Document:

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                                                                    EXHIBIT 10.6

  CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
             EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                         TRANSITIONAL SERVICES AGREEMENT

                  TRANSITIONAL SERVICES AGREEMENT ("Agreement"), dated as of the
31st day of July, 2001 ("Effective Date"), by and among BECTON, DICKINSON AND
COMPANY, a New Jersey corporation ("BD"), TRIPATH IMAGING, INC., a Delaware
corporation ("TriPath"), and TriPath Oncology, Inc., a Delaware corporation
("Newco").

                                   WITNESSETH:

                  WHEREAS, pursuant to the Development and License Agreement
(the "Development Agreement"), dated as of the date hereof, by and among BD,
TriPath and Newco, Newco has agreed, among other things, to perform certain
research and development obligations of BD under that certain Collaboration and
License Agreement, dated as of February 21, 1999, as amended, by and between BD
and Millenium Pharmaceuticals, Inc., as successor to Millennium Predictive
Medicine, Inc. (the "R&D Activities"); and

                  WHEREAS, in order to enable Newco to perform the R&D
Activities, Newco wishes to use certain facilities of BD at its building located
at 54 Loveton Circle, Sparks, Maryland (the "Building"), and has requested that
BD provide certain other services, for the transitional period described herein;
and

                  WHEREAS, BD is willing to provide access to such facilities
and provide such services during said period; and

                  WHEREAS, it is a condition to the effectiveness of the
Development Agreement that the parties hereto execute and deliver this
Agreement;

                  NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto hereby agree as follows:

          1.  Use of Facilities.

         1.1      Facilities. (a) BD hereby represents that it owns the Building
and has the corporate power to give Newco the right to occupy and use the
Facilities and Common Areas (as such terms are defined herein) as described
herein. BD further represents that the Facilities meet all FDA GLP and GMP
standards and are appropriately equipped and otherwise in a condition reasonably
adequate to enable Newco to perform the R&D Activities as currently conducted by
the BD Gene business of BD ("BD Gene"). During the Term (as defined herein), BD
shall provide Newco with (i) the use of the laboratory, office and cubicle space
(the "Facilities") described in Exhibit A attached hereto and the FF&E (as
defined herein), and including, without limitation, access (to the extent
permitted by BD's agreements with third parties) to all books, journals, market
reports, software and other documents and information
<PAGE>   2

purchased for or used by BD's molecular oncology effort, access to all
laboratory notebooks currently assigned to BD Gene or otherwise attributable to
BD's oncology effort, access to all electronic files of all current and (to the
extent existing on the date hereof) former BD Gene employees, access to and use
of the BD PACE and Quality Systems; and (ii) those support services (the
"Services") described in Exhibit B attached hereto. Newco shall use the
Facilities for the sole purpose of performing its R&D Activities under the
Development Agreement. BD shall, [*****] FDA GLP and GMP standards at all times
during the term of this Agreement. As used herein, "FF&E" shall mean [*****].

         (b) BD hereby represents and warrants that it owns and has good title
to the FF&E, free and clear of all claims, liens, security interests or other
encumbrances (except for such encumbrances which would not, individually or in
the aggregate, adversely impact Newco's use of the assets). BD hereby agrees
during the Term of this Agreement: (i) to maintain good title to the FF&E and
not to sell or otherwise dispose of such FF&E (except as part of a capital
replacement), and (ii) not to create, incur or permit any claims, liens,
security interests or other encumbrances whatsoever with respect to such assets
(except for such encumbrances which would not, individually or in the aggregate,
adversely impact Newco's use of the assets).

         (c) BD and Newco acknowledge that the Facilities occupy only a small
portion of the Building and that BD occupies and uses the remaining portions of
the Building for its own laboratory, research and other purposes. Accordingly,
BD agrees that it will use the Building, and Newco agrees that it will use the
Facilities and Common Areas (as defined below), in such manner as to prevent
and/or minimize any interference to the laboratory, research and other
activities of the other party to the extent reasonably practicable and will take
reasonable steps to prevent any unauthorized access to the Facilities or other
parts of the Building, as applicable, by its Affiliates (as defined herein) in
light of the reasonable business security and confidentiality needs of the other
party. BD shall have the right from time to time, exercisable upon prior written
notice reasonable under the circumstances and at BD's expense, to relocate Newco
to other facilities located in the Building, provided such substitute facilities
are reasonably similar in size, quality and utility at the time of the move.

         (d) Newco shall give BD reasonable advance notice of any invitee or
visitor (other than a Newco or TriPath employee) of Newco to the Building. BD
reserves the right to deny access to the Building to any of Newco's invitees or
visitors if BD, in its discretion, determines that denial of access is needed to
protect BD's business security and confidentiality needs. Newco shall maintain
written records that indicate the name, company, date, time and purpose of visit
for all invitees and visitors to the Facilities. Such visitor records shall be
open to inspection by BD during all regular business hours and Newco shall, upon
demand therefor by BD from time to time, provide BD with copies of all such
records.

