) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all or substantially
all of its assets, (c) make a general assignment for the benefit of its creditors, (d) commence a
voluntary case under the Bankruptcy Code, (e) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up or readjustment of debts,
or (f) adopt any resolution of its Board of Directors or stockholders for the purpose of effecting
any of the foregoing.

          8.2.3 Involuntary Bankruptcy. Each party may terminate this Agreement if a proceeding
or case shall be commenced without the application or consent of the other party and such
proceeding or case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the following shall be entered and continue unstayed in effect, for a period of
ninety (90) days from and after the date service of process is effected upon the other party,
seeking (a) its liquidation, reorganization, dissolution or winding up, or the readjustment of all
or substantially all of its debts, (b) the appointment of a trustee, receiver, custodian,
liquidator or the like of itself or of all or substantially all of its assets, or (c) similar
relief under any law relating to bankruptcy, insolvency, reorganization, winding up or readjustment
of debts.

          8.2.4 Acquisition by a Competitor. Each party may terminate this Agreement if the
other party undergoes a Change of Control whereby (a) the other party is acquired by, merged with
or reorganized or consolidated into a competitor of the terminating party (or an Affiliate of such
competitor), or (b) the terminating party’s competitor (or its Affiliate) becomes an Affiliate of
the other party. For purposes hereof, (a) PacBio’s
“competitors” shall include Life Technologies, Illumina,
and F. Hoffman-La Roche, their
respective assigns and successors in interest, and any other entity that competes with PacBio in
the DNA sequencing field as of the date of the Change of Control, and (b) Gen-Probe’s “competitors”
shall include Abbott Laboratories, F. Hoffman-La Roche, Becton

21

 

Dickinson
& Co., and Qiagen N.V., their respective assigns and successors in interest, and any other entity that
competes with Gen-Probe in the molecular Diagnostics field as of the date of the Change of Control.

     8.3 Effect of Expiration and Termination. Except to the extent otherwise provided in
this Agreement, upon expiration or termination of this Agreement, all rights and licenses granted
hereunder shall terminate. Expiration or termination of this Agreement shall not relieve the
parties of any obligation accruing prior to such expiration or termination. The provisions of this
Section 8.3, the provisions of Sections 2.2 (excluding Sections 2.2.1 and 2.2.2), 5.2 and 8.2.1
and Articles 6, 7, 9 and 10 shall survive the expiration or termination of this Agreement,
provided, however, that in the case of a termination prior to expiration of this
Agreement, Sections 2.2.3, 2.2.4, 2.2.5 and 2.2.6 shall survive such termination solely in respect
of the right of the party entitled to declare a termination to purchase Preferred Access Products
of the other party.

ARTICLE 9

DISPUTE RESOLUTION AND GOVERNING LAW

     9.1 Order. Disputes arising between the parties relating to the making or performance
of this Agreement (including ownership of intellectual property rights, breach of confidentiality,
inventorship, etc.) shall be resolved in the following order: (i) by good faith negotiation
between executives of PacBio and Gen-Probe who have authority to fully and finally resolve the
dispute; (ii) if necessary, by non-binding mediation at a location acceptable to the parties using
a neutral mediator having experience with the industry (with the costs therefore shared equally);
or (iii) as a last resort only, by arbitration of inventorship disputes as provided in Section 9.2,
or by arbitration of any other disputes in accordance with Section 9.3. All negotiations pursuant
to this clause shall be treated as Confidential Information in accordance with the provisions of
Article 6 of this Agreement, and shall also be treated as compromise and settlement negotiations
for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules of evidence.

     9.2 Inventorship Disputes. If the parties are unable to resolve any dispute regarding
inventorship by negotiation or mediation under Section 9.1, they shall submit such dispute to
binding arbitration under the C.P.R. Institute for Dispute Resolution Rules for Non-Administered
Arbitration of Patent and Trade Secret Disputes. The arbitrator shall be an independent patent
attorney residing in the United States and registered to practice before the United States Patent
and Trademark Office. The parties shall request that the arbitrator resolve the inventorship
dispute in accordance with the laws of the United States within three (3) months of his or her
appointment. The parties shall supply to the arbitrator documentary evidence of inventorship
together with a written statement of their position not to exceed twenty (20) pages in length
within twenty (20) days of the appointment of the arbitrator. Unless the parties agree to rely on
affidavits, the arbitrator shall set a hearing at which each party shall have up to eight (8) hours
to present witnesses and to cross examine the witnesses of the other party. If there is a hearing,
each party shall provide a statement summarizing the testimony of each witness it may have testify
to the other party and the arbitrator at least fifteen (15) days in advance of the hearing. The
parties shall request that the arbitrator’s award be in writing not to exceed twenty (20) pages in
length and shall include reasoning in support of the award. The resolution of the arbitrator shall
be final and binding on the parties, without right of appeal.

22

 

     9.3 Arbitration Procedure. Except as provided for in Section 9.2, any controversy or
claim relating to, arising out of, or in any way connected to any provision of this Agreement shall
be finally resolved by final and binding arbitration in accordance with this Section by a single
arbitrator who is a former state or federal judge, to be conducted in San Francisco, California if
initiated by Gen-Probe, or in San Diego, California if initiated by PacBio, or in such other
location as mutually agreed by the parties. Unless the parties agree otherwise, the arbitration
shall be conducted by the Judicial Arbitration and Mediation Services, Inc. (“JAMS”), or by
any similar arbitration provider who can provide a former judge to conduct such arbitration if JAMS
is no longer in existence. JAMS may order a change of venue upon a showing of good cause by
respondent. The decision of the arbitrator shall be final, nonappealable and binding upon the
parties, and it may be entered in any court of competent jurisdiction. The arbitrator shall be
bound by all rules relating to the admissibility of evidence, including without limitation, all
relevant privileges and the attorney work product doctrine. Discovery shall be permitted in
accordance with the rules and procedures of the forum state unless otherwise agreed to by the
parties or ordered by the arbitrator on the basis of strict necessity adequately demonstrated by
the party requesting an extension of time. The arbitrator shall have the power to grant equitable
relief where applicable under the law. The arbitrator shall issue a written opinion setting forth
his or her decision and the reasons therefor within thirty (30) days after the arbitration
proceeding is concluded. The obligation of the parties to submit any dispute arising under or
related to this Agreement to arbitration as provided in this Article 9 shall survive the expiration
or earlier termination of this Agreement.

     9.4 Confidentiality. The existence of and any facts or documents related to any
proceedings under Sections 9.1, 9.2, and 9.3 shall be treated as Confidential Information in
accordance with the provisions of Article 6 of this Agreement. Any mediator or arbitrator shall be
bound by an agreement containing confidentiality provisions at least as restrictive as those
contained in Article 6 of this Agreement.

     9.5 Equitable Considerations. Nothing in this Article 9 shall preclude any party from
taking whatever actions are necessary to prevent immediate, irreparable harm to its interests.

