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                                                                   EXHIBIT 10.18

                               MASIMO CORPORATION

                        2000 EMPLOYEE STOCK PURCHASE PLAN

I.       PURPOSE OF THE PLAN

         This Employee Stock Purchase Plan is intended to promote the interests
of MASIMO Corporation., a Delaware corporation, by providing eligible employees
with the opportunity to acquire a proprietary interest in the Corporation
through participation in a payroll deduction-based employee stock purchase plan
designed to qualify under Section 423 of the Code.

         Capitalized terms herein shall have the meanings assigned to such terms
in the attached Appendix.

II.      ADMINISTRATION OF THE PLAN

         The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.

III.     STOCK SUBJECT TO PLAN

                  A. Reserved Shares. The stock purchasable under the Plan shall
         be shares of authorized but unissued or reacquired Common Stock,
         including shares of Common Stock purchased on the open market. The
         number of shares of Common Stock initially reserved for issuance over
         the term of the Plan shall be Five Hundred Thousand (500,000) shares.

                  B. Annual Increase of Reserved Shares. The number of shares of
         Common Stock available for issuance under the Plan shall automatically
         increase on the first trading day of January each calendar year during
         the term of the Plan, beginning with calendar year 2001, by an amount
         equal to one percent (1%) of the total number of shares of Common Stock
         outstanding on the last trading day in December of the immediately
         preceding calendar year, but in no event shall any such annual increase
         exceed any such lesser amount determined by the Board.

                  C. Adjustments. Should any change be made to the Common Stock
         by reason of any stock split, stock dividend, recapitalization,
         combination of shares, exchange of shares or other change affecting the
         outstanding Common Stock as a class without the Corporation's receipt
         of consideration, appropriate adjustments shall be made to (i) the
         maximum number and class of securities issuable under the Plan, (ii)
         the maximum number and class of securities purchasable per Participant
         on any one Purchase Date, (iii) the maximum number and class of
         securities purchasable in total by

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         all Participants on any one Purchase Date, (iv) the maximum number
         and/or class of securities by which the share reserve is to increase
         automatically each calendar year pursuant to the provisions of Section
         III.B of this Article One and (v) the number and class of securities
         and the price per share in effect under each outstanding purchase right
         in order to prevent the dilution or enlargement of benefits thereunder.

IV.      OFFERING PERIODS

                  A. Offering Periods. Shares of Common Stock shall be offered
         for purchase under the Plan through a series of successive offering
         periods until such time as (i) the maximum number of shares of Common
         Stock available for issuance under the Plan shall have been purchased
         or (ii) the Plan shall have been sooner terminated.

                  B. Duration. Each offering period (except the initial offering
         period) shall be of such duration (not to exceed twenty-four (24)
         months) as determined by the Plan Administrator prior to the start date
         of such offering period. However, the initial offering period shall
         commence at the Effective Time and terminate on the last business day
         in December 2002. The next offering period shall commence on the first
         business day in January 2003, and subsequent offering periods shall
         commence as designated by the Plan Administrator.

                  C. Purchase Intervals. Each offering period shall consist of a
         series of one or more successive Purchase Intervals. Purchase Intervals
         shall run from the first business day in January to the last business
         day in June each year and from the first business day in July to the
         last business day in December each year. However, the first Purchase
         Interval in effect under the initial offering period shall commence at
         the Effective Time and terminate on the last business day in June 2001.

                  D. Adjustment. Should the Fair Market Value per share of
         Common Stock on any Purchase Date within an offering period be less
         than the Fair Market Value per share of Common Stock on the start date
         of that offering period, then that offering period shall automatically
         terminate immediately after the purchase of shares of Common Stock on
         such Purchase Date, and a new offering period shall commence on the
         next business day following such Purchase Date. The new offering period
         shall have a duration of twenty (24) months, unless a shorter duration
         is established by the Plan Administrator within five (5) business days
         following the start date of that offering period.

V.       ELIGIBILITY

                  A. Entry on Start Date. Each individual who is an Eligible
         Employee on the start date of any offering period under the Plan may
         enter that offering period on such start date or on any subsequent
         Semi-Annual Entry Date within that offering period, provided he or she
         remains an Eligible Employee.

                  B. Entry After Start Date. Each individual who first becomes
         an Eligible Employee after the start date of an offering period may
         enter that offering period on any

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         subsequent Semi-Annual Entry Date within that offering period on which
         he or she is an Eligible Employee.

                  C. Entry Date. The date an individual enters an offering
         period shall be designated his or her Entry Date for purposes of that
         offering period.

                  D. Participation. To participate in the Plan for a particular
         offering period, the Eligible Employee must complete the enrollment
         forms prescribed by the Plan Administrator (including a subscription
         agreement and a payroll deduction authorization) and file such forms
         with the Plan Administrator (or its designate) on or before his or her
         scheduled Entry Date.

VI.      PAYROLL DEDUCTIONS

                  A. Payroll Deductions. The payroll deduction authorized by the
         Participant for purposes of acquiring shares of Common Stock during an
         offering period may be any multiple of one percent (1%) of the Cash
         Earnings paid to the Participant during each Purchase Interval within
         that offering period, up to a maximum of fifteen percent (15%). The
         deduction rate so authorized shall continue in effect throughout the
         offering period, except to the extent such rate is changed in
         accordance with the following guidelines:

                           (i) The Participant may, at any time during the
                  offering period, reduce his or her rate of payroll deduction
                  to become effective as soon as possible after filing the
                  appropriate form with the Plan Administrator. The Participant
                  may not, however, effect more than one (1) such reduction per
                  Purchase Interval.

                           (ii) The Participant may, prior to the commencement
                  of any new Purchase Interval within the offering period,
                  increase the rate of his or her payroll deduction by filing
                  the appropriate form with the Plan Administrator. The new rate
                  (which may not exceed fifteen percent (15%) shall become
                  effective on the start date of the first Purchase Interval
                  following the filing of such form.

                  B. Effective Date. Payroll deductions shall begin on the first
         pay day administratively feasible following the Participant's Entry
         Date into the offering period and shall (unless sooner terminated by
         the Participant) continue through the pay day ending with or
         immediately prior to the last day of that offering period. The amounts
         so collected shall be credited to the Participant's book account under
         the Plan, but no interest shall be paid on the balance from time to
         time outstanding in such account. The amounts collected from the
         Participant shall not be required to be held in any segregated account
         or trust fund and may be commingled with the general assets of the
         Corporation and used for general corporate purposes.

                  C. Termination. Payroll deductions shall automatically cease
         upon the termination of the Participant's purchase right in accordance
         with the provisions of the Plan.

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                  D. No Limitation or Requirement. The Participant's acquisition
         of Common Stock under the Plan on any Purchase Date shall neither limit
         nor require the Participant's acquisition of Common Stock on any
         subsequent Purchase Date, whether within the same or a different
         offering period.

VII.     PURCHASE RIGHTS

                  A. Grant of Purchase Rights. A Participant shall be granted a
         separate purchase right for each offering period in which he or she
         participates. The purchase right shall be granted on the Participant's
         Entry Date into the offering period and shall provide the Participant
         with the right to purchase shares of Common Stock, in a series of
         successive installments over the remainder of such offering period,
         upon the terms set forth below. The Participant shall execute a
         subscription agreement embodying such terms and such other provisions
         (not inconsistent with the Plan) as the Plan Administrator may deem
         advisable.

                  Under no circumstances shall purchase rights be granted under
         the Plan to any Eligible Employee if such individual would, immediately
         after the grant, own (within the meaning of Code Section 424(d)) or
         hold outstanding options or other rights to purchase, stock possessing
         five percent (5%) or more of the total combined voting power or value
         of all classes of stock of the Corporation or any Corporate Affiliate.

                  B. Exercise of the Purchase Right. Each purchase right shall
         be automatically exercised in installments on each successive Purchase
         Date within the offering period, and shares of Common Stock shall
         accordingly be purchased on behalf of each Participant on each such
         Purchase Date. The purchase shall be effected by applying the
         Participant's payroll deductions for the Purchase Interval ending on
         such Purchase Date to the purchase of whole shares of Common Stock at
         the purchase price in effect for the Participant for that Purchase
         Date.

                  C. Purchase Price. The purchase price per share at which
         Common Stock will be purchased on the Participant's behalf on each
         Purchase Date within the offering period shall be equal to eighty-five
         percent (85%) of the lower of (i) the Fair Market Value per share of
         Common Stock on the Participant's Entry Date into that offering period
         or (ii) the Fair Market Value per share of Common Stock on that
         Purchase Date.

                  D. Number of Purchasable Shares. The number of shares of
         Common Stock purchasable by a Participant on each Purchase Date during
         the offering period shall be the number of whole shares obtained by
         dividing the amount collected from the Participant through payroll
         deductions during the Purchase Interval ending with that Purchase Date
         by the purchase price in effect for the Participant for that Purchase
         Date. However, the maximum amount which may be collected from the
         Participant through payroll deductions during the Purchase Interval
         shall not exceed $12,500. In addition, the maximum number of shares of
         Common Stock purchasable in total by all Participants on any one
         Purchase Date shall not exceed 0.5% of the total shares of Common Stock
         then outstanding; provided, however, that during the first four
         Purchase Periods, the maximum number of shares of Common Stock
         purchasable in total by all Participants on any one Purchase Date shall
         not exceed 0.75% of the total shares of Common Stock then outstanding
         shares, in either case subject to periodic adjustments in the event of
         certain changes in the Corporation's capitalization.

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         the Plan Administrator shall have the discretionary authority,
         exercisable prior to the start of any offering period under the Plan,
         to increase or decrease the limitations to be in effect for the maximum
         amount which may be collected per Participant and in total by all
         Participants on each Purchase Date during that offering period.

                  E. Excess Payroll Deductions. Any payroll deductions not
         applied to the purchase of shares of Common Stock on any Purchase Date
         because they are not sufficient to purchase a whole share of Common
         Stock shall be held for the purchase of Common Stock on the next
         Purchase Date. However, any payroll deductions not applied to the
         purchase of Common Stock by reason of the limitation on the maximum
         number of shares purchasable per Participant or in total by all
         Participants on the Purchase Date shall be promptly refunded.