         1.2.     Common Areas. During the Term, Newco shall also have the right
to use, in common with BD and others entitled to use them, the Common Areas. For
purposes of this Agreement, "Common Areas" shall mean the cafeteria, library,
meeting rooms, videoconference rooms, rest rooms, hallways, cold room, dark
room, radiation lab, autoclave, glassware room, lobby and stairwells, along with
Building entrances, exits, sidewalks, and the parking area located immediately
adjacent to the Building.

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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

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         1.3      Rules and Procedures; Access by BD. (a) Newco agrees to fully
comply, and to cause all Newco Affiliates to fully comply, with all current
policies and procedures of which BD has given Newco written notice, and such
other policies and procedures as BD may from time to time establish and provide
Newco with written notice thereof, relating to the Building, Facilities and
Common Areas. BD shall have the right, exercisable upon prior notice reasonable
under the circumstances (except in emergencies, in which case no notice shall be
required), to temporarily bar Newco's access and that of its Affiliates (as
herein defined) to the Building, Facilities and/or Common Areas for health and
safety reasons or under emergency conditions, and to otherwise operate, maintain
and perform such other acts in and to the Building, Facilities and Common Areas
in such a manner as BD shall reasonably determine from time to time.

         (b) BD and its agents and representatives shall have the right to enter
into and upon any part of the Facilities at all reasonable hours upon reasonable
prior notice to Newco (and in emergencies, or when required by government
regulatory inspectors, at all times without the requirement for any prior
notice) to inspect the same and to make repairs to the Facilities, and Newco
shall not be entitled to any reduction in any amount due hereunder by reason
thereof. BD agrees that in exercising its access right hereunder, BD shall be
subject to and shall comply with all reasonable requests of Newco with respect
to Newco's business safety, security and confidentiality needs; and except in
emergencies, any such entry shall be accompanied by a representative of Newco;
in addition, any such entry shall be exercised in such a manner so as to
minimize any disruption to Newco's business to the extent reasonably
practicable, and BD shall restore any damage to the Facilities occasioned by
such entry.

         1.4.     Alterations and Repairs. Newco shall not alter, make any
improvements to or add any fixtures at the Facilities or any other part of the
Building without the prior written consent of BD. Newco shall, at its expense,
service, keep, and maintain all the FF&E in good order, repair and condition,
ordinary wear and tear excepted. Notwithstanding the foregoing, in no event
shall Newco have any obligation to make any capital repairs to, or replacements
of, the FF&E to the extent due to ordinary wear and tear. Newco covenants and
agrees to promptly reimburse BD for the cost to repair any damage (other than
ordinary wear and tear) to the Facilities, Common Areas or any other area of the
Building caused by Newco or Newco's Affiliates; provided that Newco shall only
be obligated to reimburse for such repairs as are required to restore the
Facilities, Common Areas and any other area of the Building to as good a
condition as existed prior to such damage.

         1.5.     Casualty Damage; Condemnation. If during the Term, the
Facilities, or any other portions of the Building or the Common Areas, are
damaged or destroyed or lawfully taken or condemned for any public or
quasi-public use or purpose, thereby rendering the Facilities unusable or
inaccessible or otherwise materially adversely effecting Newco's ability to
perform its obligations under the Development Agreement, then BD shall use
reasonable efforts to relocate Newco to other comparable facilities in the
Building to the extent possible. If relocation of Newco to other facilities in
the Building is not reasonably possible, the parties agree to cooperate to find
a mutually acceptable resolution. In the event the parties are unable to
mutually agree on a resolution, Newco shall have the right to terminate this
Agreement upon written notice to BD.

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         1.6      Hazardous Substances. Except for necessary quantities of
customary cleaning supplies used in cleaning and maintaining the Facilities, and
for quantities used by Newco and related to the R&D Activities (collectively,
"Permitted Quantities"), which Permitted Quantities shall be properly stored and
used in strict accordance with all applicable Hazardous Substances laws and
regulations and BD's then existing safety and environmental policies and
procedures, Newco shall not generate, use, store, possess, transport or dispose
of any Hazardous Substances in or about the Building without the express prior
written consent of BD and compliance in a timely manner (at Newco's sole cost
and expense) with all applicable laws and BD's then existing safety and
environmental policies and procedures. Notwithstanding the foregoing, to the
extent that Newco is involved in any activity involving Hazardous Substances
which is merely a continuation of an activity currently conducted by BD, Newco
shall not be required to obtain any consent in connection with such activity,
and shall not be responsible for any cost or expense necessary to bring the
Building into compliance with applicable laws or BD's safety and environmental
policies and procedures with respect to such activity to the extent BD is not in
compliance therewith on the date hereof. The term "Hazardous Substance" as used
in this Agreement shall mean pollutant, contaminant, waste or chemical or any
toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substance, waste or material, or any substance, waste or material having any
constituent elements displaying any of the foregoing characteristics, including,
without limitation, petroleum, its derivatives, by-products and other
hydrocarbons, and any substance, waste or material regulated under any
environmental law.

                  (b)      Duty to Inform BD. If Newco knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same, has been brought into or about the Building, other than as
permitted hereunder or as previously consented to by BD, Newco shall immediately
give written notice of such fact to BD.