     9.6 Damages. The parties each agree to waive any right to receive punitive, indirect,
incidental, special or consequential damages (including, but not limited to, loss of profits,
revenue, or business) relating in any way to this Agreement; provided, however,
that the foregoing waiver shall not apply to any breach of a party’s obligations of confidentiality
under Article 6.

     9.7 Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to the conflicts of law principles
thereof. The parties agree that the State of California has a substantial relationship to this
transaction and each party agrees that the courts of California shall have exclusive jurisdiction
over them and agree to submit to the jurisdiction of such courts. Accordingly, any and all
litigation, including without limitation litigation relating to this Agreement, shall be brought
exclusively in the State of California in the state or federal court having subject matter
jurisdiction.

23

 

ARTICLE 10

MISCELLANEOUS

     10.1 Limitation of Liability.

          10.1.1 LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCES EXCEPT FOR A BREACH OF A
PARTY’S OBLIGATIONS OF CONFIDENTIALITY UNDER ARTICLE 6 SHALL A PARTY BE LIABLE FOR PUNITIVE,
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF
PROFITS, REVENUE, OR BUSINESS) IN ANY WAY RELATED TO THIS AGREEMENT, OR THE TERMINATION OF THIS
AGREEMENT, OR ARISING OUT OF OR ALLEGED TO HAVE ARISEN OUT OF (i) BREACH OF THIS AGREEMENT, (ii)
THE FAILURE BY EITHER PARTY TO DEVELOP ANY PRODUCTS OR PROCESSES IN ACCORDANCE WITH ANY DEVELOPMENT
PLAN, (iii) THE FAILURE BY EITHER PARTY TO DEVOTE THE RESOURCES SPECIFIED IN ANY DEVELOPMENT PLAN,
(iv) THE FAILURE BY EITHER PARTY TO COMPLY WITH THE TERMS OF A DEVELOPMENT PLAN, OR (v) ANY EVENT
RELATED TO THE CONDUCT OF ANY DEVELOPMENT PLAN. This limitation applies regardless of whether such
damages are sought based on breach of contract, negligence, or any other legal theory.

     10.2 Notices. Any consent, notice or report required or permitted to be given or made
under this Agreement by one party to the other shall be in writing, addressed to such other party
at its address indicated below, or to such other address as the addressee shall have last furnished
in writing to the addressor, and shall be effective: (i) if sent by registered or certified mail in
the United States return receipt requested, upon receipt; (ii) if sent by nationally recognized
overnight air courier (such as DHL or Federal Express), two (2) business days after mailing; (iii)
if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in
clauses (i) or (ii) of this Section 10.2, when transmitted and receipt is confirmed by telephone or
e-mail; and (iv) if otherwise actually personally delivered, when delivered.

			
	     If to Gen-Probe:	 	Gen-Probe Incorporated

10210 Genetic Center Drive

San Diego, California 92121

Attention: President and CEO

With a copy to:

Gen-Probe Incorporated

10210 Genetic Center Drive

San Diego, California 92121

Attention: General Counsel

and

24

 

			
	             	 	Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Attention: Andrew L. Bab

			
	      If to PacBio:	 	Pacific Biosciences of California, Inc.

1505 Adams Drive

Menlo Park, CA 94025

Attention: CEO 

With a copy to:

Pacific Biosciences of California, Inc.

1505 Adams Drive

Menlo Park, CA 94025

Attention: General Counsel

     10.3 Force Majeure. In the event that a party is prevented or delayed from fulfilling
or performing any of its obligations under this Agreement (other than an obligation to pay money)
due to the occurrence of causes beyond the reasonable control of such party, including fires,
floods, embargoes, wars, acts of war (whether war is declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays
in acting by any governmental authority or the other party, then such party’s performance shall be
excused, and the time for performance shall be extended, for the period of inability or delay due
to such occurrence; provided, however, that such party shall have used its
Commercially Reasonable Efforts to avoid such inability or delay, and such party shall have given
prompt written notice to the other party of such occurrence.

     10.4 Assignment.

          10.4.1 This Agreement may not be directly or indirectly assigned or otherwise transferred,
nor, except as expressly provided hereunder, may any right or obligations hereunder be assigned or
transferred by a party (whether voluntarily, by operation of law or otherwise) without the consent
of the other party which shall not be unreasonably withheld: provided, however,
that, except as otherwise provided in Section 10.5 below, either party may, without such consent,
assign or transfer this Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its assets related to this Agreement or in the
event of its merger, consolidation, other change in control or similar transaction. Any permitted
assignee or transferee shall assume all obligations of its assignor or transferor under this
Agreement. Any purported assignment or transfer in violation of this Section shall be void.

25

 

          10.4.2 Assignment by a party of its rights and obligations under this Agreement shall not relieve
that party of its obligations under Articles 6 and 7 hereof.

     10.5 Change in Control. Each of the parties shall notify the other party as promptly
as possible after any effected Change of Control. The party receiving the notice of Change of
Control may require the party subject to the Change of Control to provide adequate assurance of
performance of the Agreement.

     10.6 Severability. Each party hereby acknowledges that it does not intend to violate
any public policy, statutory or common laws, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or association of
countries. Should one or more provisions of this Agreement be or become invalid, the parties shall
substitute, by mutual consent, valid provisions for such invalid provisions, which valid provisions
in their economic effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the parties would have entered into this Agreement with such provisions.
In case such provisions cannot be agreed upon, the invalidity of one or several provisions of this
Agreement shall not affect the validity of this Agreement as a whole, unless the invalid provisions
are of such essential importance to this Agreement that it is to be reasonably assumed that the
parties would not have entered into this Agreement without the invalid provisions.

     10.7 Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof from and after the Effective Date. All express
or implied agreements and understandings, either oral or written heretofore made which are directly
related to the subject matter of this Agreement are superceded by this Agreement, except to the
extent of rights and obligations pursuant to the Confidentiality Agreement which had accrued as of
the Effective Date. The parties acknowledge that they are also party to the Stock Purchase
Agreement and that the provisions of that agreement, or differences between that agreement and this
Agreement, shall not influence the interpretation of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed by PacBio and
Gen-Probe.

     10.8 Independent Contractors. It is expressly agreed that Gen-Probe and PacBio shall
be independent contractors and that the relationship between the parties shall not constitute a
partnership, joint venture or agency. Neither Gen-Probe nor PacBio shall have the authority to
make any statements, representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the party to do so.

