Document:

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                                               *Confidential Treatment Requested

                                                                   EXHIBIT 10.16

                               RESEARCH AGREEMENT

    THIS RESEARCH AGREEMENT ("Agreement") is made this 20th day of August, 1999,
by and between Third Wave Technologies, Inc. ("Institution"); and Warner-Lambert
Company, a Delaware corporation, with its principal place of business at 201
Tabor Road, Morris Plains, New Jersey, 07950 ("Company").

                                    RECITALS

A. Institution has developed substantial expertise in the area of assay
development for gene expression profiling and polymorphism and mutation analysis
(the "Field").

B. Company desires to obtain the services of Institution in directing certain
research in the Field relating to the development of certain assays. Such
research is hereinafter referred to as the "Development Program". Institution is
willing to direct the Development Program, all on the terms and conditions set
forth herein and in accordance with the protocol attached hereto as Exhibit A
and incorporated herein by reference (the "Protocol").

    NOW, THEREFORE, in consideration of the covenants and premises herein
contained, the parties agree as follows:

1. The Development Program. Promptly following receipt of the amount set forth
in Section 2 below, Institution shall use diligent efforts to develop Invader(R)
polymorphism and mRNA transcript assays described in the Protocol, subject to
Company providing Institution the materials described in Exhibit B
(collectively, the "Company Materials"). Upon completion of the Development
Program with respect to each such particular assay, Institution agrees to
provide Company with the number of assay determinations set forth in the
Protocol for such particular assay, including enzyme, buffer and Invader probes
for such analyte (collectively, the "Institution Materials"). Accordingly,
Institution shall, after consultation with Company, direct and perform the
Development Program in a professional and diligent manner, all in accordance
with the Protocol and the terms of this Agreement.

2. Payment. In consideration for the performance of the Development Program by
Institution, Company shall pay Institution a non-refundable amount of $474,100
(the "Research Amount") within five (5) days of the date of Company's execution
of this Agreement.

3. Reporting. Company designates Stephen Hunt or his or her successor to
function as its research and development contact (the "Contact"). Institution
shall inform the Contact of the progress of the Development Program in the
following manner:

        (a) By informal verbal reports, from time to time;

        (b) By response to all of Company's reasonable inquiries regarding the
status of the Development Program;

        (c) By arrangements to periodically meet and discuss the progress of the
Development Program with the Contact at Institution's facilities; and

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        (d) By submission of a detailed written report thirty (30) days
following the conclusion of the Development Program (the "Final Report").

4. Ownership of Data; Publication. Subject to Company's rights in the Company
Materials, all right, title and interest in and to all information disclosed by
Institution hereunder and to all Institution Materials transferred hereunder
shall remain vested in Institution. Except as otherwise provided in this Section
4 below, Company shall own all right, title and interest in and to Inventions
(collectively, "Company Inventions") and Institution hereby assigns all such
right, title and interest in the Company Inventions to Company. Furthermore,
Institution hereby agrees to only use its personnel in connection with the
Development Program. Notwithstanding the foregoing, Company hereby agrees that
Institution shall own all right, title and interest in and to Inventions
directed to subject matter comprising improvements to the Invader assay
technology, including without limitation methods of sample preparation, probe
design or production, or assay development, performance or analysis
(collectively, "Improvements") and Company hereby assigns all such right, title
and interest in the Improvements to Institution. In addition, Company hereby
grants to Institution, to the extent it has the right to do so, an exclusive,
worldwide, royalty-free, fully paid-up, irrevocable right and license, with the
right to grant and authorize sublicenses, under any and all Company Inventions,
to make, have made, use, import, offer for sale and sell products and
components, solely for diagnostic applications including for tests or assays
used to guide, prescribe or direct therapeutic regimens, treatments or drugs.
For purposes of this Agreement, "Invention" shall mean any and all discoveries,
inventions and other subject matter (whether patentable or not) made in the
course of performing the Evaluation (as defined below) or otherwise in
connection with using the Institution Materials as permitted hereunder and all
intellectual property rights therein. Nothing in this Agreement is to be
construed as granting a license to Company to utilize any information received
from Institution or Institution Materials except as expressly provided herein,
under any patent or other intellectual property rights owned by Institution,
unless a separate agreement for such rights is executed by Company and
Institution. Company and Institution further agree to perform such acts and
provide such documents as are reasonably requested by the other party to effect
the foregoing assignments.