                  F. Termination of Purchase Right. The following provisions
         shall govern the termination of outstanding purchase rights:

                           (i) A Participant may, at any time prior to the next
                  scheduled Purchase Date in the offering period, terminate his
                  or her outstanding purchase right by filing the appropriate
                  form with the Plan Administrator (or its designate), and no
                  further payroll deductions shall be collected from the
                  Participant with respect to the terminated purchase right. Any
                  payroll deductions collected during the Purchase Interval in
                  which such termination occurs shall, at the Participant's
                  election, be immediately refunded or held for the purchase of
                  shares on the next Purchase Date. If no such election is made
                  at the time such purchase right is terminated, then the
                  payroll deductions collected with respect to the terminated
                  right shall be refunded as soon as possible.

                           (ii) The termination of such purchase right shall be
                  irrevocable, and the Participant may not subsequently rejoin
                  the offering period for which the terminated purchase right
                  was granted. In order to resume participation in any
                  subsequent offering period, such individual must re- enroll in
                  the Plan (by making a timely filing of the prescribed
                  enrollment forms) on or before his or her scheduled Entry Date
                  into that offering period.

                           (iii) Should the Participant cease to remain an
                  Eligible Employee for any reason (including death, disability
                  or change in status) while his or her purchase right remains
                  outstanding, then that purchase right shall immediately
                  terminate, and all of the Participant's payroll deductions for
                  the Purchase Interval in which the purchase right so
                  terminates shall be immediately refunded. However, should the
                  Participant cease to remain in active service by reason of an
                  approved unpaid leave of absence, then the Participant shall
                  have the right, exercisable up until the last business day of
                  the Purchase Interval in which such leave commences, to (a)
                  withdraw all the payroll deductions collected to date on his
                  or her behalf for that Purchase Interval or (b) have such
                  funds held for the purchase of shares on his or her behalf on
                  the next scheduled Purchase Date. In no event, however, shall
                  any further payroll deductions be collected on the
                  Participant's behalf during such leave. Upon the Participant's
                  return to active

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                  service (x) within ninety (90) days following the commencement
                  of such leave or (y) prior to the expiration of any longer
                  period for which such Participant's right to reemployment with
                  the Corporation is guaranteed by statute or contract, his or
                  her payroll deductions under the Plan shall automatically
                  resume at the rate in effect at the time the leave began,
                  unless the Participant withdraws from the Plan prior to his or
                  her return. An individual who returns to active employment
                  following a leave of absence that exceeds in duration the
                  applicable (x) or (y) time period will be treated as a new
                  Employee for purposes of subsequent participation in the Plan
                  and must accordingly re-enroll in the Plan (by making a timely
                  filing of the prescribed enrollment forms) on or before his or
                  her scheduled Entry Date into the offering period.

                  G. Change in Control. Each outstanding purchase right shall
         automatically be exercised, immediately prior to the effective date of
         any Change in Control, by applying the payroll deductions of each
         Participant for the Purchase Interval in which such Change in Control
         occurs to the purchase of whole shares of Common Stock at a purchase
         price per share equal to eighty-five percent (85%) of the lower of (i)
         the Fair Market Value per share of Common Stock on the Participant's
         Entry Date into the offering period in which such Change in Control
         occurs or (ii) the Fair Market Value per share of Common Stock
         immediately prior to the effective date of such Change in Control.
         However, the applicable limitation on the number of shares of Common
         Stock purchasable per Participant shall continue to apply to any such
         purchase, but not the limitation applicable to the maximum number of
         shares of Common Stock purchasable in total by all Participants on any
         one Purchase Date.

                  The Corporation shall use its best efforts to provide at least
         ten (10) days' prior written notice of the occurrence of any Change in
         Control, and Participants shall, following the receipt of such notice,
         have the right to terminate their outstanding purchase rights prior to
         the effective date of the Change in Control.

                  H. Proration of Purchase Rights. Should the total number of
         shares of Common Stock to be purchased pursuant to outstanding purchase
         rights on any particular date exceed the number of shares then
         available for issuance under the Plan, the Plan Administrator shall
         make a pro-rata allocation of the available shares on a uniform and
         nondiscriminatory basis, and the payroll deductions of each
         Participant, to the extent in excess of the aggregate purchase price
         payable for the Common Stock pro-rated to such individual, shall be
         refunded.

                  I. Assignability. The purchase right shall be exercisable only
         by the Participant and shall not be assignable or transferable by the
         Participant.

                  J. Stockholder Rights. A Participant shall have no stockholder
         rights with respect to the shares subject to his or her outstanding
         purchase right until the shares are purchased on the Participant's
         behalf in accordance with the provisions of the Plan and the
         Participant has become a holder of record of the purchased shares.

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VIII.    ACCRUAL LIMITATIONS

                  A. Limitation. No Participant shall be entitled to accrue
         rights to acquire Common Stock pursuant to any purchase right
         outstanding under this Plan if and to the extent such accrual, when
         aggregated with (i) rights to purchase Common Stock accrued under any
         other purchase right granted under this Plan and (ii) similar rights
         accrued under other employee stock purchase plans (within the meaning
         of Code Section 423)) of the Corporation or any Corporate Affiliate,
         would otherwise permit such Participant to purchase more than Twenty-
         Five Thousand Dollars ($25,000.00) worth of stock of the Corporation or
         any Corporate Affiliate (determined on the basis of the Fair Market
         Value per share on the date or dates such rights are granted) for each
         calendar year such rights are at any time outstanding.

                  B. Application of Limitation. For purposes of applying such
         accrual limitations to the purchase rights granted under the Plan, the
         following provisions shall be in effect:

                           (i) The right to acquire Common Stock under each
                  outstanding purchase right shall accrue in a series of
                  installments on each successive Purchase Date during the
                  offering period on which such right remains outstanding.

                           (ii) No right to acquire Common Stock under any
                  outstanding purchase right shall accrue to the extent the
                  Participant has already accrued in the same calendar year the
                  right to acquire Common Stock under one or more other purchase
                  rights at a rate equal to Twenty-Five Thousand Dollars
                  ($25,000.00) worth of Common Stock (determined on the basis of
                  the Fair Market Value per share on the date or dates of grant)
                  for each calendar year such rights were at any time
                  outstanding.

                  C. Refund. If by reason of such accrual limitations, any
         purchase right of a Participant does not accrue for a particular
         Purchase Interval, then the payroll deductions that the Participant
         made during that Purchase Interval with respect to such purchase right
         shall be promptly refunded.

                  D. Conflict. In the event there is any conflict between the
         provisions of this Article and one or more provisions of the Plan or
         any instrument issued thereunder, the provisions of this Article shall
         be controlling.

IX.      EFFECTIVE DATE AND TERM OF THE PLAN

                  A. Effective Date. The Plan was adopted by the Board on
         August 29, 2000, and shall become effective at the Effective Time,
         subject to the approval of the stockholders of the Corporation within
         12 months before or after its adoption by the Board.

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                  B. Term. Unless sooner terminated by the Board, the Plan shall
         terminate upon the earliest of (i) the last business day in December
         2010, (ii) the date on which all shares available for issuance under
         the Plan shall have been sold pursuant to purchase rights exercised
         under the Plan or (iii) the date on which all purchase rights are
         exercised in connection with a Change in Control. No further purchase
         rights shall be granted or exercised, and no further payroll deductions
         shall be collected, under the Plan following such termination.

X.       AMENDMENT OF THE PLAN

                  A. Amendment. The Board may alter, amend, suspend or terminate
         the Plan at any time to become effective immediately following the
         close of any Purchase Interval. However, the Plan may be amended or
         terminated immediately upon Board action, if and to the extent
         necessary to assure that the Corporation will not recognize, for
         financial reporting purposes, any compensation expense in connection
         with the shares of Common Stock offered for purchase under the Plan,
         should the financial accounting rules applicable to the Plan at the
         Effective Time be subsequently revised so as to require the Corporation
         to recognize compensation expense in the absence of such amendment or
         termination.

                  B. Amendment Requiring Consent. In no event may the Board
         effect any of the following amendments or revisions to the Plan without
         the approval of the Corporation's stockholders: (i) increase the number
         of shares of Common Stock issuable under the Plan, except for
         permissible adjustments in the event of certain changes in the
         Corporation's capitalization, (ii) alter the purchase price formula so
         as to reduce the purchase price payable for the shares of Common Stock
         purchasable under the Plan or (iii) modify the eligibility requirements
         for participation in the Plan.

XI.      GENERAL PROVISIONS

                  A. Cost and Expenses. All costs and expenses incurred in the
         administration of the Plan shall be paid by the Corporation; however,
         each Plan Participant shall bear all costs and expenses incurred by
         such individual in the sale or other disposition of any shares
         purchased under the Plan.

                  B. No Right to Continued Employment. Nothing in the Plan shall
         confer upon the Participant any right to continue in the employ of the
         Corporation or any Corporate Affiliate for any period of specific
         duration or interfere with or otherwise restrict in any way the rights
         of the Corporation (or any Corporate Affiliate employing such person)
         or of the Participant, which rights are hereby expressly reserved by
         each, to terminate such person's employment at any time for any reason,
         with or without cause.

                  C. Governing Law. The provisions of the Plan shall be governed
         by the laws of the State of California without resort to that State's
         conflict-of-laws rules.

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                                    APPENDIX

         The following definitions shall be in effect under the Plan:

                  A. Board shall mean the Corporation's Board of Directors.

                  B. Cash Earnings shall mean (i) the regular base salary paid
         to a Participant by one or more Participating Companies during such
         individual's period of participation in one or more offering periods
         under the Plan plus (ii) all overtime payments, bonuses, commissions,
         profit-sharing distributions and other incentive-type payments received
         during such period. Such Cash Earnings shall be calculated before
         deduction of (A) any income or employment tax withholdings or (B) any
         contributions made by the Participant to any Code Section 401(k) salary
         deferral plan or any Code Section 125 cafeteria benefit program now or
         hereafter established by the Corporation or any Corporate Affiliate.
         However, Cash Earnings shall not include any contributions made by the
         Corporation or any Corporate Affiliate on the Participant's behalf to
         any employee benefit or welfare plan now or hereafter established
         (other than Code Section 401(k) or Code Section 125 contributions
         deducted from such Cash Earnings).