                  (c)      Indemnification by Newco and TriPath. Newco and
TriPath, jointly and severally, shall indemnify, protect, defend and hold BD and
its officers, directors, agents and employees, harmless from and against any and
all damages, liabilities, judgments, costs, claims, liens, expenses, penalties,
permits and reasonable attorney's fees arising out of or involving any Hazardous
Substance brought into the Building by or for Newco or under Newco's control
after the date hereof. Newco's obligations under this Section 1.6 (c) shall
include, but not be limited to, the effects of any contamination or injury to
any person, property or the environment created or suffered by Newco, and the
cost of investigation (including, without limitation, reasonable consultant's
and attorney's fees and testing), removal, remediation, restoration and/or
abatement thereof, or of any contamination therein involved, and shall survive
the expiration or earlier termination of this Agreement.

                  (d)      Indemnification by BD. BD hereby represents that the
Facilities are free of contamination by any Hazardous Substances. BD shall
indemnify, protect, defend and hold Newco and TriPath and its officers,
directors, agents and employees, harmless from and against any and all damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
reasonable attorney's fees arising out of or involving any Hazardous Substance
brought into the Building by or for BD or under BD's control. BD's obligations
under this Section 1.6 (d) shall include, but not be limited to, the effects of
any contamination or injury to any person, property or the environment created
or suffered by BD, and the cost of investigation (including, without limitation,
reasonable consultant's and attorney's fees and testing), removal, remediation,

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restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Agreement.

         1.7.     Signs. Newco shall not affix, attach or otherwise place any
sign on the roof, the exterior or interior portions of any windows, walls,
corridors or any other area of the Building without BD's prior approval.

         2.  BD Gene Employees.

         2.1.     Assignment of Employees. During the Term, BD shall assign to
the Development Program, for the benefit of Newco, those employees of BD Gene
set forth on Exhibit C of the Development Agreement [*****] (collectively, "BD
Gene Employees"). Such persons shall, at all times during the Term, be employees
of BD for all purposes. All responsibilities and duties of the BD Gene Employees
during the Term shall be assigned by BD, after consultation with Newco.
Ownership of any inventions made by a BD Gene Employee in the course of the
Development Program shall be determined as set forth in Section 5.1 of the
Development Agreement. BD shall obtain Newco's consent prior to terminating any
BD Gene Employee, which consent shall not be unreasonably withheld, provided,
however, that nothing in this Section 2.1 shall prevent BD from terminating any
BD Gene Employee for cause (which for purposes of this Agreement shall mean
misappropriation of any funds or property of BD or its employees or other acts
of fraud or dishonesty, criminal conduct (other than minor traffic violations)
or violation of any policy or standard of conduct of BD which has an adverse
effect on BD's business). In the event the employment of any [*****].

         2.2      Benefits; Severance. All benefits and other payments to which
a BD Gene Employee shall become entitled as a result of his or her termination
of employment with BD, whether arising under applicable law, regulation or
benefit policy of BD, shall be paid by BD. All liabilities associated with any
BD Gene Employee with respect to any employee benefit plan, severance plan or
any other arrangement covering such BD Gene Employee shall remain with BD. In no
event shall Tripath or Newco be responsible for any severance or termination
obligations with respect to any employees terminated by BD.

         3.  Fees.

         3.1      Facilities. As compensation for the use of the Facilities and
FF&E and the Services to be provided by BD hereunder, Newco shall pay to BD
during the Term a monthly fee of [*****] located in the Building, pro-rated for
any partial month. In addition, as compensation for the services provided by BD
Gene Employees pursuant to Section 2.1, Newco [*****] (i) [*****] BD Gene
Employees during such month (or earned by any other person currently employed
with BD Gene for the period prior to their acceptance of employment with Newco),
(ii) [*****] in compensating such BD Gene Employees consistent with BD's
compensation policies (including, without limitation, benefits costs,
success-sharing and bonus amounts), and (iii) [*****] in connection with the
Development Plan which would [*****].

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AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

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         3.2      Payment Terms. Within five business days following the end of
each calendar month during the Term, BD shall deliver to Newco an invoice
setting forth the amount due for such month. In addition, BD shall deliver an
invoice to Newco within five business days following the end of the month
immediately following the last month of the Term with respect to all amounts
payable by Newco hereunder which were not previously invoiced to Newco. Newco
shall pay the amount due under any invoice within [*****] from the date of such
invoice, and all invoices will be paid without deduction or setoff for any
reason whatsoever. All such amounts shall be paid in United States dollars, by
check payable to the order of BD or by wire transfer of the relevant amount to a
bank account designated by BD.

         3.3      Books and Records. During the Term and for a period of one
year thereafter, BD shall keep and maintain true and accurate books and other
records containing such information as may be necessary in order to enable Newco
to verify any of the amounts claimed by BD to be payable to it pursuant hereto.

         4.       Term; Termination.

         4.1      Term This Agreement shall be for an initial term of one year
from the date written above, unless earlier terminated in accordance with the
terms hereof. Upon the expiration of the initial term, or any renewal term, this
Agreement may be extended as mutually agreed by the parties (the initial term,
as the same may be extended, is referred to herein as the "Term").