     10.9 No Solicitation. Each party agrees that for a period beginning on the Effective
Date and ending on the close of business on the date two years following the termination or
expiration of this Agreement, neither party nor any of its Affiliates shall solicit to employ any
officer of the other party or any employee of the other party that is involved in the performance
of this Agreement (which shall include research and development employees and members of the
Steering Committee), without obtaining the prior written consent of the other party (it being
understood that any newspaper or public solicitation not directed specifically to such Person shall
not be deemed to be a solicitation for purposes of this provision); provided that this
Section 10.9 shall not prohibit a party or such party’s Affiliates from discussing employment
opportunities with, or hiring, any officer or employee of the other party involved in the
performance of this Agreement who initiates such discussions with such party or such party’s
Affiliates.

26

 

     10.10 Waiver. The waiver by a party of any right hereunder or the failure to perform or of
a breach by the other party shall not be deemed a waiver of any other right hereunder or of any
other breach or failure by said other party whether of a similar nature or otherwise.

     10.11 Drafting Party; Interpretation. The provisions of this Agreement, and the
documents and instruments referred to in the Agreement, have been prepared, examined, negotiated
and revised by each party and their respective lawyers, and no implication shall be drawn and no
provision shall be construed against any party by virtue of the purported identity of the drafter
of this Agreement, or any portion of this Agreement. The headings contained in this Agreement are
for convenience of reference only, shall not be deemed a part of this Agreement and shall not be
referred to in connection with the construction or interpretation of this Agreement. As used in
this Agreement, the words “include” and “including,” and variations of thereof, shall not be deemed
to be terms of limitation, but rather shall be deemed to be followed by the words “without
limitation.” The parties acknowledge that they have been represented by counsel and have had the
opportunity to conduct due diligence.

     10.12 Third Parties. None of the provisions of this Agreement shall be for the
benefit of or enforceable by any Third Party.

     10.13 Affiliates. The rights and obligations of each party shall apply to its
Affiliates, provided that each party shall be fully responsible for the performance by its
Affiliates of such party’s obligations under this Agreement.

     10.14 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

27

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

	 	 	 	 	 
	 	PACIFIC BIOSCIENCES OF CALIFORNIA, INC.

 	 
	 	By  	/s/ Hugh Martin
 	 
	 	 	Hugh Martin, PhD. 	 
	 	 	Chairman and Chief Executive Officer 	 
	 
	 	GEN-PROBE INCORPORATED

 	 
	 	By  	/s/ Eric Tardif
 	 
	 	 	Eric Tardif 	 
	 	 	Senior Vice President, Corporate Strategy 	 
	 

28

 

EXHIBIT LIST

A  —  Initial Development Plan

B  —  Initial Appointees to Steering Committee

C  —  V2 Proof of Concept Criteria

29

 

EXHIBIT A

INITIAL DEVELOPMENT PLAN

The parties shall undertake the following activities:

	•	 	making available, through the Steering Committee, all data, expertise, technology and
know-how reasonably necessary for each party to perform its respective obligations under the
Collaboration;

	•	 	defining a potential pilot study regarding the evaluation of Gen-Probe’s Front-End Sample
Preparation technologies combined with PacBio’s sequencing Sample Preparation technologies
across multiple sample sources, with the goals of streamlining and optimizing Sample
Preparation methodologies within the context of current market, regulatory and reimbursement
requirements and developing the Products for the Diagnostics market;

	•	 	identifying, through the Steering Committee, regulatory and reimbursement requirements for
an integrated Sample Preparation and Third Generation Sequencing System;

	•	 	identifying the other expected requirements of the Products, including workflow, cost,
performance and other requirements, in each case based in part on customer and key opinion
leader input; and

	•	 	identifying and planning strategies for ensuring clinical adoption of the Products.

30

 

EXHIBIT B

INITIAL APPOINTEES TO STEERING COMMITTEE

Gen-Probe Incorporated

	1.	 	[...***...]

	2.	 	[...***...]

	3.	 	[...***...]

Pacific Biosciences, Inc.

	1.	 	[...***...]

	2.	 	[...***...]

	3.	 	[...***...]

***Confidential Treatment Requested

31

 

EXHIBIT C

V2 PROOF OF CONCEPT CRITERIA

“V2 Proof of Concept” shall mean PacBio’s initial demonstration, currently targeted to be
completed in [...***...], that the V2 System is [...***...], including [...***...] and satisfaction of
the milestones set forth below:

	1.	 	Completion of [...***...], including:

	 	a.	 	Successful completion of [...***...].
	 
	 	b.	 	Completion of [...***...].
	 
	 	c.	 	Completion of the preliminary [...***...], which shall outline the future
development pathway and identify any significant remaining technical challenges and
the proposed resolution of such challenges.
	 
	 	d.	 	Successful completion of tests on [...***...] and [...***...], demonstrating
preliminary feasibility. Such feasibility tests should address at least the
following risk items: [...***...].

	2.	 	Successful completion of the preliminary cost analysis of the [...***...] and its manufacture,
according to the then-current design of the [...***...] and V2 System, demonstrating reasonable
technical and commercial efficacy and feasibility of such product for its intended
application.

	3.	 	Successful completion of the intellectual property portfolio strategy and plan, including
[...***...].

	4.	 	Completion of risk analysis identifying technical and commercial risks and severity, together
with a mitigation plan.

	5.	 	Completion of feasibility for the V2 System as a whole, including top level architecture.

***Confidential Treatment Requested

32exv10w1

	 	 	 	 	 

Exhibit 10.1

ARBITRON INC.

2008 EQUITY COMPENSATION PLAN

(Amended and Restated Effective as of May 25, 2010 (the “Amendment

and Restatement Date”))

     1. Purpose.

     The purpose of this 2008 Equity Compensation Plan (the “Plan”) of Arbitron Inc., a Delaware
corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing
the Company’s ability to attract, retain and motivate persons who are expected to make important
contributions to the Company and by providing such persons with equity ownership opportunities and
performance-based incentives that are intended to better align the interests of such persons with
those of the Company’s stockholders. Except where the context otherwise requires, the term
“Company” includes any of the Company’s present or future parent or subsidiary corporations as
defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations issued thereunder (the “Code”) and any other business venture (including, without
limitation, joint venture or limited liability company) in which the Company has a controlling
interest, as determined by the Board of Directors of the Company (the “Board”).

     2. Eligibility.

     All of the Company’s employees, officers, and directors are eligible to be granted options,
stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), deferred
stock units (“DSUs”), other stock-based awards and cash awards as described in the Section 10(i)
(each, an “Award”) under the Plan. Each person who receives an Award under the Plan is deemed a
“Participant.”

     3. Administration and Delegation.

     (a) Administration by Board of Directors. The Plan will be administered by the Board.
The Board has the authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it considers advisable. The Board may
construe and interpret the terms of the Plan and any Award agreements entered into under the Plan.
The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it considers expedient to carry the Plan into effect and
will be the sole and final judge of such expediency. All decisions by the Board may be made in the
Board’s sole discretion and will be final and binding on all persons having or claiming any
interest in the Plan or in any Award. No director or person acting pursuant to the authority
delegated by the Board shall be liable for any action or determination relating to or under the
Plan made in good faith.