                  C. Change in Control shall mean a change in ownership of the
         Corporation pursuant to any of the following transactions:

                           (i) a merger or consolidation in which securities
                  possessing more than fifty percent (50%) of the total combined
                  voting power of the Corporation's outstanding securities are
                  transferred to a person or persons different from the persons
                  holding those securities immediately prior to such
                  transaction, or

                           (ii) the sale, transfer or other disposition of all
                  or substantially all of the assets of the Corporation in
                  complete liquidation or dissolution of the Corporation, or

                           (iii) the acquisition, directly or indirectly, by a
                  person or related group of persons (other than the Corporation
                  or a person that directly or indirectly controls, is
                  controlled by or is under common control with the Corporation)
                  of beneficial ownership (within the meaning of Rule 13d-3 of
                  the 1934 Act) of securities possessing more than fifty percent
                  (50%) of the total combined voting power of the Corporation's
                  outstanding securities pursuant to a tender or exchange offer
                  made directly to the Corporation's stockholders.

                  D. Code shall mean the Internal Revenue Code of 1986, as
         amended.

                  E. Common Stock shall mean the Corporation's common stock.

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                  F. Corporate Affiliate shall mean any parent or subsidiary
         corporation of the Corporation (as determined in accordance with Code
         Section 424), whether now existing or subsequently established.

                  G. Corporation shall mean Masimo Corporation, a Delaware
         corporation, and any corporate successor to all or substantially all of
         the assets or voting stock of Masimo Corporation. that shall by
         appropriate action adopt the Plan.

                  H. Effective Time shall mean the time at which the
         Underwriting Agreement is executed and the Common Stock priced for the
         initial public offering of such Common Stock. Any Corporate Affiliate
         that becomes a Participating Corporation after such Effective Time
         shall designate a subsequent Effective Time with respect to its
         employee-Participants.

                  I. Eligible Employee shall mean any person who is employed by
         a Participating Corporation on a basis under which he or she is
         regularly expected to render more than twenty (20) hours of service per
         week for more than five (5) months per calendar year for earnings
         considered wages under Code Section 3401 (a).

                  J. Entry Date shall mean the date an Eligible Employee first
         commences participation in the offering period in effect under the
         Plan. The earliest Entry Date under the Plan shall be the Effective
         Time.

                  K. Fair Market Value per share of Common Stock on any relevant
         date shall be determined in accordance with the following provisions:

                           (i) If the Common Stock is at the time traded on the
                  Nasdaq National Market, then the Fair Market Value shall be
                  the closing selling price per share of Common Stock on the
                  date in question, as such price is reported by the National
                  Association of Securities Dealers on the Nasdaq National
                  Market. If there is no closing selling price for the Common
                  Stock on the date in question, then the Fair Market Value
                  shall be the closing selling price on the last preceding date
                  for which such quotation exists.

                           (ii) If the Common Stock is at the time listed on any
                  Stock Exchange, then the Fair Market Value shall be the
                  closing selling price per share of Common Stock on the date in
                  question on the Stock Exchange determined by the Plan
                  Administrator to be the primary market for the Common Stock,
                  as such price is officially quoted in the composite tape of
                  transactions on such exchange. If there is no closing selling
                  price for the Common Stock on the date in question, then the
                  Fair Market Value shall be the closing selling price on the
                  last preceding date for which such quotation exists.

                           (iii) For purposes of the initial offering period
                  that begins at the Effective Time, the Fair Market Value shall
                  be deemed to be equal to the price per share at which the
                  Common Stock is sold in the initial public offering pursuant
                  to the Underwriting Agreement.

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                  L. 1934 Act shall mean the Securities Exchange Act of 1934, as
         amended.

                  M. Participant shall mean any Eligible Employee of a
         Participating Corporation who is actively participating in the Plan.

                  N. Participating Corporation shall mean the Corporation and
         such Corporate Affiliate or Affiliates as may be authorized from time
         to time by the Board to extend the benefits of the Plan to their
         Eligible Employees.

                  O. Plan shall mean the Corporation's 2000 Employee Stock
         Purchase Plan, as set forth in this document.

                  P. Plan Administrator shall mean the committee of two (2) or
         more Board members appointed by the Board to administer the Plan.

                  Q. Purchase Date shall mean the last business day of each
         Purchase Interval. The initial Purchase Date shall be June 30, 2001.

                  R. Purchase Interval shall mean each successive six (6)-month
         period within the offering period at the end of which there shall be
         purchased shares of Common Stock on behalf of each Participant.

                  S. Semi-Annual Entry Date shall mean the first business day in
         January and July each year on which an Eligible Employee may first
         enter an offering period.

                  T. Stock Exchange shall mean either the American Stock
         Exchange or the New York Stock Exchange.

                  U. Underwriting Agreement shall mean the agreement between the
         Corporation and the underwriter or underwriters managing the initial
         public offering of the Common Stock.

                                      A-3<PAGE>   1

                                                                   EXHIBIT 10.20

                         DEVELOPMENT & SUPPLY AGREEMENT

       This Development and Supply Agreement (the "Agreement"), effective as of
August 1, 2000 (the "Effective Date"), is made by and between Third Wave
Technologies, Inc., a Wisconsin corporation, with a place of business at 502 S.
Rosa Road, Madison, WI 53719 ("TWT"), and Applied Biosystems Group, with a place
of business at 850 Lincoln Centre Drive, Foster City, CA 94404-1128 ("ABG"), an
operating group of PE Corporation, a Delaware corporation.

                                   BACKGROUND

       A. TWT and ABG desire to collaborate to develop certain genotyping assays
implementing their respective proprietary technologies.

       B. TWT and ABG shall supply such assays to be used by Dr. Yusuke Nakamura
("Dr. Nakamura") and others in connection with the SNP initiative of the
Japanese Millennium Project sponsored by various agencies of the Japanese
government, in which approximately 150,000 unique single nucleotide
polymorphisms ("SNPs") will be examined using 4,000 to 5,000 patient samples
(the "Japanese SNP Initiative").

       NOW, THEREFORE, for and in consideration of the covenants, conditions and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:

                                   ARTICLE 1.
                                   DEFINITIONS

              1.1 "ABG Technology" shall mean the ABG Patents and ABG Know-How.

                     1.1.1 "ABG Know-How" shall mean technical information
relating to (i) probe design, synthesis and purification methods and techniques;
(ii) Target selection methods; (iii) reagent stabilization and packaging; (iv)
sample preparation methods and procedures; (v) assay optimization techniques;
(vi) signal detection methods and protocols; (vii) data collection or analysis
methods; (viii) multiplexing methods; and (ix) automation and miniaturization
methodologies, techniques and equipment, in each case to the extent the same is
Controlled by ABG during the term of this Agreement, and to the extent the same
is necessary or useful for TWT to fulfill its obligations or exercise its rights
hereunder.

                     1.1.2 "ABG Patents" shall mean all patents and all
reissues, renewals, re-examinations and extensions thereof, and patent
applications therefor, and any divisions or continuations, in whole or in part,
thereof, which claim the manufacture, use or sale of the Assays and Assay
Components, in each case that are Controlled by ABG during the term of this
Agreement, and to the extent the same is necessary or useful for TWT to fulfill
its obligations or exercise its rights hereunder.

<PAGE>   2

              1.2 "Affiliate" shall mean any entity which controls, is
controlled by or is under common control with TWT or ABG . For purposes of this
definition only, and not the definition of Control set forth in Section 1.6,
"control" shall mean ownership or control, directly or indirectly, of more than
fifty percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority).

              1.3 "Assay" shall mean a SNP genotyping assay developed hereunder
based on TWT's proprietary Invader assay platform as described in more detail on
Attachment 1 hereto.

                     1.3.1 "Phase I Assay" shall mean an Assay developed as part
of the Phase I Development Program. It is understood that Phase I Assays shall
include those Assays provided to the Japanese SNP Initiative prior to the
Effective Date hereof.

                     1.3.2 "Phase II Assay" shall mean an Assay developed as
part of the Phase II Development Program.

              1.4 "Assay Components" shall mean for a particular Assay,
collectively and individually, (i) the Primary Probe Mix, (ii) the Master Mix,
and (iii) the DNA-coated Cards (as defined in Section 3.2.1.4 below), for
purposes of Phase I Assays, as manufactured and supplied by the parties
hereunder.

              1.5 "Cleavase(R) Enzyme" shall mean that specific
flap-endonuclease (FEN) enzyme with the ability to cleave a nucleotide sequence
at a structure-dependent site, substantially lacking a polymerase activity, and
adapted for use with the Assay, as further described on Attachment 1 hereto.

              1.6 "Control" or "Controlling" for purposes other than the
definition of Section 1.1, shall mean possession of the ability to grant a
license or sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any third party.

              1.7 "DNA-coated Card" shall mean a 96 X 1 (mu)L microtitre plate
having 20 ng of a dried-down genomic DNA sample located in each well thereof.

              1.8 "Development Program" shall mean, collectively, the Phase I
Development Program and the Phase II Development Program performed under this
Agreement.

                     1.8.1 "Phase I Development Program" shall mean the Phase I
Development Program described in Section 3.1.

                     1.8.2 "Phase II Development Program" shall mean the Phase
II Development Program described in Section 3.2.

              1.9 "Equipment" shall mean the equipment listed on Attachment 2
hereto.

              1.10 "FRET Probe Mix" shall mean two (2) differentially
dye-labeled Secondary Probes useful as universal differential reporters for each
allele of a Target, one incorporating FAM dye and the other incorporating VIC
dye, together with a passive reference dye (ROX dye), as described in more
detail in Attachment 1.

                                      -2-
<PAGE>   3

              1.11 "Genomic DNA" shall mean such genomic DNA samples from
Japanese patient samples for use in the Development Program hereunder. The
parties hereto anticipate that the Genomic DNA will be provided by Dr. Nakamura.

              1.12 "Genotyping Determination" shall mean a single determination
of the genotype at a particular SNP locus by analysis of both possible alleles
to determine whether the particular sample is homozygous for the major or minor
allele or heterozygous for both the major and minor alleles.

              1.13 "InvaderCreator(TM) Software" shall mean TWT's proprietary
software for use in probe design and quality control of Assays commonly known as
"InvaderCreator" together with upgrades and updates thereto available during the
term of this Agreement.

              1.14 "Master Mix" shall have the meaning set forth in Section
3.2.1.6 below.

              1.15 "Primary Probe Mix" shall mean an Invader Probe and purified
Primary Invader Probes for a specific Target.