         4.2      Termination.

                  (a)      This Agreement may be terminated by any party in the
event of a material breach of this Agreement by another party which is not cured
within sixty (60) days after written notice has been provided to the breaching
party by the party wishing to terminate this Agreement. In the event such
breach, by its nature, is incurable, then notwithstanding the foregoing, the
Agreement may be terminated immediately.

                  (b)      This Agreement shall terminate immediately in the
event the Development Agreement shall terminate for any reason.

                  (c)      This Agreement may be terminated at any time upon the
mutual agreement of the parties.

                  (d)      This Agreement may be terminated by Newco at any time
by giving BD thirty (30) days prior written notice of such termination.

         4.3      Effect of Termination. No termination or expiration of this
Agreement shall relieve any party of any obligation hereunder accruing, or its
responsibility for any breach of this Agreement occurring, prior to the date of
termination or expiration, as applicable. The provisions of Sections 1.6 and 7
shall survive any termination or expiration of this Agreement.

         4.4      Removal of Property. Upon any termination of this Agreement,
Newco shall promptly remove all personal property of Newco then in the Building.

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AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

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         5.       Insurance. (a) Newco may at its option, during the Term, at
its sole cost and expense, procure and keep in force and effect fire and
extended coverage property insurance on its equipment and any other personal
property placed in or about the Building in whatever amounts it deems necessary.
Any such insurance shall contain a waiver of subrogation in favor of BD. If
Newco elects not to insure such equipment or other personal property, BD shall
bear no responsibility for, nor have any obligation to Newco to insure or
otherwise be financially responsible for loss or damage to such property unless
such damage is caused by the gross negligence or willful misconduct of BD or its
affiliates, employees, officers, agents, representatives, or successors and
assigns.

                  (b)      At all times during the Term, Newco (or TriPath, on
behalf of Newco), at its own expense, shall maintain a policy or policies of
commercial general liability insurance (occurrence coverage) with respect to its
activities in or about the Building, with the premiums thereon fully paid on or
before the due date, issued by and binding upon an insurance company authorized
to conduct such business in the State of Maryland and reasonably acceptable to
BD. Such policy or policies shall afford minimum protection of not less than
[*****], and shall name BD as an additional insured. Such insurance shall be
primary and non-contributing to any insurance maintained by BD and shall contain
a waiver of subrogation in favor of BD. Such insurance policy or policies also
shall include personal injury and contractual liability coverage for the
performance by Newco of its indemnity agreements set forth in this Agreement.

                  (c)      Newco shall, at BD's request from time to time,
provide BD with a current certificate of insurance evidencing compliance with
the terms and requirements of this Section 5. All policies required to be
maintained under this Section 5 shall contain a provision whereby the insurer is
not allowed to cancel, fail to renew or change materially the coverage without
first giving thirty (30) days prior written notice to BD.

                  (d)      At all times during the Term, BD, at its sole cost
and expense, shall procure and keep in full force and effect fire, property and
commercial general liability insurance that BD determines provides sufficient
coverage for the Building. If BD elects not to insure all or any part of the
Building, Newco shall bear no responsibility for, nor have any obligation to BD
to insure or otherwise be financially responsible for loss or damage to such
property unless such damage is caused by the gross negligence or willful
misconduct of Newco or its affiliates, employees, officers, agents,
representatives, or successors and assigns.

         6.       Limitations on Liability. (a) BD shall not have any duties or
responsibilities hereunder other than those specifically set forth herein and no
implied obligations shall be read into this Agreement. BD shall not be liable to
Newco for (i) any accident or damage caused by electric lights or wires or the
operation of elevators, heating, lighting or plumbing apparatus, or any accident
or injury occurring in connection with the Building or any services provided by
BD, (ii) losses of or damage to property of Newco caused by rain, snow, water or
steam that may leak into or flow from any part of the Building through any
defects in the roof or plumbing or from any other source, including but not
limited to, acts or omissions on the part of other occupants or users of the
Building or persons using or present at the Building, or (iii) thefts or losses
of, or damage to, any goods, cash, personal effects or other personal property
stored or placed by Newco (or any Newco Affiliate) in or about the Facilities,
unless the losses or

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AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

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damages referred to in said items (i) through (iii) are caused by the gross
negligence or willful misconduct of BD, its affiliates, employees, agents,
representatives, or successors and assigns. NOTWITHSTANDING ANYTHING CONTAINED
HEREIN TO THE CONTRARY, UNDER NO CIRCUMSTANCES SHALL BD BE LIABLE FOR ANY
INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN CONNECTION
WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING,
BUT NOT LIMITED TO, THOSE RESULTING FROM LOSS OF TIME, LOSS OF DATA, LOSS OF
PROFITS OR LOSS OF GOODWILL, WHETHER FORESEEABLE OR UNFORESEEABLE.