     (b) Appointment of Committees. To the extent permitted by applicable law, the Board
may delegate any or all of its powers under the Plan to one or more committees or subcommittees of
the Board (a “Committee”). All references in the Plan to the “Board” mean the Board or a Committee
of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or
authority under the Plan have been delegated to such Committee or officers. Until and to the extent
the Board determines otherwise, the Compensation and Human Resources Committee of the Board shall
constitute the Committee.

     (c) Delegation to Officers. To the extent permitted by applicable law, the Board may
delegate to one or more officers of the Company the power to grant Awards (subject to any
limitations under the Plan) to employees or officers of the Company or any of its present or future
subsidiary corporations and to

 

 

exercise such other powers under the Plan as the Board may determine, provided that the Board
must fix the terms of the Awards to be granted by such officers (including the exercise price of
such Awards, which may include a formula by which the exercise price will be determined) and the
maximum number of shares subject to Awards that the officers may grant; provided further, however,
that no officer will be authorized to grant Awards to any “executive officer” of the Company (as
defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or
to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act).

     (d) Awards to Non-Employee Directors. Discretionary Awards to non-employee directors
will only be granted and administered by a Committee, all of the members of which are independent
as defined by Section 303A.02 of the New York Stock Exchange Listed Company Manual.

     4. Stock Available for Awards.

     (a) Number of Shares; Share Counting.

     (1) Authorized Number of Shares. Subject to adjustment under Section 9, Awards may
be made under the Plan for up to 4,700,000 shares of common stock, $0.50 par value per share, of
the Company (the “Common Stock”). Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

     (2) Share Counting. For purposes of counting the number of shares available for the
grant of Awards under the Plan and under the sublimits contained in Sections 4(b)(2), 4(b)(3),
4(b)(4), and 7(b)(1) with respect to vesting of Restricted Stock Awards, (i) all shares of Common
Stock covered by independent SARs must be counted against the number of shares available for the
grant of Awards; (ii) if any Award (A) expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part or (B) results in any Common
Stock not being issued, the unused Common Stock covered by such Award will again be available for
the grant of Awards; provided, however, in the case of Incentive Stock Options, the foregoing
will be subject to any limitations under the Code; and provided further, in the case of
independent SARs, that only the number of shares issued in settlement of a stock-settled SAR will
be counted against the shares available under the Plan and against the sublimits listed in the
first clause of this Section and (iii) shares of Common Stock delivered (either by actual
delivery or attestation) to the Company by a Participant to (A) purchase shares of Common Stock
upon the exercise of an Award or (B) satisfy tax withholding obligations (including shares
retained from the Award creating the tax obligation) shall be added back to the number of shares
available for the future grant of Awards.

     (b) Sub-limits. Subject to adjustment under Section 9, the following sub-limits on
the number of shares subject to Awards will apply:

     (1) Section 162(m) Per-Participant Limits. The maximum number of shares of Common
Stock with respect to which Options and SARs may be granted to any Participant under the Plan
will be 700,000 in the aggregate during any period of three consecutive fiscal years of the
Company. For purposes of the foregoing limit, the combination of an Option in tandem with a SAR
(as each is hereafter defined) will be treated as a single Award. The maximum number of shares of
Common Stock with regard to which Awards other than Options and SARs that are intended to qualify
as “performance-based compensation” under Code Section 162(m) may be granted to any Participant
under the Plan will be 500,000 during any period of three consecutive fiscal years of the
Company. The per Participant limits described in this Section 4(b)(1) will be construed and
applied consistently with Section 162(m) of the Code or any successor provision thereto, and the
regulations thereunder (“Section 162(m)”).

     (2) Limit on Incentive Stock Options. The maximum number of shares with respect to
which Incentive Stock Options may be granted is 4,700,000.

2

 

     (c) Substitute Awards. In connection with a merger or consolidation of an entity with
the Company or the acquisition by the Company of property or stock of an entity, the Board may
grant Awards in substitution for any options or other stock or stock-based awards granted by such
entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan.
Substitute Awards whether granted under the Plan or otherwise do not count against the overall
share limit set forth in Section 4(a)(1) or any sublimits contained in the Plan, except as may be
required by reason of Section 422 and related provisions of the Code or by the applicable listing
requirements.

     5. Stock Options.

     (a) General. The Board may grant options to purchase Common Stock (each, an “Option”)
and determine the number of shares of Common Stock to be covered by each Option, the exercise price
of each Option and the conditions and limitations applicable to the exercise of each Option,
including conditions relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option that is not intended to be an Incentive Stock Option (as
hereinafter defined) will be designated a “Non-statutory Stock Option.”

     (b) Incentive Stock Options. An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) will only be
granted to employees of Arbitron Inc., any of Arbitron Inc.’s present or future parent or
subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities
the employees of which are eligible to receive Incentive Stock Options under the Code, and will be
subject to and will be construed consistently with the requirements of Section 422 of the Code. The
Company shall have no liability to a Participant, or any other party, if an Option (or any part
thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for
any action taken by the Board, including without limitation the conversion of an Incentive Stock
Option to a Nonstatutory Stock Option.

     (c) Exercise Price. The Board will establish the exercise price of each Option and
specify the exercise price in the applicable option agreement. Except for substitute Awards
described in Section 4(c), the exercise price will be not less than 100% of the Fair Market Value
(as defined below) on the date the Option is granted; provided that if the Board approves the grant
of an Option with an exercise price to be determined on a future date, the exercise price will be
not less than 100% of the Fair Market Value on such future date.

     “Fair Market Value” of a share of Common Stock for purposes of the Plan will be determined as
follows:

     (1) if the Common Stock trades on a national securities exchange, the closing sale price
(for the primary trading session) on the date of grant; or

     (2) if the Common Stock does not trade on any such exchange, the average of the closing bid
and asked prices as reported by an authorized OTCBB market data vendor as listed on the OTCBB
website (otcbb.com) on the date of grant; or

     (3) if the Common Stock is not publicly traded, the Board will determine the Fair Market
Value for purposes of the Plan using any measure of value it determines to be appropriate
(including, as it considers appropriate, relying on appraisals) in a manner consistent with the
valuation principles under Code Section 409A, except as the Board or Committee may expressly
determine otherwise.

3

 

     For any date that is not a trading day, the Fair Market Value of a share of Common Stock for
such date will be determined by using the closing sale price or average of the bid and asked
prices, as appropriate, for the immediately preceding trading day and with the timing in the
clauses above adjusted accordingly. The Board can substitute a particular time of day or other
measure of “closing sale price” or “bid and asked prices” if appropriate because of exchange or
market procedures or can, in its sole discretion, use weighted averages either on a daily basis or
such longer period as complies with Code Section 409A.