              1.16 "Probe Set" shall mean the Invader Probe and the Signal
Probes for a particular Target in a particular Primary Invader Reaction
(respectively, the "Primary Invader Probes" and "Primary Signal Probes").

                     1.16.1 "Invader Probe" shall mean a probe comprising a
region complementary(1) to the 3'-portion of the sequence of the applicable
Target, and a region that overlaps the duplex formed by the corresponding Signal
Probe and Target by at least a single nucleotide base. The 3'-terminal base of
the Invader Probe may be complementary or noncomplementary to the Target.

                     1.16.2 "Signal Probe" shall mean a probe which is
overlapped by the Invader Probe and which comprises a region complementary to
the 5' portion of the sequence of the particular Target.

                     1.16.3 "Primary Invader Probe Set" shall mean the Primary
Invader Probe and the associated two (2) Primary Signal Probes for a Target.

       For purposes of this Section 1.16, "overlap" refers to the presence of
one or more nucleotides or other structural moieties on the 3'-end of the
Invader Probe that are in addition to the complementary region that forms a
duplex with the 3' portion of the Target that is contiguous to the duplex formed
by the Signal Probe and the 5' portion of the Target.

              1.17 "Profit Margin" shall mean all amounts received by ABG or its
Affiliates in consideration of the transfer of Assays or Assay Components less
(i) ABG Direct Costs, (ii) ABG Overhead, (iii) TWT Direct Costs, and (iv) TWT
Overhead.

                     1.17.1 "ABG Direct Costs" shall mean ABG Manufacturing
Costs.

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

       (1) The Invader Probe and/or Signal Probe allow for areas of
noncomplementarity (i.e., one or more base pair mismatches) to the cognate
sequence of the Target.

                                      -3-
<PAGE>   4

                     1.17.2 "ABG Manufacturing Costs" shall mean the direct
costs incurred by ABG or its Affiliate associated with the manufacture, filling,
packaging, labeling and/or other preparation of (i) Raw Materials provided to
TWT for incorporation into Assays or Assay Components or (ii) Assay Components
for use in the Japanese SNP Initiative, including, without limitation, direct
labor, materials (including reasonable allowances associated with wastage or
failed lots) quality control and other testing, transportation, shipping,
warehousing, logistics and other resources directly consumed in the manufacture,
filling, packaging, labeling, and/or other preparation of such Raw Materials or
Assay Components, in each case calculated in accordance with generally accepted
and standard cost accounting principles. With respect to Raw Materials or Assay
Components (or component thereof) acquired by ABG from a non-Affiliate third
party, the Manufacturing Costs for such Raw Materials or Assay Components (or
component thereof) will be deemed to be the amounts paid to such third party
therefor, plus costs associated with the acquisition from such vendor, including
without limitation, quality control or assurance services provided by or on
behalf of ABG or its Affiliates.

                     1.17.3 "ABG Other Costs" shall mean ABG's reasonable costs
of general and administrative overhead directly allocable to ABG Direct Costs
including costs of facilities and equipment (including Equipment), reasonable
maintenance, service and repair of equipment used for the Development Program or
otherwise for the manufacture of Assays or Assay Components hereunder, import
clearance fees, duties, taxes and other similar governmental charges related to
the importation of Assays, provided that such ABG Other Costs shall in no event
exceed fifty percent (50%) of ABG Direct Costs. "ABG Other Costs" shall include
twenty-five percent (25%) of the running royalties paid or payable by ABG or its
Affiliates to ID Biomedical in connection with the manufacture, use or sale of
Assays hereunder for certain rights under any of U.S. Patent Nos. 5,403,711,
4,876,187, 5,011,769 or 5,660,988, or any patent claiming priority to the same,
or any foreign equivalents of the same, up to a maximum running royalty of one
and one-quarter percent (1.25%) of sales of Assays hereunder.

                     1.17.4 "TWT Direct Costs" shall mean, collectively, the TWT
Manufacturing Costs and the TWT Development Costs.

                     1.17.5 "TWT Manufacturing Costs" shall mean direct costs
incurred by TWT or its Affiliate associated with the manufacture, filling,
packaging, labeling and/or other preparation of such Assays or Assay Components
for use in the Japanese SNP Initiative, including without limitation labor,
materials (including reasonable allowances associated with wastage or failed
lots) and validation studies, quality assurance, quality control and other
testing, transportation, shipping, warehousing, logistics and other resources
directly consumed in the manufacture, filling, packaging, labeling and/or other
preparation of such Assays or Assay Components, in each case calculated in
accordance with generally accepted and standard cost accounting principles. With
respect to Assays or Assay Components acquired by TWT from a non-Affiliate third
party, the Manufacturing Costs for such Assays or Assay Components will be
deemed to be the amounts paid to such third party therefor, plus costs
associated with the acquisition from such vendor, including without limitation,
quality control or assurance services provided by or on behalf of TWT or its
Affiliates.

                     1.17.6 "TWT Development Costs" shall mean the direct costs
of development of Assays, including (i) salaries and employment benefits for
TWT's personnel directly involved in the development of Assays and (ii)
allocation of direct costs of the operation, maintenance and upgrade of the
InvaderCreator Software (or replacement software therefor) related to the
development of the Assays and hardware used therefor.

                                      -4-
<PAGE>   5

                     1.17.7 "TWT Other Costs" shall mean TWT's reasonable costs
of general and administrative overhead directly allocable to TWT Direct Costs
including costs of facilities and equipment, reasonable maintenance,service and
repair of equipment used for the Development Program or otherwise for the
manufacture of Assays or Assay Components hereunder, import clearance fees,
duties, taxes and other similar governmental charges related to the importation
of Assays, provided that such TWT Overhead shall in no event exceed fifty
percent (50%) of TWT Direct Costs.

              1.18 "Quality Control Protocol" shall mean the protocol developed
by TWT pursuant to Sections 3.2.2.6 and 3.3.3.7 below for the quality control of
the Assays.

              1.19 "Raven Plates" shall mean those 384 well microtiter plates
which are formated for use with the Raven System and supplied by ABG to the
Japanese SNP Initiative.

              1.20 "Raven System" shall have the meaning as set forth in Section
3.4 below.

              1.21 "Raw Materials" shall have the meaning as set forth in
Section 3.2.1.3 below.

              1.22 "Reaction Buffer" shall mean 37.5 mM MgCl2, 20%PEG, 500 mM
MOPS, pH 7.5.

              1.23 "Secondary Probe" shall mean an oligonucleotide forming a
hairpin and having a stem portion complementary to a flap portion of the
corresponding Primary Signal Probe.

              1.24 "Specifications" shall mean with respect to a particular
Assay, Assay Component or other deliverable hereunder the delivery
specifications therefor, as may be modified or amended by the Steering Committee
(as described in Section 2.1 below).

              1.25 "Synthesis Reagents" shall mean amidites, 3'-amino support
columns, oxidizer, and capping solution for performing oligonucleotide
synthesis.

              1.26 "Target" shall mean a particular SNP, together with the
associated sequence data, as designated by mutual agreement of Dr. Nakamura and
the parties hereto.

              1.27 "Total Revenue" shall mean any and all amounts received by
ABG, its Affiliates or its designee in consideration of Assays and Assay
Components supplied hereunder for use in the Japanese SNP Initiative.

              1.28 "Transfer Price" shall mean, with respect to Assay Components
or other materials transferred hereunder by one party to the other, the
transferring party's Costs for such Assay Components or other materials so
transferred. For purposes of the foregoing, "Costs" shall mean a party's Direct
Costs plus Other Costs (i.e., "TWT Costs" shall mean TWT Direct Costs plus TWT
Other Costs, and "ABG Costs" shall mean ABG Direct Costs plus ABG Other Costs).

              1.29 "TWT Initial Payment" shall have the meaning as set forth in
Section 7.1 below.

              1.30 "TWT Technology" shall mean TWT Patents and TWT Know-How.

                                      -5-
<PAGE>   6

                     1.30.1 "TWT Know-How" shall mean technical information
relating to: (i) probe design, synthesis and purification methods and
techniques; (ii) Target selection methods; (iii) reagent stabilization and
packaging; (iv) sample preparation methods and procedures; (v) assay
optimization techniques; (vi) signal detection methods and protocols; (vii) data
collection or analysis methods; (viii) multiplexing methods; and (ix) automation
and miniaturization methodologies, techniques and equipment, in each case to the
extent the same is Controlled by TWT during the term of this Agreement, and to
the extent the same is necessary or useful for ABG to fulfill its obligations or
exercise its rights hereunder.

                     1.30.2 "TWT Patents" shall mean all patents and all
reissues, renewals, re-examinations and extensions thereof, and patent
applications therefor, and any divisions or continuations, in whole or in part,
thereof, which claim the manufacture, use or sale of Assays, in each case that
are Controlled by TWT during the term of this Agreement, and to the extent the
same is necessary or useful for ABG to fulfill its obligations or exercise its
rights hereunder.

                                   ARTICLE 2.

                               STEERING COMMITTEE

              2.1 Steering Committee. ABG and TWT shall establish a committee to
oversee, review and coordinate the implementation of the Development Program and
manufacture and transfer of Assays and Assay Components ("Steering Committee").
From time to time, the Steering Committee may establish subcommittees to oversee
particular projects or activities, and such subcommittees will be constituted as
the Steering Committee agrees. The Steering Committee shall (i) review and
approve modifications or amendments to Specifications and/or delivery or other
schedules, and (ii) undertake and/or approve such other matters as are provided
for the Steering Committee under this Agreement or as mutually agreed by the
parties. Decisions of the Steering Committee shall be made by unanimous
agreement of the members present in person or by other means (e.g.,
teleconference) at any meeting; provided that at least two (2) representatives
of each party are present at such meeting.

              2.2 Membership. The Steering Committee shall be comprised of an
equal number of representatives from each of ABG and TWT, selected by such
party. The exact number of such representatives shall be three (3) for each of
TWT and ABG or such other number as the parties may agree. TWT and ABG may
replace its respective Steering Committee representatives at any time, with
prior written notice to the other party. Each party will report at least monthly
through its representatives on the Steering Committee with respect to the
progress of the Development Program.

              2.3 Steering Committee Meetings. During the term of the Phase I
Development Program, the Steering Committee shall meet bi-monthly or as
otherwise agreed by the parties, and thereafter as necessary to oversee, review
and coordinate the Development Program, but no less than monthly. Such meeting
shall be held by video conference or as otherwise agreed.