         (b)      Except as otherwise provided herein, neither Newco nor TriPath
nor any of their respective officers, directors, shareholders, affiliates,
employees, agents, representatives, successors or assigns shall be liable for
any action taken or omitted to be taken by Newco or TriPath under or in
connection with this Agreement, except for losses incurred by BD arising out of
the gross negligence or willful misconduct of Newco or TriPath, as the case may
be, and their respective affiliates, employees, agents, representatives, or
successors and assigns. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, UNDER NO CIRCUMSTANCES SHALL NEWCO OR TRIPATH BE LIABLE FOR ANY
INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN CONNECTION
WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING,
BUT NOT LIMITED TO, THOSE RESULTING FROM LOSS OF TIME, LOSS OF DATA, LOSS OF
PROFITS OR LOSS OF GOODWILL, WHETHER FORESEEABLE OR UNFORESEEABLE.

         7.       Confidentiality.

                  (a)      Any information relating to Newco or TriPath or their
affiliates which is obtained by BD or any affiliates, agents, licensees,
officers, directors, employees, contractors, subcontractors, invitees, guests
and others subject to its supervision or control (collectively, "Affiliates") as
a result of its or their presence in the Building and other than in the course
of the Development Program, including without limitation, information relating
to Newco's or TriPath's present or future products, business or prospects,
whether in oral, written, visual or other form, shall be deemed Confidential
Information for purposes of the Development Agreement (notwithstanding any
requirement in the Development Agreement that such information be in writing or
marked as confidential) and shall be kept confidential in accordance with the
terms of the Development Agreement. BD shall be responsible for any breach of
this Section 7 by an Affiliate of BD.

                  (b)      Any information relating to BD or its affiliates
which is obtained by Newco or any Affiliate of Newco as a result of its or their
presence in the Building and other than in the course of the Development
Program, including without limitation, information relating to BD's present or
future products, business or prospects, whether in oral, written, visual or
other form, shall be deemed Confidential Information for purposes of the
Development Agreement (notwithstanding any requirement in the Development
Agreement that such information be in writing or marked as confidential) and
shall be kept confidential in accordance with the terms of the Development
Agreement. Newco shall not permit any Affiliate of Newco to enter the Building
unless such Affiliate shall have agreed to be bound by the terms of this Section
7. Newco shall be responsible for any breach of this Section 7 by an Affiliate
of Newco.

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         8.       Force Majeure. Any party's obligations shall be suspended
during the period and to the extent that such party is prevented or hindered
from complying therewith by any law or governmental order or by any cause beyond
the control of such party, including, without limitation, acts of God, strikes,
lock outs and other labor and industrial disputes and disturbances, civil
disturbances, accidents, acts of war or conditions arising out of or
attributable to war (whether declared or undeclared), shortage of necessary
equipment, materials or labor, or restrictions thereon or limitations upon the
use thereof, and delays in transportation. In such event, the suspending party
shall give notice of suspension as soon as reasonably practicable to the other
parties stating the date and extent of such suspension and the cause thereof,
and shall resume the performance of such obligations as soon as reasonably
practicable after the removal of the cause.

         9.       Guaranty. TriPath hereby unconditionally guarantees the
obligations and liabilities of Newco under this Agreement. TriPath hereby
acknowledges and agrees that (i) Newco and BD may amend or modify this Agreement
[*****] and (ii) BD shall be entitled to interact and deal with Newco on all
matters relating to this Agreement (and any modifications or amendments hereto)
without regard to the guaranty made by TriPath hereunder, and that in each such
case, the obligations and liabilities of TriPath under this guaranty shall not
be released or otherwise affected or impaired as a result thereof.

         10.      General Provisions.

         10.1     Execution in Counterparts. This Agreement (A) may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same document, and (B) shall
become effective when one or more counterparts have been signed by each of the
parties hereto and delivered to each of the other party hereto.

         10.2     Notices. All notices, requests, demands and other
communications given hereunder shall be in writing and shall be deemed to have
been duly given: (i) on the date of delivery, if delivered personally or by
messenger, (ii) on the first business day following the date of timely deposit
with Federal Express or other nationally recognized overnight courier service,
if sent by such courier specifying next day delivery, (iii) upon receipt of
confirmation of transmission, if transmitted by telecopier; and (iv) on the
third business day after mailing, if mailed by registered or certified mail
(postage prepaid, return receipt requested); provided, however, that a notice of
change of address or telecopier number shall not be deemed to have been given
until actually received by the addressee. All such notices, requests, demands
and other communications shall be addressed as set forth below or to such other
address or telecopier number as either party hereto may designate to the other
party hereto by like notice:

         if to BD:

                           Becton, Dickinson and Company
                           1 Becton Drive
                           Franklin Lakes, NJ 07417

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                           Attention:  Vincent Forlenza
                           Telecopy:  201-847-5361

         with a copy to:

                           Becton, Dickinson and Company
                           1 Becton Drive
                           Franklin Lakes, NJ  07417
                           Telecopy No.:  201-848-9228
                           Attn: General Counsel

         if to Newco:

                           TriPath Oncology, Inc.
                           780 Plantation Drive
                           Burlington, North Carolina  27215
                           Telecopy No.: 336-222-8819
                           Attn:  President

         with a copy to:

                           Palmer & Dodge LLP
                           One Beacon Street
                           Boston, Massachusetts 02108-3019
                           Telecopy No.:  (617) 227-4420
                           Attn: Steven N. Farber, Esq.
                           (after 11/01/01:  111 Huntington Avenue
                           Boston, Massachusetts  02115

         if to TriPath:

                           TriPath Imaging, Inc.
                           780 Plantation Drive
                           Burlington, North Carolina  27215
                           Telecopy No.: 336-222-8819
                           Attn: President

         with a copy to:

                           Palmer & Dodge LLP
                           One Beacon Street
                           Boston, Massachusetts 02108-3019
                           Telecopy No.:  (617) 227-4420
                           Attn: Steven N. Farber, Esq.
                           (after 11/01/01:  111 Huntington Avenue
                           Boston, Massachusetts 02115)

         10.3     Amendments. This Agreement may only be amended or modified by
a written instrument executed by BD and Newco hereto.