     The Board has sole discretion to determine the Fair Market Value for purposes of this Plan,
and all Awards are conditioned on the participants’ agreement that the Administrator’s
determination is conclusive and binding even though others might make a different determination.

     (d) Duration of Options. Each Option will be exercisable at such times and subject to
such terms and conditions as the Board may specify in the applicable option agreement; provided,
however, that no Option will be granted with a term in excess of 10 years.

     (e) Exercise of Option. Options may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other form of notice (including
electronic notice) approved by the Board, together with payment in full as specified in
Section 5(f) for the number of shares for which the Option is exercised. Shares of Common Stock
subject to the Option will be delivered by the Company as soon as practicable following exercise.

     (f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option
granted under the Plan will be paid for as follows:

     (1) in cash or by check, payable to the order of the Company;

     (2) except as may otherwise be provided in the applicable option agreement, by (i) delivery
of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to
the Company sufficient funds to pay the exercise price and any required tax withholding or
(ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price and any required tax withholding;

     (3) to the extent provided for in the applicable option agreement or approved by the Board,
in its sole discretion, by delivery (either by actual delivery or attestation) of shares of
Common Stock owned by the Participant valued at their Fair Market Value, provided (i) such method
of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly
from the Company, was owned by the Participant for such minimum period of time, if any, as may be
established by the Board in its discretion and (iii) such Common Stock is not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements;

     (4) to the extent permitted by applicable law and provided for in the applicable option
agreement or approved by the Board, in its sole discretion, by payment of such other lawful
consideration as the Board may determine; or

     (5) by any combination of the above permitted forms of payment.

     (g) Limitation on Repricing. Unless such action is approved by the Company’s
stockholders: (1) no outstanding Option granted under the Plan may be amended to provide an
exercise price per share that is lower than the then-current exercise price per share of such
outstanding Option (other than adjustments pursuant to Section 9) and (2) the Board may not cancel
any outstanding option (whether or not granted

4

 

under the Plan) and grant in substitution therefor either new Awards under the Plan covering
the same or a different number of shares of Common Stock and having an exercise price per share
lower than the then-current exercise price per share of the cancelled option or cash.

     (h) No Dividend Equivalents. No option will provide for the payment or accrual of the
right to receive an amount equal to any dividends or other distributions declared and paid on an
equal number of outstanding shares of Common Stock (“Dividend Equivalents”).

     6. Stock Appreciation Rights.

     (a) General. The Board may grant Awards consisting of SARs entitling the holder, upon
exercise, to receive an amount of Common Stock determined in whole or in part by reference to
appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock
over the measurement price established pursuant to Section 6(c). The date as of which such
appreciation is determined will be the exercise date.

     (b) Grants. SARs may be granted in tandem with, or independently of, Options granted
under the Plan.

     (c) Measurement Price. The Board will establish the measurement price of each SAR and
specify it in the applicable SAR agreement. Except for substitute Awards described in Section 4(c),
the measurement price must not be less than 100% of the Fair Market Value on the date the SAR is
granted; provided that if the Board approves the grant of a SAR with an exercise price to be
determined on a future date, the exercise price must be not less than 100% of the Fair Market Value
on such future date.

     (d) Duration of SARs. Each SAR will be exercisable at such times and subject to such
terms and conditions as the Board may specify in the applicable SAR agreement; provided, however,
that no SAR will be granted with a term in excess of 10 years.

     (e) Exercise of SARs. SARs may be exercised by delivery to the Company of a written
notice of exercise signed by the proper person or by any other form of notice (including electronic
notice) approved by the Board, together with any other documents required by the Board.

     (f) Limitation on Repricing. Unless such action is approved by the Company’s
stockholders: (1) no outstanding SAR granted under the Plan may be amended to provide an exercise
price per share that is lower than the then-current exercise price per share of such outstanding
SAR (other than adjustments pursuant to Section 9) and (2) the Board may not cancel any outstanding
SAR (whether or not granted under the Plan) and grant in substitution therefor either new Awards
under the Plan covering the same or a different number of shares of Common Stock and having an
exercise price per share lower than the then-current exercise price per share of the cancelled SAR
or cash.

     (g) Dividend Equivalents. No SAR will provide for the payment or accrual of Dividend
Equivalents.

     7. Restricted Stock; Restricted Stock Units.

     (a) General. The Board may grant Awards entitling recipients to acquire shares of
Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price (or to require forfeiture of such
shares if issued at no cost) from the recipient if conditions specified by the Board in the
applicable Award are not satisfied before the end of the applicable restriction period or periods
established by the Board for such Award. Instead of granting Awards for Restricted Stock, the Board
may grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered
at the time such Award vests (“Restricted Stock Units”)

5

 

or at a future date (“Deferred Stock Units”), (Restricted Stock, Restricted Stock Units, and
Deferred Stock Units are each referred to herein as a “Restricted Stock Award”).

     (b) Limitations on Vesting. Restricted Stock Awards that vest solely based on the
passage of time will be zero percent vested before the first anniversary of the date of grant, no
more than one-third vested before the second anniversary of the date of grant, and no more than
two-thirds vested before the third anniversary of the date of grant. Restricted Stock Awards that
do not vest solely based on the passage of time will not vest before the first anniversary of the
date of grant (or, in the case of Awards to non-employee directors, if earlier, the date of the
first annual meeting held after the date of grant). Notwithstanding any other provision of this
Plan (other than Section 10(i), if applicable), the Board may, in its discretion, either at the
time a Restricted Stock Award is made or at any time thereafter, waive its right to repurchase
shares of Common Stock (or waive the forfeiture thereof) or remove or modify any part or all of the
restrictions applicable to the Restricted Stock Award, provided that the Board may only exercise
such rights in the event of death, disability or retirement of the Participant; or a merger,
consolidation, sale, reorganization, recapitalization, or change in control of the Company. The
limitations of this Section 7(b) will not apply to (y) Performance Awards granted pursuant to
Section 10(i) or (z) Restricted Stock Awards granted, in the aggregate, for up to 10% of the
maximum number of authorized shares set forth in Section 4(a)(1).

     (c) Terms and Conditions for All Restricted Stock Awards. The Board will determine
the terms and conditions of a Restricted Stock Award, including the conditions for vesting and
repurchase (or forfeiture) and the issue price, if any.

     (d) Additional Provisions Relating to Restricted Stock.

     (1) Dividends. Participants holding shares of Restricted Stock will be entitled to
all ordinary cash dividends paid with respect to such shares, unless otherwise provided by the
Board. Unless otherwise provided by the Board, if any dividends or
distributions are paid in shares, or consist of a dividend or distribution to holders of Common Stock other than an
ordinary cash dividend, the shares, cash or other property will be subject to the same
restrictions on transferability and forfeitability as the shares of Restricted Stock with respect
to which they were paid. Each dividend payment will be made no later than the end of the calendar
year in which the dividends are paid to shareholders of that class of stock or, if later, the
15th day of the third month following the date the dividends are paid to shareholders of that
class of stock. Notwithstanding the foregoing, dividends payable with respect to shares of
Restricted Stock constituting Performance Awards shall only be delivered when the restrictions on
the shares to which the dividends relate lapse.