5. Confidentiality. Institution and Company hereby confirm the validity of and
agree to be bound by the Mutual Confidentiality Agreement effective March 24,
1998 by and between the parties which continues in effect (the "Confidentiality
Agreement").

        (a) Confidential Information. The parties may from time to time disclose
to each other Confidential Information. "Confidential Information" shall mean
any information disclosed by one party to the other party hereto which if
disclosed in tangible form is marked "confidential" or with other similar
designation to indicate its confidential or proprietary nature or if disclosed
orally is indicated orally to be confidential or proprietary by the party
disclosing such information at the time of such disclosure and is confirmed in
writing as confidential or proprietary by the disclosing party within a
reasonable period after such disclosure; provided, however, all Improvements
shall be deemed to be Confidential Information of the Institution and all
Company Inventions (except to the extent that such Company Inventions relate to
diagnostic applications) shall be deemed to be Confidential Information of the
Company. Notwithstanding the foregoing or anything herein to the contrary,
Confidential Information shall not include any information that, in each case as
demonstrated by written documentation: (i) was already known to the receiving
party or its affiliates, other than under an obligation of confidentiality, at
the time of disclosure; (ii) was generally available to the public or otherwise
part of the public domain at the time of its disclosure to the receiving party;
(iii) became generally available to the

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public or otherwise part of the public domain after its disclosure and other
than through any act or omission of the receiving party in breach of this
Agreement; or (iv) was subsequently lawfully disclosed to the receiving party or
its affiliates by a third party which is not in violation of any contractual or
legal obligation to the disclosing party with respect to such Confidential
Information.

        (b) Confidentiality. Each party agrees to hold and maintain in strict
confidence all Confidential Information of the other party. Without limiting the
foregoing, neither party shall use or disclose the Confidential Information of
the other party, except as otherwise permitted by this Agreement or as may be
necessary or useful to exercise its rights or perform its obligations under this
Agreement. Nothing contained in this Section 5 shall prevent either party from
disclosing any Confidential Information of the other party (i) to accountants,
lawyers or other professional advisors to the extent reasonably necessary to
accomplish the purposes of this Agreement or to prospective lenders, investment
bankers or other financial institutions in connection with a merger, acquisition
or securities offering, subject in each case to the recipient entering into an
agreement to protect such Confidential Information from disclosure; or (ii) to
the extent is required by law or regulation to be disclosed; provided, however,
that the party subject to such disclosure requirement has provided written
notice to the other party promptly upon receiving notice of such requirement in
order to enable the other party to seek a protective order or otherwise prevent
disclosure of such Confidential Information. Upon any termination of this
Agreement, Company and Institution shall promptly return to the other party all
Confidential Information received from the other party (except one copy of which
may be retained for purposes of monitoring compliance with the provisions of
this Section 5 and for archival purposes). The foregoing provisions of this
Section 5 shall survive expiration or termination of this Agreement for a period
of seven (7) years after such expiration or termination.

6. Compliance with Applicable Laws. Institution agrees to conduct the
Development Program and maintain records and data during and after the term of
this Agreement in compliance with all applicable legal and regulatory
requirements, including without limitation any applicable requirements of the
United States Food and Drug Administration and the United States Federal Drug
Enforcement Administration.