                                   ARTICLE 3.

                               DEVELOPMENT PROGRAM

              3.1 Development Program. ABG and TWT shall use commercially
reasonable diligent efforts to conduct a development program for approximately
one hundred fifty thousand

                                      -6-
<PAGE>   7

(150,000) Assays as specified by Dr. Nakamura in accordance with a time schedule
mutually agreed to by the parties and Dr. Nakamura. The Development Program
shall be conducted in two phases ("Phase I Development Program" and "Phase II
Development Program") as described in more detail below.

              3.2 Phase I Development Program. Each party shall perform the
obligations assigned to such party as may be modified by the Steering Committee,
and deliver the associated deliverables in accordance with the Specifications
therefor, as set forth in this Section 3.2.

                     3.2.1 ABG . ABG shall perform the following obligations
with respect to each of the Phase I Assays:

                            3.2.1.1 synthesize a FRET Probe Mix for the two (2)
alleles of a Target;

                            3.2.1.2 prepare the Reaction Buffer (as described in
more detail in Attachment 1);

                            3.2.1.3 provide to TWT sufficient quantities of (i)
Synthesis Reagents for TWT to synthesize the Primary Invader Probe Set and
synthetic targets, (ii) FRET Probe Mix, Reaction Buffer and control DNAs (~75
ng/SNP for each of 5 individuals) for use in the Quality Control Protocol
(collectively, (i) and (ii), the "Raw Materials");

                            3.2.1.4 dry down each of up to five thousand (5,000)
Genomic DNA samples with one 20 ng sample in each well of a 96 X 1 (mu)L card
(each such card a "DNA-coated Card");

                            3.2.1.5 package the DNA-coated Cards; and

                            3.2.1.6 package FRET Probe Mix, Reaction Buffer and
Cleavase Enzyme (collectively, the "Master Mix").

                     3.2.2 Delivery. ABG shall deliver to TWT in sufficient
quantities the Raw Materials in accordance with a schedule mutually agreed upon
by the parties.

                     3.2.3 TWT. TWT shall perform the following obligations with
respect to each of the Phase I Assays:

                            3.2.3.1 design one (1) Target-specific Invader Probe
and two (2) Primary Signal Probes (each as described in more detail on
Attachment 1) for each of the majority and minority allele for each Target using
InvaderCreator Software;

                            3.2.3.2 synthesize using Synthesis Reagents provided
by ABG each of (A) the Invader Probe, (B) two (2) Primary Signal Probes and (C)
two (2) synthetic targets one for each allele of a Target (each a "Synthetic
Target") for use in the Quality Control Protocol described below;

                            3.2.3.3 purify each Primary Signal Probe employing
TWT's standard HPLC methodologies or such other processes as the Steering
Committee may establish from time to time.

                                      -7-
<PAGE>   8

                            3.2.3.4 prepare Cleavase Enzyme;

                            3.2.3.5 provide sufficient quantities of Cleavase
Enzyme to ABG for inclusion and packaging with Master Mix;

                            3.2.3.6 quality control each of the Phase I Assays
using the genomic DNAs, Reaction Buffer and FRET Probe Mix provided by ABG
employing TWT's standard Quality Control Protocols or such other protocols as
the Steering Committee may approve from time to time; and

                            3.2.3.7 package Primary Probe Mix.

                     3.2.4 Term of Phase I Development Program. The parties
shall conduct the Phase I Development Program until such time as ABG has
completed development of the Raven System in accordance with Section 3.4 below.
Each party shall use commercially reasonable diligent efforts to perform those
activities that are reasonably necessary to complete the Phase I Development
Program under this Section 3.2 by October 31, 2000.

                     3.2.5 Delivery. TWT shall deliver (i) Cleavase Enzyme to
ABG pursuant to a schedule mutually agreed upon by the parties, and (ii) Primary
Probe Mix (as set forth in Section 3.2.3.7) to Dr. Nakamura or others for use in
the Japanese SNP Initiative pursuant to Sections 5.2.1.2.

              3.3 Phase II Development Program. Each party shall perform the
activities assigned to such party as may be modified by the Steering Committee,
and provide the associated deliverables in accordance with the Specifications
therefor, as set forth in this Section 3.3:

                     3.3.1 ABG . ABG shall perform the following obligations
with respect to each of the Phase II Assays:

                            3.3.1.1 provide to TWT sufficient quantities of FAM,
VIC and ROX dyes (or such other dyes as the Steering Committee may specify) for
preparation of the FRET Probe Mix;

                            3.3.1.2 provide to TWT sufficient quantities of:
Synthesis Reagents for TWT to synthesize the Invader Probe, Primary Signal
Probes, Synthetic Targets, and FRET Probe Mix; and

                     3.3.2 Delivery. ABG shall deliver to TWT the Raw Materials
in accordance with a schedule mutually agreed upon by the parties.

                     3.3.3 TWT. TWT shall perform the following obligations with
respect to each Phase II Assay:

                            3.3.3.1 design one (1) Target-specific Invader Probe
and two (2) Primary Signal Probes for each of the majority and minority allele
for each Target using InvaderCreator Software;

                                      -8-
<PAGE>   9

                            3.3.3.2 synthesize using Synthesis Reagents provided
by ABG each of (i) Invader Probe, (ii) 2 Primary Signal Probes and (iii) two (2)
Synthetic Targets for use in the Quality Control Protocol described below;

                            3.3.3.3 purify each Primary Probe employing TWT's
standard HPLC methodologies or such other processes as the Steering Committee
may establish from time to time;

                            3.3.3.4 synthesize the FRET Probe Mix using
Synthesis Reagents and FAM, VIC and ROX dyes provided by ABG ;

                            3.3.3.5 prepare the Reaction Buffer;

                            3.3.3.6 prepare Cleavase Enzyme;

                            3.3.3.7 quality control each of the Phase II Assays
employing TWT's standard Quality Control Protocols or such other protocols as
the Steering Committee may approve from time to time;

                            3.3.3.8 package Primary Probe Mix;

                            3.3.3.9 package Master Mix; and

                            3.3.3.10 such other activities as the parties may
agree from time to time.

                     3.3.4 Delivery. TWT shall deliver the Primary Probe Mix and
Master Mix to Dr. Nakamura or others for use in the Japanese SNP Initiative
pursuant to Sections 5.2.2.2 below.

              3.4 Development of Raven System. ABG shall use its commercially
reasonable diligent efforts to develop and complete a beta-unit of an automated
format of the ABI Prism(TM) 7700 Detection System (the "Raven System") for use
by Dr. Nakamura or others for genotyping using the Phase II Assays for the
Japanese SNP Initiative. Following completion of the beta-unit of the Raven
System, ABG shall cooperate with Dr. Nakamura to complete the rollout of the
Raven System for use in the Japanese SNP Initiative. Promptly after the
Effective Date, ABG shall provide to TWT written specifications regarding the
formatting of the Raven System. Based on such specifications, each party shall
perform its obligations under the Development Program to ensure that the Phase
II Assays and associated deliverables are compatible for use with the 384-well
microtiter plates on the Raven System.

              3.5 Development Program Materials. It is understood that any and
all materials provided by one party to the other in connection with the
Development Program shall be used solely for purpose of the Development Program
and not provided to third parties except to Dr. Nakamura or others in finished
Assay Component format for use in the Japanese SNP Initiative. It is further
understood that the party in control of such materials shall be responsible for
ensuring that its use conforms with all applicable laws and regulations.
Further, all materials transferred by one party to the other will be transferred
at the Transfer Price of the materials, except as otherwise expressly provided
herein.

                                      -9-
<PAGE>   10

              3.6 Equipment Loan. In connection with the Development Program,
ABG shall loan the Equipment to TWT pursuant to the loan agreement attached
hereto as Exhibit A (the "Loan Agreement"). ABG and TWT shall enter into the
Loan Agreement coincident with the execution of this Agreement.

              3.7 Materials. Each party acknowledges that certain of the
materials transferred to it under the Development Program are highly sensitive
materials (including but not limited to certain fluorescent dyes, e.g., VIC dye,
transferred by ABG to TWT), and that, if the materials were made available to
third parties, such availability could have a substantial adverse effect on the
transferring company's current businesses. Each party agrees to use any
materials transferred hereunder only in furtherance of the Development Program,
and, at the end of the Development Program, to return any unused materials to
the transferrring party.

                                   ARTICLE 4.

                                 RECORD KEEPING

              4.1 Records. Each party shall maintain records of its activities
under the Development Program (or cause such records to be maintained) in
sufficient detail and in good scientific manner as will properly reflect all
work done and results achieved in the performance of the Development Program. In
addition, each party shall have reasonable access upon advance notice to such
records of the other party.

              4.2 Reports. Each party agrees to keep the Steering Committee
reasonably informed as to its conduct of the Development Program.

                                   ARTICLE 5.

                                     SUPPLY

              5.1 Terms and Conditions. All supply of Assays, Assay Components
Cleavase Enzymes and Raw Materials hereunder shall be subject to the terms and
conditions of this Agreement. ANY ADDITIONAL OR INCONSISTENT TERMS OR CONDITIONS
OF ANY ORDER OR ACKNOWLEDGMENT GIVEN OR RECEIVED REGARDING THE SUBJECT MATTER OF
THIS AGREEMENT SHALL HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY
EXPRESSLY EXCLUDED.

              5.2 Supply. Each party shall be responsible for supplying the
materials assigned to such party below.

                     5.2.1 Phase I Assays.

                            5.2.1.1 ABG. ABG shall supply to Dr. Nakamura or
others for use in the Japanese SNP Initiative, the following components, with
respect to each Phase I Assay: (i) Master Mix, which is capable of performing
one thousand (1,000) Genotyping Determinations; and (ii) DNA-coated Cards.

                            5.2.1.2 TWT. TWT shall supply to ABG , with respect
to each Phase I Assay, the Primary Probe Mix, together with associated quality
control data, which such Primary Probe Mix is capable of performing five
thousand (5,000) Genotyping Determinations.