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         10.4 Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof, and supersedes
all prior agreements and understandings between the parties hereto, oral and
written, with respect to the subject matter hereof.

         10.5     Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law thereof.

         10.6     Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the provisions of this Agreement.

         10.7     Interpretation. As used in this Agreement, unless the context
otherwise requires: words describing the singular number shall include the
plural and vice versa; words denoting any gender shall include all genders;
words denoting natural persons shall include corporations, partnerships and
other entities, and vice versa; and the words "hereof", "herein" and
"hereunder", and words of similar import, shall refer to this Agreement as a
whole, and not to any particular provision of this Agreement.

         10.8     Relationship of Parties. Nothing contained in this Agreement
shall be deemed or construed by the parties, or by any third party, to create
the relationship of partnership, joint venture or agent and principal between
the parties hereto, it being understood and agreed that the relationship between
the parties hereto shall be the relationship of independent parties contracting
for services. No party has, and shall not hold itself out as having, any
authority to enter into any contract or create any obligation or liability on
behalf of, in the name of or binding upon any other party hereto. Without
limiting the generality of the foregoing, Newco agrees that neither this
Agreement, nor any act or omission prescribed herein or relating hereto, creates
an express or implied principal-agent, representative or employer-employee
relationship between BD and Newco, Newco's subcontractors or any employees of
Newco or its subcontractors. In addition, neither Newco nor its subcontractors,
nor the employees of Newco or of Newco's subcontractors, shall be eligible to
participate in any of BD's health, welfare, disability, pension, workers
compensation or any other employee benefit programs or similar programs.

         10.9     Certain Definitions. All capitalized terms contained in this
Agreement which are not defined herein shall have the meanings ascribed thereto
in the Development Agreement.

         10.10    Assigns. This Agreement shall not be assigned without the
express written consent of the other parties hereto (which consent may be
granted or withheld in the sole discretion of each party). A Change in Control
of TriPath or Newco shall be deemed an assignment of this Agreement.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                      -11-
<PAGE>   12

         IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Agreement as of the date first above written.

                           BECTON, DICKINSON AND COMPANY

                           By:   /s/ Vincent A. Forlenza
                              ---------------------------------------------
                              Name: Vincent A. Forlenza
                              Title: Senior Vice President - Technology
                              Strategy and Development

                           TRIPATH IMAGING, INC.

                           By:   /s/ Paul R. Sohmer, M.D.
                              ---------------------------------------------
                              Name: Paul R. Sohmer, M.D.
                              Title: President and Chief Executive Officer

                           TRIPATH ONCOLOGY, INC.

                           By:   /s/ Paul R. Sohmer, M.D.
                              ---------------------------------------------
                              Name: Paul R. Sohmer, M.D.
                              Title: President

                                      -12-
<PAGE>   13

                                    EXHIBIT A

                            DESCRIPTION OF FACILITIES

The approximate 25,000 square feet of laboratory, cubicle and office space
located in the Building and currently used by BD Gene.

                                      -13-
<PAGE>   14

                                    EXHIBIT B

                             DESCRIPTION OF SERVICES

[*****]

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

         CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                      -14-<PAGE>   1
                                                                    EXHIBIT 10.7

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
      SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                OPTION AGREEMENT

         This Option Agreement (the "Option Agreement") dated the 31st day of
July 2001 (the "Effective Date") is by and between Becton, Dickinson and
Company, a corporation organized and existing under the laws of New Jersey and
having a place of business at 1 Becton Drive, Franklin Lakes, New Jersey 07417
("BD") and TriPath Imaging, Inc., a corporation organized and existing under the
laws of Delaware and having its principal office at 780 Plantation Drive,
Burlington, North Carolina 27215 ("TriPath").

                                  INTRODUCTION

         1.       BD has a license (with a right to exercise an option on
TriPath's behalf) to use certain software developed and/or otherwise possessed
by [*****] (the "Software") by means of a certain License Agreement dated July
31, 2001, a copy of which is attached hereto as Exhibit A (the "Software License
Agreement"); and

         2.       TriPath desires to retain a right to instruct BD to exercise
its option for TriPath to obtain a license from [*****] to use the Software on
substantially the same terms and conditions as the Software License Agreement.

         NOW, THEREFORE, BD and TriPath agree as follows:

                                    Article I
                                      Grant

         1.1      BD hereby grants to TriPath an exclusive right for a period
extending from the Effective Date until the date one year following the
Effective Date (the "Option Period"), to notify BD of TriPath's desire to have
BD exercise its option in accordance with the Software License Agreement.
         1.2      During the Option Period, BD shall not exercise its option
under the Software License Agreement without TriPath's written direction to do
so.