7. Materials.

        (a) Company agrees that all Institution Materials obtained from
Institution pursuant to this Agreement shall be used solely for the purpose of
evaluating whether or not Company desires to enter into a licensing and other
business arrangements with Institution, all on terms and conditions as mutually
determined by Company and Institution and not for any commercial purposes (the
"Evaluation"). Institution agrees that all Company Materials obtained from
Company pursuant to this Agreement shall be used solely for the purpose of
evaluating whether or not Institution desires to enter into a licensing and
other business arrangements with Company, all on terms and conditions as
mutually determined by Company and Institution and not for any commercial
purposes other than the Development Program and commercial diagnostic
applications. Company agrees at all times to use the Institution Materials, and
Institution agrees at all times to use the Company Materials, in compliance with
all state, federal and other applicable laws, rules and regulation pertaining to
use thereof. The Institution Materials and the Company Materials shall include
the original materials transferred to Company or Institution, respectively, as
well as any derivatives or improvements developed by the receiving party
therefrom. INSTITUTION SUPPLIES THE INSTITUTION MATERIALS AND

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COMPANY SUPPLIES THE COMPANY MATERIALS WITHOUT ANY WARRANTY, REPRESENTATION OR
UNDERTAKING WHATSOEVER, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTY RESPECTING THE EFFICIENCY, PERFORMANCE, WORKMANSHIP, CONDITION,
MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE OR NONINFRINGEMENT.

        (b) During the term of this Agreement and for five (5) years thereafter
Institution agrees to make available to Company for its own internal research
and development purposes enzyme, buffer and Invader probes developed hereunder
pursuant Institution's standard terms and conditions therefor, including
standard pricing and minimum order requirement of at least quantities to perform
one thousand (1,000) determinations for any particular polymorphism or mRNA
transcript, as applicable.

8. Institution's Representations and Warranties. Institution hereby represents,
warrants and covenants to Company the following:

        (a) It has the power and authority to undertake the contractual
commitments set forth in this Agreement; and

        (b) It is free to enter into this Agreement and carry out its
obligations hereunder without violating any obligation owed to a third party,
including, without limitation, any governmental or quasi-governmental agency,
group or department, or any other private or public institution, person or
company. No such third party currently has, or, except as expressly authorized
herein, will have, any option, license or other right of any kind with respect
to any Institution Materials or any data, information, inventions or discoveries
obtained or developed under this Agreement.

9. Monitoring of Development Program. During the term of this Agreement,
Institution agrees to permit representatives of Company to examine at any
reasonable time during normal business hours (i) the facilities where the
Development Program is being conducted, (ii) raw research data and (iii) any
other relevant information (and to make copies) necessary for Company to confirm
that the Development Program is being conducted in conformance with the Protocol
and in compliance with applicable laws and regulations, including those of the
United States Food and Drug Administration and the United States Federal Drug
Enforcement Administration.

10. Term. The term of this Agreement shall commence on the date that it is made
and continue for up to 180 days.

11. Termination. The Development Program may be terminated by Company at any
time in the exercise of its sole discretion upon fifteen (15) days prior written
notice to Institution. Upon receipt or giving of notice, as the case may be,
Institution agrees promptly to terminate conduct of the Development Program.

12. Publicity. Neither party shall use the name of the other party or its
divisions, affiliates, personnel or products, as applicable, for promotional
purposes without the prior written consent of the party whose name is proposed
to be used, which consent shall not be unreasonably withheld; provided, however,
that either party may (i) disclose the terms of this Agreement to prospective
lenders, investment bankers and other financial institutions of its choice
solely for the purposes of financing the business operations of such party,
either upon the written consent of the other party or if the disclosing party
obtains a signed confidentiality agreement with such

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entity or financial institution with respect to such information, and (ii) make
disclosures to the extent required to comply with applicable securities law and
in the case of (ii), if possible, the non-disclosing party shall have consented
to such disclosure, which consent shall not be unreasonably withheld. Without
limiting the foregoing, the parties shall agree, within fifteen (15) days of
executing this Agreement, upon a press release to announce the execution of this
Agreement; thereafter, each party may each disclose to third parties the
information contained in such press release without the need for further
approval by the other.