     (2) Stock Certificates. The Company may require that any stock certificates issued
in respect of shares of Restricted Stock must be deposited in escrow by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the expiration of
the applicable restriction periods, the Company (or such designee) will deliver the certificates
no longer subject to such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts
due or exercise rights of the Participant in the event of the Participant’s death (the
“Designated Beneficiary”). In the absence of an effective designation by a Participant,
“Designated Beneficiary” means the Participant’s estate.

     (e) Additional Provisions Relating to Restricted Stock Units and Deferred Stock Units.

     (1) Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e.,
settlement) with respect to each Restricted Stock Unit, the Participant will be entitled to
receive from the Company one share of Common Stock or an amount of cash equal to the Fair Market
Value of one share of Common

6

 

Stock, as determined by the Board and provided in the applicable Award agreement. The Board
may, in its discretion, provide that settlement of Restricted Stock Units will be deferred, on a
mandatory basis or at the election of the Participant and become a Deferred Stock Unit.

     (2) Voting Rights. A Participant will have no voting rights with respect to any
Restricted Stock Units or Deferred Stock Units.

     (3) Dividend Equivalents. To the extent provided by the Board, in its sole
discretion, a grant of Restricted Stock Units or Deferred Stock Units may provide Participants
with Dividend Equivalents. Dividend Equivalents may be paid currently or credited to an account
for the Participants, may be settled in cash and/or shares of Common Stock and may be subject to
the same restrictions on transfer and forfeitability as the Restricted Stock Units or Deferred
Stock Units with respect to which paid, as determined by the Board in its sole discretion,
subject in each case to such terms and conditions as the Board establishes, in each case to be
set forth in the applicable Award agreement. Notwithstanding the foregoing, Dividend Equivalents
(if any) associated with Performance Awards shall be accumulated and paid only as and to the
extent the related shares underlying the Performance Awards are issued.

     8. Other Stock-Based Awards.

     (a) General. Other Awards of shares of Common Stock, and other Awards that are valued
in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other
property, may be granted hereunder to Participants (“Other Stock-Based Awards”), including without
limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the
future. Such Other Stock-Based Awards will also be available as a form of payment in the settlement
of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant
is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as
the Board determines.

     (b) Terms and Conditions. Subject to the provisions of the Plan, the Board will
determine the terms and conditions of each Other Stock-Based Award, including any purchase price
applicable thereto; provided however, that Other Stock-Based Awards shall be subject to the
limitations of Section 7(b) and the requirement in Section 7(a)(3) regarding accumulation of
dividend equivalents with respect to Performance Awards.

     9. Adjustments for Changes in Common Stock and Certain Other Events.

     (a) Changes in Capitalization. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or
other similar change in capitalization or event, or any dividend or distribution to holders of
Common Stock other than an ordinary cash dividend, (i) the number and class of securities available
under this Plan, (ii) the sub-limits and share counting rules set forth in Sections 4(a) and 4(b)
and 7(b)(1) with respect to vesting of Restricted Stock Awards, (iii) the number and class of
securities and exercise price per share of each outstanding Option, (iv) the share- and per-share
provisions and the exercise price of each SAR, (v) the number of shares subject to and the
repurchase price per share subject to each outstanding Restricted Stock Award and (vi) the share-
and per-share-related provisions and the purchase price, if any, of each outstanding Other
Stock-Based Award, must be equitably adjusted by the Company (or substituted Awards may be made, if
applicable) in the manner determined by the Board. Without limiting the generality of the
foregoing, if the Company effects a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to an outstanding Option are adjusted as of the
date of the distribution of the dividend (rather than as of the record date for such dividend),
then an optionee who exercises an Option between the record date and the distribution date for such
stock dividend will be entitled to receive, on the distribution date, the stock dividend with
respect to the shares of Common Stock acquired upon such

7

 

Option exercise, notwithstanding the fact that such shares were not outstanding as of the
close of business on the record date for such stock dividend.

     (b) Reorganization Events.

     (1) Definition. A “Reorganization Event” means: (a) any merger or consolidation of
the Company with or into another entity as a result of which all of the Common Stock of the
Company is converted into or exchanged for the right to receive cash, securities or other
property or is cancelled, (b) any exchange of all of the Common Stock of the Company for cash,
securities or other property pursuant to a share exchange transaction or (c) any liquidation or
dissolution of the Company.

     (2) Consequences of a Reorganization Event on Awards Other than Restricted Stock
Awards. In connection with a Reorganization Event, the Board may take any one or more of the
following actions as to all or any (or any portion of) outstanding Awards other than Restricted
Stock Awards on such terms as the Board determines: (i) provide that Awards must be assumed, or
substantially equivalent Awards must be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof), (ii) upon written notice to a Participant, provide that the
Participant’s unexercised Awards will terminate immediately before the consummation of such
Reorganization Event unless exercised by the Participant within a specified period following the
date of such notice, (iii) provide that outstanding Awards will become exercisable, realizable,
or deliverable, or restrictions applicable to an Award will lapse, in whole or in part before or
upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of
which holders of Common Stock will receive upon consummation thereof a cash payment for each
share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a
cash payment to a Participant equal to the excess, if any, of (A) the Acquisition Price times the
number of shares of Common Stock subject to the Participant’s Awards (to the extent the exercise
price does not exceed the Acquisition Price) over (B) the aggregate exercise price of all such
outstanding Awards and any applicable tax withholdings, in exchange for the termination of such
Awards, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards
will convert into the right to receive liquidation proceeds (if applicable, net of the exercise
price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In
taking any of the actions permitted under this Section 9(b), the Board will not be obligated by
the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type,
identically.

     For purposes of clause (i) above, an Option will be considered assumed if, following
consummation of the Reorganization Event, the Option confers the right to purchase, for each
share of Common Stock subject to the Option immediately before the consummation of the
Reorganization Event, the consideration (whether cash, securities or other property) received as
a result of the Reorganization Event by holders of Common Stock for each share of Common Stock
held immediately before the consummation of the Reorganization Event (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if the consideration received as a
result of the Reorganization Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or
succeeding corporation, provide for the consideration to be received upon the exercise of Options
to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in value (as determined by the Board) to the per share consideration received
by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

     (3) Consequences of a Reorganization Event on Restricted Stock Awards. Upon the
occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the
repurchase and other rights of the Company under each outstanding Restricted Stock Award will
inure to the benefit of the

8

 

Company’s successor and will, unless the Board determines otherwise, apply to the cash,
securities or other property which the Common Stock was converted into or exchanged for pursuant
to such Reorganization Event in the same manner and to the same extent as they applied to the
Common Stock subject to such Restricted Stock Award. Upon the occurrence of a Reorganization
Event involving the liquidation or dissolution of the Company, except to the extent specifically
provided to the contrary in the instrument evidencing any Restricted Stock Award or any other
agreement between a Participant and the Company, all restrictions and conditions on all
Restricted Stock Awards then outstanding will automatically be deemed terminated or satisfied.