                                   Article II
                                  Consideration

         2.1      In consideration for the exclusive right set forth in Section
1.1, TriPath shall pay to BD a [*****] , by wire transfer on the Effective Date
to an account to be identified by BD.

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

         CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
<PAGE>   2

         2.2      If TriPath does direct BD (in writing) to exercise the option
under the Software License Agreement, then TriPath shall pay to BD [*****]
within five (5) business days of providing such direction.

                                   Article III
                               Exercise of Option

         3.1      At any time during the term of the Option Period, TriPath may
direct BD to exercise its option under the Software License Agreement by
providing to BD written notice of such direction.
         3.2      Promptly following such written notice, BD shall exercise its
option in accordance with the terms of the Software License Agreement.
         3.3      If TriPath at any time during the Option Period provides
written notice to BD that TriPath will not direct BD to exercise its option
under the Software License Agreement, then this Option Agreement shall terminate
as of the date of mailing of such written notice.

                                   Article IV
               BD Obligations Under the Software License Agreement

         BD shall pay the entire amount of the Licensed Software License Fees
defined in Section 3.2 of the Software License Agreement in accordance with the
terms thereof.

                                    Article V
                              Term and Termination

         5.1      This Option Agreement shall continue in full force and effect
from the Effective Date, and unless terminated earlier by mutual written
agreement of the parties, shall expire on the later of:
                  (a)      the expiration of the Option Period; or
                  (b)      if TriPath has directed BD to exercise its option in
                           accordance with Section 3.1, the exercise of the
                           option by BD.
         5.2      Prior to expiration of this Option Agreement, TriPath may
terminate this Option Agreement by providing written notice to BD that TriPath
will not direct BD to exercise its option under the Software License Agreement.
         5.3      The terms and conditions of Articles IV, VI, VII, VIII and IX
shall survive any termination of this Option Agreement.

                                   Article VI
                         Representations and Warranties

         6.1      BD represents and warrants that it:
                  (a)      is a licensee under the Software License Agreement;
                  (b)      has the right to grant to TriPath the rights granted
                           herein;

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

         CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       2
<PAGE>   3

                  (c)      is under no obligation to any third party which would
                           interfere with the representations, warranties and/or
                           obligations of BD under this Option Agreement;
                  (d)      has the necessary authority to enter into this Option
                           Agreement and be bound by the terms and conditions
                           hereof; and
                  (e)      will use its best efforts not to breach any of its
                           obligations under the Software License Agreement.

         6.2      TriPath represents and warrants that it has the necessary
authority to enter into this Option Agreement and be bound by the terms and
conditions hereof.
         6.3      Except as expressly set forth in this Option Agreement, the
parties MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTE OR OTHERWISE,
AND THE PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF NON-INFRINGEMENT.

                                   Article VII
                              Public Announcements

         Any announcements or similar publicity with respect to the execution of
this Option Agreement shall be agreed upon between the parties hereto in advance
of such announcement as set forth herein. Either party may make such public
announcements with respect hereto. Each party agrees to provide to the other
party a copy of any public announcement as soon as reasonably practicable under
the circumstances prior to its scheduled release. Except under extraordinary
circumstances, each party shall provide the other with an advance copy of any
public announcement at least five (5) business days prior to the scheduled
disclosure. Each party shall have the right to expeditiously review and
recommend changes to any announcement regarding this Option Agreement or the
subject matter of this Option Agreement, provided that such right of review and
recommendation shall only apply for the first time that specific information is
to be disclosed, and shall not apply to the subsequent disclosure of
substantially similar information that has previously been disclosed. Except as
otherwise required by law, the party whose public announcement has been reviewed
shall remove or revise any information the reviewing party reasonably deems to
be inappropriate for disclosure.

                                       3
<PAGE>   4

                                  Article VIII
                                     Notices

         Notices to BD shall be addressed to:

              Becton Dickinson and Company
              1 Becton Drive
              Franklin Lakes, New Jersey 07417
              Attn:  Senior Vice President, Technology, Strategy and Development
              Telecopy No.: 1-201-847-5361

with a copy to:

              Becton, Dickinson and Company
              1 Becton Drive
              Franklin Lakes, New Jersey 07417
              Attn:  Vice President and Chief Intellectual Property Counsel
              Telecopy No.: 1-201-848-9228

         Notices to TriPath shall be addressed to:

              TriPath Imaging, Inc.
              780 Plantation Drive
              Burlington, North Carolina 27215
              Attn:  Paul Sohmer, M.D.

         with a copy to:

              Palmer & Dodge LLP
              One Beacon Street
              Boston, Massachusetts 02108
              Attention:  Steven N. Farber, Esq.
              Telecopy No.: 1-617-227-4420

         Either party may change its address by giving notice to the other party
in the manner herein provided. Any notice required or provided for by the terms
of this Option Agreement shall be in writing and shall be (a) sent by registered
or certified mail, return receipt requested, postage prepaid, (b) sent via a
reputable overnight courier service, or (c) sent by facsimile transmission with
an original to be followed the same day via a reputable overnight courier
service, in each case properly addressed in accordance with the paragraph above.
The effective date of notice shall be the actual date of receipt by the party
receiving the same.