                                      -10-
<PAGE>   11

                     5.2.2 Phase II Assays. TWT shall supply the following
components to ABG , with respect to each Phase II Assay: (i) the Primary Probe
Mix, together with associated quality control data, which such Primary Probe Mix
is capable of performing five thousand (5,000) Genotyping Determinations; and
(ii) Master Mix, which is capable of performing one thousand (1,000) Genotyping
Determinations;

              5.3 Schedule. The parties shall use commercially reasonable
diligent efforts to supply the Assay Components as set forth in Section 5.2
above to ABG in accordance with a mutually-agreed schedule referencing this
Section 5.3.

              5.4 Shipping and Packaging. All Assay Components delivered
hereunder will be labeled conspicuously "FOR RESEARCH USE ONLY NOT FOR USE IN
DIAGNOSTIC PROCEDURES" and "NOT FOR USE IN AGRICULTURAL APPLICATIONS". All Assay
Components will be packaged in standard packaging and shipped courier, freight
and insurance pre-paid to an address for ABG Biosystems Japan Ltd., a subsidiary
of ABG , ("ABG Japan") in Japan as designated by ABG . ABG shall be responsible
for ensuring that ABG Japan clears the Assay Components through Japanese customs
and delivers the Assay Components to Dr. Nakamura or others associated with the
Japanese SNP Initiative. Furthermore, ABG shall be responsible for ensuring that
ABG Japan collects amounts due from Dr. Nakamura with respect to Assay
Components provided hereunder.

              5.5 Invoicing. TWT shall submit an invoice to ABG upon shipment of
Assay Components shipped hereunder. All invoices shall be sent to ABG 's address
for notices hereunder or such other address as designated by ABG in writing, and
each such invoice shall state the quantity of Assay Components in a given
shipment.

                                   ARTICLE 6.

                                 GRANT OF RIGHTS

              6.1 Grant of Rights to ABG . TWT hereby grants to ABG a
non-exclusive, non-transferable license under the TWT Technology solely for the
purpose of carrying out the activities assigned to it under the Development
Program and distributing the Assay Components to Dr. Nakamura and others for the
Japanese SNP Initiative.

              6.2 Grant of Rights to TWT. ABG hereby grants to TWT a
non-exclusive, non-transferable license under ABG Technology solely for the
purposes of carrying out the activities assigned to it under the Development
Program.

              6.3 No Implied License. Except as expressly provided herein,
nothing in this Agreement shall be deemed to grant TWT any rights under ABG
Technology, or to grant ABG any rights under TWT Technology, either expressly,
impliedly or by estoppel. Without limiting the foregoing, it is agreed that,
subject to ABG's rights in the ABG Technology, TWT shall have the right to sell
and otherwise commercialize (directly or through others) assays directed at the
same Targets as those developed and supplied hereunder without further
obligation to ABG, only to the extent such sales and commercialization does not
practice ABG Technology, or to the extent that TWT obtains a separate license
under such ABG Technology for such purposes, and ABG shall have the right to
sell and otherwise commercialize (directly or through others) assays directed at
the same Targets as those developed and supplied hereunder without further
obligation to TWT, only to the extent such sales and commercialization does not
practice TWT

                                      -11-
<PAGE>   12

Technology, or to the extent that ABG obtains a separate license under such TWT
Technology for such purposes.

                                   ARTICLE 7.

                                    PAYMENTS

              7.1 Initial Payment. Within ten (10) days of the date of TWT's
shipment of Assay Components to ABG or its designee in accordance with Section
5.4 above, each of TWT and ABG will make such payments and perform such other
activities in connection therewith all as set forth in accordance with the
mutually agreed schedule referencing this Section 7.1. For purposes of this
Article 7, TWT's share of the Profit Margin shall be referred to as "TWT
Profits", and likewise, ABG 's share of the Profit Margin shall be referred to
as "ABG Profits."

              7.2 Reconciliation. Within fifteen (15) days of the end of the
first three (3) full calendar months of the delivery schedule set forth in
Section 5.3 and each subsequent three (3) month period thereafter (each such
period, a "Reconciliation Period"), each party shall deliver to the other a
report summarizing in reasonable detail the calculation of each of their
respective Profits (i.e., TWT Profits or ABG Profits, as applicable), including
calculations of their respective Costs. On the basis of such calculations and
taking into account each party's Costs included in the Transfer Price of the
materials provided hereunder, the parties shall make reconciling payments to
ensure that both parties have equally shared the Profit Margin. In the event
that ABG Profits are greater than TWT Profits for such Reconciliation Period,
ABG shall make a payment to TWT equal to one-half (1/2) of the difference
between ABG Profits and TWT Profits for such Reconciliation Period (such
payments, a "Reconciliation Payment") within fifteen (15) days after receipt of
TWT's written report. Likewise, in the event that TWT Profits are greater than
ABG Profits for such Reconciliation Period, TWT shall make a Reconciliation
Payment equal to one-half (1/2) of the difference between TWT Profits and ABG
Profits for such Reconciliation Period within fifteen (15) days after receipt of
ABG 's written report. All such reports provided by one party to the other shall
be deemed Confidential Information of the providing party.

              7.3 Adjustment. Within thirty (30) days of the end of each
Reconciliation Period, the parties shall establish in writing upon an
appropriate adjustment to the revenue sharing percentages and/or minimum
transfer prices set forth in Sections 7.1.1 and 7.1.2 based on the parties'
respective actual Profits calculated (i.e., ABG Profits and TWT Profits) and
Reconciliation Payments made in accordance with Section 7.2 above with respect
to the immediately preceding Reconciliation Period. The objective of this
adjustment is to establish a TWT Initial Payment that approximates recoupment of
costs and an equal sharing of the Profit Margin, thus minimizing the need for a
Reconciliation Payment to achieve an actual sharing of the Profit Margin. Any
adjustments made to the revenue sharing percentages and/or minimum transfer
prices in accordance with this Section 7.3 shall replace the existing revenue
sharing percentages and/or minimum transfer prices in Sections 7.1.1 and 7.1.2
and shall take effect in the subsequent Reconciliation Period.

              7.4 Non-discriminatory Pricing. In connection with Assay
Components developed and supplied hereunder to the Japanese SNP Initiative, ABG
agrees to charge Dr. Nakamura and others for such Assay Components in accordance
with its standard practices and shall not price such Assays in a manner below
how ABG prices its other products of a similar margin potential.

                                      -12-
<PAGE>   13

              7.5 Records; Inspection. Each party shall keep complete, true and
accurate books of accounts and records for the purpose of determining the
amounts calculated and payable pursuant to this Article 7. Such books and
records shall be kept at the principal place of business of the party, for at
least five (5) years following the end of the Reconciliation Period to which
they pertain. Such records will be open for inspection during such five (5)-year
period by an independent auditor chosen by the inspecting party and reasonably
acceptable to the other party for the purpose of verifying the amounts payable
hereunder. Such inspections may be made no more than once each calendar year, at
reasonable times and on reasonable notice. Inspections conducted under this
Section 7.5 shall be at the expense of inspecting party, unless a variation or
error producing an underpayment, to such party, in amounts payable exceeding ten
percent (10%) of the amount payable for any Reconciliation Period covered by the
inspection is established in the course of any such inspection, whereupon all
costs relating to the inspection and any underpaid amounts that are discovered
shall be paid by the party in error, together with interest on such underpaid
amounts at the rate set forth in Section 7.6 below. The parties will endeavor to
minimize disruption of the inspected party's normal business activities to the
extent reasonably practicable.

              7.6 Payments. All amounts payable hereunder shall be payable in
United States Dollars and shall be made by check or bank wire transfer in
immediately available funds to an account designated by TWT. Any payments due
under this Agreement which are not paid by the date such payments are due under
this Agreement shall bear interest to the extent permitted by applicable law at
the U.S. prime rate per annum quoted in the "Money Rates" column of The Wall
Street Journal (U.S., East Coast Edition) on the date such payment is due, plus
an additional two percent (2%), calculated on the number of days such payment is
delinquent. This Section 7.6 shall in no way limit any other remedies available
to either party hereto.

              7.7 Currency Conversion. Any currency conversion shall be required
in connection with the payments hereunder, such conversion shall be made by
using the exchange rates used by ABG in calculating ABG 's own revenues for
financial reporting purposes.

                                   ARTICLE 8.

                              INTELLECTUAL PROPERTY

              8.1 Ownership of Inventions. Title to all inventions and other
intellectual property conceived and reduced to practice solely by ABG personnel
in connection with the Development Program ("ABG Inventions") shall be owned by
ABG. Title to all inventions and other intellectual property conceived and
reduced to practice solely by TWT personnel in connection with the Development
Program ("TWT Inventions") shall be owned by TWT. Title to all inventions and
other intellectual property conceived and reduced to practice jointly by
personnel of TWT and ABG in connection with the Development Program ("Joint
Inventions") shall be jointly owned by ABG and TWT. Except as expressly provided
in this Agreement, it is understood that neither party shall have any obligation
to account to the other for profits, or to obtain any approval of the other
party to license or exploit a Joint Invention, by reason of joint ownership
thereof and each party hereby waives any right it may have under the laws of any
country to require such accounting or approval. Additionally, each party will
have the right, but not the obligation to bring, at its own expense, an
infringement action against any third party under its interest in Joint
Inventions. The parties will assist one another and cooperate in any such
litigation at the reasonable request of the party bringing the suit, and, if the
other party is necessary in order to institute or maintain an infringement by
the party bringing the suit as

                                      -13-
<PAGE>   14

defined by law, such other party agrees to be joined in the suit as a party
plaintiff, at the expense of the party bringing the suit.

              8.2 License to Inventions.

                     8.2.1 TWT Inventions. TWT hereby grants to ABG a
non-exclusive, perpetual, fully paid-up, worldwide license, with the right to
grant and authorize sublicenses, under any TWT Inventions, to make, use, offer
to sell, sell and import products and components and otherwise exploit such TWT
Inventions.

                     8.2.2 ABG Inventions. ABG hereby grants to TWT a
non-exclusive, perpetual, fully paid-up, worldwide license, with the right to
grant and authorize sublicenses, under any ABG Inventions, to make, use, offer
to sell, sell and import products and components and otherwise exploit such ABG
Inventions.

                     8.2.3 Other. It is understood that the foregoing licenses
under TWT Inventions and ABG Inventions, respectively, may require additional
licenses to intellectual property rights owned or controlled by the other party
or third parties in order to exploit either the TWT Inventions or the ABG
Inventions, as applicable, and that no such additional licenses are granted
herein, either expressly, impliedly or by estoppel.