13. Independent Contractor. Institution is acting in the capacity of independent
contractor hereunder and not as employee or agent of Company.

14. Controlling Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Michigan (other than provisions relating
to conflicts of laws).

15. Agreement Modifications. This Agreement may not be altered, amended or
modified except by written document signed by all parties.

16. Inconsistencies. The terms and conditions of this Agreement shall govern in
the event of conflict between it and the Protocol.

17. Force Majeure. Any party's delay or failure in performing its obligations
under this Agreement shall be excused to the extent caused by the occurrence of
events beyond that party's reasonable control, including without limitation,
war, floods, earthquakes, other acts of God, industrial disputes, civil
disobedience, strikes, fire, mobilization, changes in governmental regulation or
interpretation, requisition, embargo, restriction and shortage of transport
facilities, fuel, energy or supplies. Each party claiming the benefit of such an
excuse shall notify the other party in writing of any such delay or failure in
performance, and shall resume performance as soon as is reasonably practicable.

18. Notice. All notices given hereunder shall be in writing and shall be
delivered by hand or mailed by certified or registered mail, return receipt
requested, postage pre-paid, addressed to the parties as follows:

<TABLE>
<S>                                <C>
    (a) To Company:                Parke-Davis Pharmaceutical Research
                                   2800 Plymouth Road
                                   Ann Arbor, Michigan 48105
                                   Attn: Chairman

        with a copy to:            Parke-Davis Pharmaceutical Research
                                   2800 Plymouth Road
                                   Ann Arbor, Michigan 48105
                                   Attn: Assistant General Counsel

    (b) To Institution:            Third Wave Technologies, Inc.
                                   502 South Rosa Road
                                   Madison, Wisconsin 53719-1256
                                   Attn: President
</TABLE>

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Notice shall be deemed given when received and the parties may change the
respective addresses where notice is to be given upon prior notice hereunder.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.

WARNER-LAMBERT COMPANY

By: /s/ PETER B. CORR
   -------------------------------
Name:  Peter B. Corr
      ----------------------------
Title: President, R&D
      ----------------------------

THIRD WAVE TECHNOLOGIES, INC.

By: /s/ LANCE FORS
   -------------------------------
Name:  Lance Fors
      ----------------------------
Title: Chief Executive Officer
      ----------------------------

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                                    EXHIBIT A

                                    PROTOCOL

The Institution will develop one hundred and eighty-one (181) discrete
Invader(TM) Assays and supply the indicated number of determinations as detailed
below; all assays will be supplied For Research Use Only and are not for use in
diagnostic procedures with humans:

<TABLE>
<CAPTION>
                           NUMBER OF             NUMBER OF             TOTAL NUMBER
                           DIFFERENT          DETERMINATIONS                OF
        ASSAYS               ASSAYS               PER ASSAY            DETERMINATIONS
     --------------      ------------        ---------------          ----------------
<S>                         <C>                 <C>                    <C>
Mouse SNPs for                  100              1,000(3)               100,000
PDLMG(1)
P450 SNPs for                    25              1,000(3)                25,000
REACH Study(1)
NAT(1) SNP for                    1              4,000(3)                 4,000
REACH Study(1)
P450 mRNA Isoforms                5               1,000                   5,000
for expression
profiling(2)
mRNAs for                        50               1,000                  50,000
expression profiling 2
        TOTALS                  181                  --                 184,000

</TABLE>

(1) Each Invader(TM) Assay for Single Nucleotide Polymorphism (SNP) detection
consists of an assay or assay components which will permit the Company to detect
each allele of interest. Each Invader SNP Assay will incorporate oligonucleotide
probes for detection of the polymorphism of interest, the appropriate
Cleavase(R) enzyme and other reagents including buffers and standards needed for
the performance of such assay together with a 96 or 384-well microtiter plate.
Complete instructions will be provided for each Invader SNP Assay.