     (c) Change in Control Events.

     (1) Definition. Except to the extent defined differently in an Award, a “Change in
Control Event” means:

     (i) the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a
“Person”) of beneficial ownership of any capital stock of the Company if, after such
acquisition, such Person beneficially owns (within the meaning of Rule 13d 3 promulgated under
the Exchange Act) 25% or more of either (x) the then-outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes
of this subsection (a), the following acquisitions will not constitute a Change in Control
Event: (1) any acquisition directly from the Company or (2) any acquisition by any corporation
pursuant to a Business Combination (as defined below) which complies with clauses (x) and
(y) of subsection (c) of this definition; or

     (ii) such time as the Continuing Directors (as defined below) do not constitute at least a
majority of the Board (or, if applicable, the Board of Directors of a successor corporation to
the Company), where the term “Continuing Director” means at any date a member of the Board
(x) who was a member of the Board on the date of the initial adoption of this Plan by the Board
or (y) who was nominated or elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election; provided, however, that
this clause (y) excludes any individual whose initial assumption of office occurred as a result
of an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents, by or on behalf of
a person other than the Board; or

     (iii) the consummation of a merger, consolidation, reorganization, recapitalization or
share exchange involving the Company or a sale or other disposition of all or substantially all
of the assets of the Company (a “Business Combination”), unless, immediately following such
Business Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately before
such Business Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors, respectively, of the
resulting or acquiring corporation in such Business Combination (which includes, without
limitation, a corporation which as a result of such transaction owns the Company or
substantially all of the Company’s assets either directly or through one or more subsidiaries)
(such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”)
in substantially the same proportions as their ownership of the Outstanding Company

9

 

Common Stock and Outstanding Company Voting Securities, respectively, immediately before
such Business Combination and (y) no Person (excluding any employee benefit plan (or related
trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially
owns, directly or indirectly, 25% or more of the then-outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding securities of
such corporation entitled to vote generally in the election of directors (except to the extent
that such ownership existed before the Business Combination); or

     (iv) the liquidation or dissolution of the Company.

     (2) Effect on Awards. Notwithstanding the provisions of Section 9(b), except as
provided otherwise in an individual agreement governing an Award, in the event of a Change in
Control Event:

     (i) for the portion of each Award that continues in effect or is assumed or for which
substantially equivalent awards are substituted (as provided in Section 9(b)(2)), then Award or
the substituted Award shall become fully vested, exercisable and payable and be released from
any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market
Value) for all of the shares (or other consideration) at the time represented by such
continuing, assumed or substituted portion of the Award, immediately upon termination of the
Participant’s employment or other service relationship if such employment or service
relationship is terminated by the successor company or the Company without “cause” or
voluntarily by the Participant with “good reason” (in each case as defined in the applicable
agreement governing the Award) within twenty-four (24) months after the Change in Control
Event; and

     (ii) for the portion of each Award that does not continue in effect and is neither assumed
nor substituted, such portion of the Award shall automatically become fully vested and
exercisable and be released from any repurchase or forfeiture rights (other than repurchase
rights exercisable at Fair Market Value) for all of the shares (or other consideration) at the
time represented by such portion of the Award, immediately prior to the effective date of the
Change in Control Event, provided that the Participant’s employment or service relationship has
not terminated prior to such date.

     10. General Provisions Applicable to Awards.

     (a) Transferability of Awards. Awards cannot be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation
of law, except by will or the laws of descent and distribution or, other than in the case of an
Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the life of
the Participant, will be exercisable only by the Participant; provided, however, that the Board may
permit or provide in an Award for the gratuitous transfer of the Award by the Participant to or for
the benefit of any immediate family member, family trust or other entity established for the
benefit of the Participant and/or an immediate family member thereof if, with respect to such
proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the
sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended;
provided, further, that the Company will not be required to recognize any such transfer until such
time as the Participant and such permitted transferee must, as a condition to such transfer,
deliver to the Company a written instrument in form and substance satisfactory to the Company
confirming that such transferee will be bound by all of the terms and conditions of the Award.
References to a Participant, to the extent relevant in the context, include references to
authorized transferees.

     (b) Documentation. Each Award will be evidenced in such form (written, electronic or
otherwise) as the Board determines. Each Award may contain terms and conditions in addition to
those set forth in the Plan.

10

 

     (c) Board Discretion. Except as otherwise provided by the Plan, each Award may be
made alone or in addition or in relation to any other Award. The terms of each Award need not be
identical, and the Board need not treat Participants uniformly.

     (d) Termination of Status. The Board may determine the effect on an Award of the
disability, death, termination or other cessation of employment, authorized leave of absence or
other change in the employment or other status of a Participant and the extent to which, and the
period during which, the Participant, or the Participant’s legal representative, conservator,
guardian or Designated Beneficiary, may exercise rights under the Award.

     (e) Withholding. The Participant must satisfy all applicable federal, state, and local or
other income and employment tax withholding obligations before the Company will deliver stock
certificates or otherwise recognize ownership of Common Stock under an Award. The Company may
decide to satisfy the withholding obligations through additional withholding on salary or wages. If
the Company elects not to or cannot withhold from other compensation, the Participant must pay the
Company the full amount, if any, required for withholding or have a broker tender to the Company
cash equal to the withholding obligations. Payment of withholding obligations is due before the
Company will issue any shares on exercise or release from forfeiture of an Award or, if the Company
so requires, at the same time as is payment of the exercise price unless the Company determines
otherwise. If provided for in an Award or approved by the Board in its sole discretion, a
Participant may satisfy such tax obligations in whole or in part by delivery (either by actual
delivery or attestation) of shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value; provided, however, except as
otherwise provided by the Board, that the total tax withholding where stock is being used to
satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations
(based on minimum statutory withholding rates for federal and state tax purposes, including payroll
taxes, that are applicable to such supplemental taxable income). Shares used to satisfy tax
withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or
other similar requirements.

     (f) Amendment of Award. Except as otherwise provided in Section 5(g) with respect to
repricings, Section 7(b)(1) with respect to vesting of Restricted Stock Awards, Section 10(i) with
respect to Performance Awards or Section 11(d) with respect to actions requiring shareholder
approval, the Board may amend, modify or terminate any outstanding Award, including but not limited
to, substituting therefor another Award of the same or a different type, changing the date of
exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option.
The Participant’s consent to such action will be required unless (i) the Board determines that the
action, taking into account any related action, would not materially and adversely affect the
Participant’s rights under the Plan or (ii) the change is permitted under Section 9 hereof.