              8.3 Patent Prosecution.

                     8.3.1 Sole Inventions. ABG or TWT, as the case may be (for
purposes of this Section 8.3.1 the "Controlling party") shall control the
Prosecution and Maintenance Activities pertaining to solely owned patent
applications and patents claiming the Controlling party's Inventions (i.e., a
ABG Invention or a TWT Invention, as applicable), in each case worldwide using
counsel of its choice and in such countries as the Controlling party deems
appropriate. For purposes of this Section 8.3, "Prosecution and Maintenance
Activities" shall mean the preparing, filing, prosecuting and maintenance of
patent applications and patents and re-examinations, reissues and requests for
patent term extensions therefor, together with the conduct of any interference,
opposition or other similar proceeding pertaining to patent applications or
patents.

                     8.3.2 Joint Inventions. TWT shall have the right to control
the Prosecution and Maintenance Activities pertaining to patents and patent
applications claiming Joint Inventions and each party shall be responsible for
one-half (1/2) of the out-of-pocket expenses incurred in connection with such
activities as they are incurred. TWT shall keep ABG informed as to the status of
patent matters described in this Section 8.3.2, including without limitation, by
providing ABG copies of any substantive documents that TWT receives from any
patent office promptly after receipt, including notice of all interferences,
reissues, re-examinations, oppositions or requests for patent term extensions,
and by providing ABG reasonable opportunity to review and comment on any
documents which will be filed in any patent office, and incorporating all
reasonable comments. ABG shall reasonably cooperate with the TWT and assist TWT
in connection with such activities, at TWT's request, including without
limitation, by making scientists and scientific records reasonably available to
TWT. Notwithstanding the foregoing, if either party (the "Notifying party")
notifies the other party in writing that it no longer desires to pay for the
expenses with respect to any such patent application or patent claiming a Joint
Invention under this Section 8.3.2, the Notifying party shall assign all right,
title and interest in and to such patent application or patent (as the case may
be)

                                      -14-
<PAGE>   15

and any patents issuing thereon (subject to the rights and licenses granted
hereunder) to the other party; in such event, the Notifying party shall not be
responsible for expenses incurred under this Section 8.3.2 with respect to such
patent application or patent beginning sixty (60) days after giving the
foregoing notice.

                                   ARTICLE 9.

                                 CONFIDENTIALITY

              9.1 Confidential Information. Except as expressly provided herein,
the parties agree that, for the term of this Agreement and seven (7) years
thereafter, the receiving party shall not publish or otherwise disclose and
shall not use for any purpose any information furnished to it by the other party
hereto pursuant to this Agreement (i) which, if disclosed in tangible form, is
marked "Confidential" or with other similar designation to indicate its
confidential or proprietary nature, or, (ii) if disclosed orally is indicated
orally to be confidential or proprietary by the party disclosing such
information at the time of the initial disclosure thereof and is confirmed in
writing as confidential or proprietary by the disclosing party within forty-five
(45) days after such disclosure, or (iii) is disclosed by a party under
circumstances in which a reasonable person would understand that such
information is confidential and proprietary to the disclosing party
(collectively, "Confidential Information"). Notwithstanding the foregoing,
Confidential Information shall not include information that, in each case as
demonstrated by sufficient evidence:

                     9.1.1 was already known to the receiving party, other than
under an obligation of confidentiality, at the time of disclosure;

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

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

                     9.1.4 was subsequently lawfully disclosed to the receiving
party by a person other than a party; or

                     9.1.5 was developed by the receiving party without
reference to any information or materials disclosed by the disclosing party.

              9.2 Permitted Disclosures. Notwithstanding the provisions of
Section 9.1 above, each party hereto may disclose the other party's Confidential
Information to comply with applicable governmental regulations (not including
regulations applying to the filing of patent applications), including submitting
information to tax authorities, provided that if a party is required to make any
such disclosure of the other party's Confidential Information, to the extent it
may legally do so, it will give reasonable advance notice to the latter party of
such disclosure and, will use its reasonable efforts to secure confidential
treatment of such information prior to its disclosure (whether through
protective orders or otherwise).

                                      -15-
<PAGE>   16

                                   ARTICLE 10.

                         REPRESENTATIONS AND WARRANTIES

              10.1 TWT Warranties. TWT warrants and represents to ABG that (i)
it has the full right and authority to enter into this Agreement and grant the
rights and licenses granted herein; and (ii) it has not previously granted and
will not grant any rights in conflict with the rights and licenses granted
herein.

              10.2 ABG Warranties. ABG warrants and represents to TWT that (i)
it has the full right and authority to enter into this Agreement and grant the
rights and licenses granted herein; and (ii) it has not previously granted and
will not grant any rights in conflict with the rights and licenses granted
herein.

              10.3 Certain Warranties and Covenants. ABG shall have the right to
pass on the following warranties in connection with the transfer of Assay
Components manufactured and supplied by TWT hereunder with respect to such Assay
Components hereunder:

                     10.3.1 Product Specifications. TWT represents and warrants
that all Assay Components supplied to ABG hereunder will comply with all
applicable Specifications at the time of shipment to ABG or its designee.

                     10.3.2 Remedies. In connection therewith, ABG shall require
its customers to promptly perform customary inspection upon receipt of each
shipment of Assay Components manufactured by TWT. Any claim regarding the
failure of such shipment to conform to the applicable Specifications shall be
submitted to TWT promptly upon discovery, but in no case later than thirty (30)
days after the receipt by the customer, together with reasonable evidence of
such nonconformity at the time of inspection. In the event that one of ABG 's
customers of Assay Components submits to TWT (directly or through ABG ) a claim
regarding the failure of any shipment to meet Specifications in accordance with
this Section 10.3.2, TWT shall as its sole and exclusive liability and the
customer's sole and exclusive remedy, at TWT's cost (including freight and
insurance) deliver replacement quantities of such Assay Components to the
Notifying party as soon as practicable.

              10.4 Disclaimer of Warranties. EXCEPT AS PROVIDED IN THIS ARTICLE
10, NEITHER PARTY MAKES ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTY OR
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. Without limiting the foregoing,
TWT shall not be responsible for any representation or warranty made by or on
behalf of ABG to Dr. Nakamura and others in connection with the Japanese SNP
Initiative, which such representation or warranty is beyond the scope of those
warranties made by TWT in Section 10.3.1.

                                   ARTICLE 11.

                                 INDEMNIFICATION

              11.1 Indemnification of ABG. TWT shall indemnify each of ABG and
its directors, officers, and employees of ABG and the successors and assigns of
any of the

                                      -16-
<PAGE>   17

foregoing (each a "ABG Indemnitee"), and hold each ABG Indemnitee harmless from
and against fifty percent (50%) of any and all liabilities, damages,
settlements, penalties, fines, costs or expenses (including, without limitation,
reasonable attorneys' fees and other expenses of litigation) arising out of any
claim, complaint, suit, proceeding or cause of action brought against a ABG
Indemnitee by a third party (any of the foregoing, a "Claim") alleging damage
arising out of the manufacture, sale, distribution or use of Assays or Assay
Components hereunder. Notwithstanding the foregoing, TWT shall have no
obligation under this Section 11.1 with respect to Claims brought against a ABG
Indemnitee by a third party to the extent such Claim arises as a result of the
gross negligence, recklessness or willful misconduct of ABG or its employees,
acting within the scope of their employment.

              11.2 Indemnification of TWT. ABG shall indemnify each of TWT and
its directors, officers, and employees of TWT and the successors and assigns of
any of the foregoing (each a "TWT Indemnitee"), and hold each TWT Indemnitee
harmless from and against fifty percent (50%) of any and all liabilities,
damages, settlements, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys' fees and other expenses of litigation) arising
out of any claim, complaint, suit, proceeding or cause of action brought against
a TWT Indemnitee by a third party (any of the foregoing, a "Claim") alleging
damage arising out of the manufacture, sale, distribution or use of Assays or
Assay Components hereunder. Notwithstanding the foregoing, ABG shall have no
obligation under this Section 11.2 with respect to Claims brought against a TWT
Indemnitee by a third party to the extent such Claim arises as a result of the
gross negligence, recklessness or willful misconduct of TWT or its employees,
acting within the scope of their employment. Furthermore, ABG shall have no
obligation under this Section 11.2 with respect to Claims brought against a TWT
Indemnitee by ID Biomedical, or any successor thereto, for infringement of any
of U.S. Pat. Nos. 5,403,711, 4,876,187, 5,011,769, or 5,660,988, or any patent
claiming priority to the same, or any foreign equivalents of the same ("IDB
Technology").

              11.3 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article 11 shall promptly notify the other party (the
"Indemnitor") in writing of any Claim in respect of which the Indemnitee intends
to claim such indemnification, and the Indemnitor shall have sole control of the
defense and/or settlement thereof; provided that the Indemnitee shall have the
right to participate, at its own expense, with counsel of its own choosing in
the defense and/or settlement of such Claim. The indemnification under this
Article 11 shall not apply to amounts paid with respect to settlement of any
Claim if such settlement is effected without the consent of the Indemnitor,
which consent will not be unreasonably withheld or delayed. The failure to
deliver written notice to the Indemnitor within a reasonable time after the
commencement of any such claim, suit or proceeding, if prejudicial to its
ability to defend such action, shall relieve such Indemnitor of any liability to
the Indemnitee under this Article 11, but the omission so to deliver written
notice to the Indemnitor shall not relieve the Indemnitor of any liability to
any Indemnitee otherwise than under this Article 11. Without limiting the
foregoing, the Indemnitee shall keep the Indemnitor fully informed of the
progress of any Claim for which it intends to claim indemnification under this
Article 11.

                                      -17-
<PAGE>   18

                                   ARTICLE 12.

                              TERM AND TERMINATION

              12.1 Term. This Agreement shall become effective as of the
Effective Date and shall continue in full force and effect unless and until
earlier terminated pursuant to the other provisions of this Article 12.

              12.2 Termination for Cause. Either party to this Agreement may
terminate this Agreement in the event the other party shall have materially
breached or defaulted in the performance of any of its material obligations
hereunder, and such default shall have continued for sixty (60) days after
written notice thereof was provided to the breaching party by the non-breaching
party. Any termination shall become effective at the end of such sixty (60) day
period unless the breaching party has cured any such breach or default prior to
the expiration of the sixty (60) day period.