                                       4
<PAGE>   5

                                   Article IX
                                  Miscellaneous

         9.1      This Option Agreement shall be construed and the respective
rights of the parties hereto determined according to the substantive laws of the
State of Delaware notwithstanding the provisions governing conflict of laws
under such Delaware law to the contrary and without giving effect to the United
Nations Convention on Contracts for the International Sale of Goods, the 1974
Convention on the Limitation Period in the International Sale of Goods (the
"1974 Convention") and the Protocol amending the 1974 Convention, done at Vienna
April 11, 1980, except matters of intellectual property law which shall be
determined in accordance with the national intellectual property laws relevant
to the intellectual property in question.
         9.2      Neither BD nor TriPath may assign this Option Agreement in
whole or in part without the consent of the other party, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, either party may assign
this Option Agreement in whole or in part without the consent of the other party
in the event of a Change of Control. For the purposes of this Section 9.2,
"Change of Control" shall mean (a) a merger, consolidation or other transaction
or series of related transactions as a result of which persons who were
shareholders of a party immediately prior thereto would not immediately
thereafter beneficially own (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) at least fifty percent (50%) of the combined
voting power of such party or the surviving entity immediately after such
transaction; or (b) any one person or group, as such terms are used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than any trustee or other fiduciary holding securities
under an employee benefit plan of such Party), together with any of such
person's "affiliates" or "associates", as such terms are used in the Exchange
Act, becoming the beneficial owner (as defined in Rule 13d-3 promulgated under
the Exchange Act) of fifty percent (50%) or more of the combined voting power of
the outstanding securities of such party, or (c) any sale of all or
substantially all of the assets of such party relating to the subject matter of
this Option Agreement, in one or a series of related transactions.
         9.3      This Option Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof, and supersedes all
previous arrangements with respect to the subject matter hereof, whether written
or oral. Any amendment or modification to this Option Agreement shall be made in
writing signed by both parties hereto.
         9.4      No failure or omission by the parties hereto in the
performance of any obligation of this Option Agreement shall be deemed a breach
of this Option Agreement or create any liability if the same shall arise from
any cause or causes beyond the control of the parties, including, but not
limited to, the following: acts of God; acts or omissions of any government; any
rules, regulations or orders issued after the Effective Date by any governmental
authority or by any officer, department, agency or instrumentality thereof;
fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot;
and invasion and provided that such failure or omission resulting from one of
the above causes is cured as soon as is practicable after the occurrence of one
or more of the above-mentioned causes.

                                       5
<PAGE>   6

         9.5      It is understood and agreed that the relationship between the
parties hereunder is that of independent contractors and that nothing in this
Option Agreement shall be construed as authorization for either BD or TriPath to
act as agent for the other. 9.6 This Agreement has been prepared jointly and
shall not be strictly construed against either party.

         9.6      This Agreement has been prepared jointly and shall not be
strictly construed against either party.

         9.7      The captions or headings of the sections or other subdivisions
hereof are inserted only as a matter of convenience or for reference and shall
have no effect on the meaning of the provisions hereof.
         9.8      No failure on the part of BD or TriPath to exercise, and no
delay in exercising, any right, power, remedy or privilege under this Option
Agreement, or provided by statute or at law or in equity or otherwise, shall
impair, prejudice or constitute a waiver of any such right, power, remedy or
privilege or be construed as a waiver of any breach of this Option Agreement or
as an acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
or the exercise of any other right, power, remedy or privilege.
         9.9      If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may be possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction.
         9.10     This Option Agreement may be executed in counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, taken together, shall constitute one
and the same instrument.
         9.11     In no event shall TriPath or BD be liable to the other for any
special, consequential, indirect or incidental damages or losses arising out of
or in connection with this Option Agreement, the Software License Agreement or
any license agreement that TriPath may enter with [*****] as a result of BD's
exercise of its option under the Software License Agreement, including without
limitation, loss of profits or revenues, whether such claim is based upon breach
of contract, breach of warranty, negligence, strict liability in tort or any
other theory of relief or whether or not TriPath or BD is informed in advance of
the possibility of such damages or losses.

                  [Remainder of page intentionally left blank]

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

         CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.

                                       6
<PAGE>   7

         IN WITNESS WHEREOF, the parties have executed this Option Agreement as
of the date first set forth above.

                           BECTON, DICKINSON AND COMPANY

                           By:    /s/ Vincent A. Forlenza
                                  -----------------------------------------
                           Name:  Vincent A. Forlenza
                           Title: Sr. Vice President - Technology, Strategy
                                  and Development

                           TRIPATH IMAGING, INC.

                           By:    /s/ Paul R. Sohmer, M.D.
                                  -----------------------------------------
                           Name:  Paul R. Sohmer, M.D.
                           Title: President and Chief Executive Officer

                                       7
<PAGE>   8

                                   EXHIBIT A

                           SOFTWARE LICENCE AGREEMENT

                                    [*****]

Confidential Materials filed separately with the Securities Exchange
Commission. Asterisks denote such omission.

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