     (g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any
shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously
delivered under the Plan until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations.

     (h) Acceleration. Except as otherwise provided in Section 10(i) with respect to
Performance Awards or Section 11(d) with respect to actions requiring shareholder approval, and
subject to Section 7(b), the

11

 

Board may at any time provide that any Award will become immediately exercisable in full or in
part, free of some or all restrictions or conditions, or otherwise realizable in full or in part,
as the case may be.

     (i) Performance Awards.

     (1) Grants. Restricted Stock Awards, Other Stock-Based Awards and Cash Awards under
the Plan may be made subject to the achievement of performance goals pursuant to this
Section 10(i) (“Performance Awards”), subject to the limit in Section 4(b)(1) on shares covered
by such grants. Subject to Section 10(i)(4), no Performance Awards will vest before the first
anniversary of the date of grant. Performance Awards can also provide for cash payments of up to
$5,000,000 per fiscal year per individual.

     (2) Committee. Grants of Performance Awards to any Covered Employee intended to
qualify as “performance-based compensation” under Section 162(m) (“Performance-Based
Compensation”) must be made only by a Committee (or subcommittee of a Committee) comprised solely
of two or more directors eligible to serve on a committee making Awards qualifying as
“performance-based compensation” under Section 162(m). In the case of such Awards granted to
Covered Employees, references to the Board or to a Committee will be treated as referring to such
Committee or subcommittee. “Covered Employee” means any person who is, or whom the Committee, in
its discretion, determines may be, a “covered employee” under Section 162(m)(3) of the Code.

     (3) Performance Measures. For any Award that is intended to qualify as
Performance-Based Compensation, the Committee must specify that the degree of granting, vesting
and/or payout must be subject to the achievement of one or more objective performance measures
established by the Committee, which will be based on the relative or absolute attainment of
specified levels of one or any combination of the following: (i) change in share price;
(ii) operating earnings, operating profit margins, earnings before interest, taxes, depreciation,
or amortization, net earnings, earnings per share (basic or diluted) or other measure of
earnings; (iii) total stockholder return; (iv) operating margin; (v) gross margin; (vi) balance
sheet performance, including debt, long or short term, inventory, accounts payable or receivable,
working capital, or shareholders’ equity; (vii) return measures, including return on invested
capital, sales, assets, investment or equity; (viii) days’ sales outstanding; (ix) operating
income; (x) net operating income; (xi) pre-tax profit; (xii) cash flow, including cash flow from
operations, investing, or financing activities, before or after dividends, investments, or
capital expenditures; (xiii) revenue; (xiv) expenses, including cost of goods sold, operating
expenses, marketing and administrative expense, research and development, restructuring or other
special or unusual items, interest, tax expense, or other measures of savings; (xv) earnings
before interest, taxes and depreciation; (xvi) economic value created or added; (xvii) market
share; (xviii) sales or net sales; (xix) sales or net sales of particular products; (xx) gross
profits; (xxi) net income; (xxii) inventory turns; (xxiii) revenue per employee; and
(xxiv) implementation or completion of critical projects involving acquisitions, divestitures,
process improvements, product or production quality, attainment of other strategic objectives
relating to market penetration, geographic expansion, product development, regulatory or quality
performance, innovation or research goals. Such goals may reflect absolute entity or business
unit performance or a relative comparison to the performance of a peer group of entities or other
external measure of the selected performance criteria and may be absolute in their terms or
measured against or in relationship to other companies comparably, similarly or otherwise
situated. The Committee may specify that such performance measures will be adjusted to exclude
any one or more of (i) extraordinary items, (ii) gains or losses on the dispositions of
discontinued operations, (iii) the cumulative effects of changes in accounting principles,
(iv) the writedown of any asset, and (v) charges for restructuring and rationalization programs.
Such performance measures: (i) may vary by Participant and may be different for different Awards;
(ii) may be particular to a Participant or the department, branch, line of business, subsidiary
or other unit in which the Participant works and may cover such period as may be specified by the
Committee; and (iii) will be set by the Committee within the time

12

 

period prescribed by, and will otherwise comply with the requirements of, Section 162(m).
Awards that are not intended to qualify as Performance-Based Compensation may be based on these
or such other performance measures as the Board may determine.

     (4) Adjustments. Notwithstanding any provision of the Plan, with respect to any
Performance Award that is intended to qualify as Performance-Based Compensation, the Committee
may adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such
Award, and the Committee may not waive the achievement of the applicable performance measures
except in the case of the death or disability of the Participant or a change in control of the
Company.

     (5) Other. The Committee will have the power to impose such other restrictions on
Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all
requirements for Performance-Based Compensation.

     11. Miscellaneous

     (a) No Right To Employment or Other Status. No person will have any claim or right to
be granted an Award, and the grant of an Award must not be construed as giving a Participant the
right to continued employment or any other relationship with the Company. The Company expressly
reserves the right at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

     (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary will have any rights as a stockholder with respect to any
shares of Common Stock to be distributed with respect to an Award until becoming the record holder
of such shares.

     (c) Effective Date and Term of Plan. The Plan as restated will become effective on
the date the Plan is approved by the Company’s stockholders (the “Effective Date”). No Awards will
be granted under the Plan after the expiration of 10 years from the Amendment and Restatement Date,
but Awards previously granted may extend beyond that date.

     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any
portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award
granted to a Participant that is intended to comply with Section 162(m) after the date of such
amendment will become exercisable, realizable or vested, as applicable to such Award, unless and
until the Company’s stockholders approve such amendment if required by Section 162(m) (including
the vote required under Section 162(m)); and (ii) no amendment that would require stockholder
approval under the rules of the New York Stock Exchange (“NYSE”) may be made effective unless and
until the Company’s stockholders approve such amendment. In addition, if at any time the approval
of the Company’s stockholders is required as to any other modification or amendment under
Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the
Board may not effect such modification or amendment without such approval. Unless otherwise
specified in the amendment, any amendment to the Plan adopted in accordance with this Section 11(d)
will apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time
the amendment is adopted, provided the Board determines that such amendment does not materially and
adversely affect the rights of Participants under the Plan.

     (e) Provisions for Foreign Participants. The Board may modify Awards granted to
Participants who are foreign nationals or employed outside the United States or establish subplans
or procedures under the Plan to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit
or other matters.

13

 

     (f) Compliance with Code Section 409A. The Company will have no liability to a
Participant, or any other party, if an Award that is intended to be exempt from, or compliant with,
Section 409A is not so exempt or compliant or for any action taken by the Board.

     (g) Governing Law. The provisions of the Plan and all Awards made hereunder will be
governed by and interpreted in accordance with the laws of the State of Delaware, excluding
choice-of-law principles of the law of such state that would require the application of the laws of
a jurisdiction other than such state.

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