              12.3 Termination Upon Notice. Either party may terminate this
Agreement upon ninety (90) days prior written notice to the other party,
provided that such notice shall not be delivered prior to May 1, 2002.

              12.4 Termination of Japanese SNP Initiative. Notwithstanding
Section 12.3 above, either party may terminate this Agreement upon ninety (90)
days prior written notice to the other prior to May 1, 2002 in the event Dr.
Nakamura provides written notice of his intent to discontinue or significantly
reduce use of the Assays in the Japanese SNP Initiative.

              12.5 Effects of Expiration or Termination. Termination of this
Agreement for any reason shall not release any party hereto from any liability
which, at the time of such termination, has already accrued to the other party
or which is attributable to a period prior to such termination nor preclude
either party from pursuing all rights and remedies it may have hereunder or at
law or in equity with respect to any breach of this Agreement.

              12.6 Survival. Articles 1, 8, 9, 10, 11, 12 and 13 and Section 7.5
shall survive expiration or termination of this Agreement for any reason. Except
as otherwise provided in this Article 12 all rights and obligations of the
parties under this Agreement shall terminate upon expiration or termination of
this Agreement for any reason.

                                   ARTICLE 13.
                               DISPUTE RESOLUTION

              13.1 Disputes. If the parties are unable to resolve any dispute
between them arising out of or in connection with this Agreement, either party
may, by written notice to the other, have such dispute referred to the
Presidents of each TWT and ABG for attempted resolution by good faith
negotiations within sixty (60) days after such notice is received, and in such
event, each party shall cause its President to meet and be available to attempt
to resolve such issue.

              13.2 Arbitration. Any dispute, controversy or claim arising out of
or in connection with the validity, construction, enforceability or performance
of this Agreement,

                                      -18-
<PAGE>   19

including disputes relating to alleged breach or to termination of this
Agreement shall be settled by binding arbitration in the manner described in
Exhibit B.

                                   ARTICLE 14.

                                  MISCELLANEOUS

              14.1 Governing Law. This Agreement and any dispute arising from
the performance or breach hereof shall be governed by and construed and enforced
in accordance with, the laws of the State of California, without reference to
conflicts of laws principles.

              14.2 Force Majeure. Nonperformance of any party shall be excused
to the extent that performance is rendered impossible by strike, fire,
earthquake, flood, governmental acts or orders or restrictions, failure of
suppliers, or any other reason where failure to perform is beyond the reasonable
control of the nonperforming party.

              14.3 Third party Contractors. Without limiting either party's
responsibility under this Agreement, each party shall have the right at any time
to satisfy its supply obligations hereunder either in whole or in part through
arrangements with third parties engaged to perform services or supply facilities
or goods.

              14.4 No Implied Waivers; Rights Cumulative. No failure on the part
of TWT or ABG to exercise and no delay in exercising any right under this
Agreement, or provided by statute or at law or in equity or otherwise, shall
impair, prejudice or constitute a waiver of any such right, nor shall any
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.

              14.5 No Consequential Damages. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY SPECIAL, CONSEQUENTIAL,
EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR
PROFITS RELATING TO THE SAME), ARISING FROM OR RELATING TO THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF, WHETHER BASED IN CONTRACT, TORT (INCLUDING WITHOUT
LIMITATION NEGLIGENCE) OR OTHERWISE, AND EVEN IF SUCH PARTY IS ADVISED OF THE
POSSIBILITY OR LIKELIHOOD OF SAME. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSE OR ANY LIMITED REMEDY PROVIDED HEREIN.

              14.6 Independent Contractors. Nothing contained in this Agreement
is intended implicitly, or is to be construed, to constitute TWT or ABG as
partners in the legal sense. No party hereto shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of any other party or to bind any other party to any contract, agreement or
undertaking with any third party.

              14.7 Notices. All notices, requests and other communications
hereunder shall be in writing and shall be personally delivered, sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
via facsimile in each case to the respective address specified below, or such
other address as may be specified in writing to the other parties hereto:

                                      -19-
<PAGE>   20

<TABLE>
<S>                                                <C>
               ABG :                               Applied Biosystems Group
                                                   850 Lincoln Centre Drive
                                                   Foster City, CA  94404-1128
                                                   Attention: Legal Department
                                                   Fax:  650-638-6677

               TWT:                                Third Wave Technologies, Inc.
                                                   502 S. Rosa Road
                                                   Madison, WI 53719-1256
                                                   Attn:  President
                                                   Fax:  (608) 273-6989

               with a copy to:                     Wilson Sonsini Goodrich & Rosati
                                                   Professional Corporation
                                                   650 Page Mill Road
                                                   Palo Alto, California 94304-1050
                                                   Attn:  Kenneth A. Clark, Esq.
                                                   Fax:  (650) 493-6811
</TABLE>

              14.8 Assignment. This Agreement shall not be assignable by either
party to any third party hereto without the written consent of the other party
hereto, except that either party may assign this Agreement without prior consent
to an entity that acquires all or substantially all of the business or assets of
such party (or that portion thereof to which this Agreement relates), in each
case whether by merger, acquisition, or otherwise, provided that such assignee
agrees in writing to be bound by the terms and conditions of this Agreement.

              14.9 Modification. No amendment or modification of any provision
of this Agreement shall be effective unless in writing signed by all parties
hereto. No provision of this Agreement shall be varied, contradicted or
explained by any oral agreement, course of dealing or performance or any other
matter not set forth in an agreement in writing and signed by both parties.

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

              14.11 Publicity. Each of the parties hereto agrees not to disclose
to any third party the financial terms of this Agreement without the prior
written consent of the other party hereto, except to advisors, investors and
others on a need-to-know basis under circumstances that reasonably ensure the
confidentiality thereof, or to the extent required by law. In addition, neither
Party nor any of its Affiliates will originate any press release relating to
this Agreement without the prior written approval of the other Party, except to
the extent required by law.

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

                                      -20-
<PAGE>   21

              14.13 Compliance with Laws. Notwithstanding anything to the
contrary contained herein, all obligations of ABG and TWT are subject to prior
compliance with United States and foreign export regulations and such other
United States and foreign laws and regulations as may be applicable, and to
obtaining all necessary approvals required by the applicable agencies of the
governments of the United States and foreign jurisdictions. ABG and TWT shall
cooperate with each other and shall provide assistance to the other as
reasonably necessary to obtain any required approvals.

              14.14 Headings. Headings used herein are for convenience only and
shall not in any way affect the construction of or be taken into consideration
in interpreting this Agreement.

              14.15 Entire Agreement. This Agreement together with the Exhibits
and schedules expressly referencing this Agreement and signed by the parties,
constitute the entire agreement, both written or oral, with respect to the
subject matter hereof, and supersede all prior or contemporaneous understandings
or agreements, including the "LOI for Collaboration Agreement (Nakamura
Project)" dated May 15, 2000, whether written or oral, between TWT and ABG with
respect to such subject matter.

       IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in duplicate originals as of the date first above
written.

THIRD WAVE TECHNOLOGIES, INC.         APPLIED BIOSYSTEMS GROUP

By:  /s/ Lance Fors                 By:   /s/ Michael W. Hunkapiller
    ----------------------------       -----------------------------------------

Name: Lance Fors                    Name: Michael W. Hunkapiller
      --------------------------         ---------------------------------------

Title: President & CEO              Title: Senior Vice President, PE Corporation
       -------------------------          --------------------------------------

                                      -21-
<PAGE>   22

                                    EXHIBIT A

                             FORM OF LOAN AGREEMENT

                         [Attach form of Loan Agreement]

<PAGE>   23

                                    EXHIBIT B

                         ALTERNATIVE DISPUTE RESOLUTION

In the event of any dispute, difference or question between the parties arising
out of or in connection with this Agreement, the construction thereof, or the
rights, duties or liabilities of either party excluding any dispute or
controversy for which arbitration is prohibited by any applicable law or treaty,
and which dispute is not amicably resolved by the good faith efforts of the
parties under Section 13.1, then such dispute will be resolved by binding
arbitration in the manner described below:

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

2.     Within 5 business days following the receipt of the original arbitration
       notice ("Notice Date") a neutral will be selected by the then President
       of the Center for Public Resources ("CPR"), 14th Floor, 366 Madison
       Avenue, New York, New York 10017. The neutral will be an individual who
       will preside in resolution of any disputes between the parties and will
       be an independent expert in the biopharmaceutical industry with a general
       working knowledge of genetic analysis and the technology and market
       relating thereto. The neutral selected will be a member of the Judicial
       Panel of the CPR and will not be an employee, director or shareholder of
       either a party or of an Affiliate of either party. In the event the
       President of the CPR is unable to select from the Judicial Panel of the
       CPR a neutral meeting the criteria outlined above, the parties shall
       agree to select a neutral meeting such criteria outside of the CPR within
       10 business days following the Notice Date .

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

<PAGE>   24

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

       4.1.   Each party will have the right to be represented by counsel at the
              hearing.

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

5.     The arbitration proceeding will be confidential and the neutral will
       issue appropriate protective orders to safeguard each parties'
       Confidential Information. Except as required by law, no party will make
       (or instruct the neutral to make) any public announcement with respect to
       the proceedings or decision of the neutral without the prior written
       consent of each other party. The existence of any dispute submitted to
       arbitration, and the award of the neutral, will be kept in confidence by
       the parties and the neutral, except as required in connection with the
       enforcement of such award or as otherwise required by applicable law.

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

7.     Each party will be entitled to a maximum of eight (8) hours of hearing to
       present testimony or documentary evidence. Such time limitation will
       include any direct, cross or rebuttal testimony, but such time limitation
       will only be charged against the party conducting such direct, cross or
       rebuttal testimony. It will be the responsibility of the neutral to
       determine whether each party has had the full day of hearing to which it
       is entitled. If the neutral believes that exceptional circumstances
       exist, and additional hearing time is necessary for a full and fair
       resolution of the issue, the neutral may order such additional hearing
       time as the neutral deems necessary.

8.     At least 15 business days prior to the date set for the hearing, each
       party will submit to each other party and the neutral a list of all
       documents on which such party intends to rely in any oral or

                                      -2-
<PAGE>   25

       written presentation to the neutral and a list of all witnesses, if any,
       such party intends to call at such hearing and a brief summary of each
       witnesses testimony.

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

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

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

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

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

                                      -3-

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