(2) Each Invader(TM) Assay for mRNA quantification consists of an assay or assay
components which will permit the Company to quantify a mRNA of interest. Each
Invader mRNA Assay will incorporate oligonucleotide probes, the appropriate
Cleavase(R) enzyme and other reagents including buffers and standards needed for
the performance of such assay together with a 96 or 384-well microtiter plate.
Each Invader mRNA assay will include control standard set to establish a
standard quantification curve. Complete instructions will be provided for each
Invader mRNA Assay.

(3) Each determination for an Invader Assays for Single Nucleotide Polymorphism
(SNP) detection include a determination for each allele, which is done in 2
separate microtiter wells in the current assay configuration.

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A. The Development Program for each Invader Assay for Single Nucleotide
Polymorphism detection assay will encompass the following when the starting
sample material is a PCR product or genomic DNA:

        1. At the initiation of the Development Program, the Company shall
           provide the Institution with the appropriate PCR product and/or
           genomic DNA containing the target sequence of interest as set forth
           on Exhibit B.

        2. Primary Invader Reaction:

                -       The Institution will design three (3) target-specific
                        oligonucleotide probes for use in the Primary Invader
                        Reaction: (i) an "Invader" probe (a probe designed
                        hybridize to the 3' portion of the target sequence, and
                        form a region that overlaps the duplex formed by the
                        appropriate Signal probe and target by at least a single
                        nucleotide base); (ii) a "Signal" probe for the major
                        allele ("wild-type") sequence and (iii) a "Signal" probe
                        for the mutant or minor allele ("mutant") sequence. Each
                        Signal probe will comprise a probe designed to hybridize
                        to the 5' portion of the appropriate target sequence and
                        overlap with the Invader probe. The Institution's
                        proprietary Cleavase enzymes will recognize the
                        structure created by this overlapping region and cleave
                        the 5' end of the wild-type and mutant probes for use in
                        the Secondary Invader Reaction (described below).

                -       The melting temperature (T(m)) of both the wild-type and
                        mutant Signal probes will be estimated. In order to
                        optimize signal generation, a temperature near the T(m)
                        of these probes will be utilized for the both the
                        Primary and Secondary Invader Reactions such that the
                        reaction cycle (hybridization of a Signal probe,
                        cleavage of its 5' end, and release of the remaining 3'
                        portion) will occur rapidly under isothermal conditions.

                The rapid isothemal cycling of the Signal probes allows each
                copy of PCR product or genomic DNA target to serve as the
                substrate for multiple Signal probe cleavage events during
                reaction incubation. The accumulation of 5' fragments of the
                wild-type Signal probe is directly proportional to the number of
                wild-type target molecules present in the test sample. Likewise,
                the accumulation of 5' fragments of the mutant Signal probe is
                directly proportional to the number of mutant target molecules
                present in the test sample. Since the Primary and Secondary
                Invader Reactions will take place simultaneously, the Primary
                and Secondary Reaction temperature optima will be designed to be
                compatible.

        3. Secondary Invader Reaction:

                -       The Institution will design an oligonucleotide that will
                        function as both a Secondary target and a "Secondary
                        Signal" probe in the Secondary Invader Reaction. After
                        cleavage in the Primary Invader Reaction the 5' end of
                        the wild-type and mutant Signal probes from the Primary
                        Invader Reaction will be designed to act as "Secondary
                        Invader" probes in the Secondary Invader Reaction (i.e.,
                        the Secondary Signal probe will be designed such that
                        the 3'

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                        end of the Secondary Invader probe (5' of the Signal
                        probe from the Primary Invader Reaction) will overlap
                        the 5' most region of hybridization of the Secondary
                        Signal probe/Secondary target complex). The
                        Institution's proprietary Cleavase enzymes will
                        recognize the structure created by this overlapping
                        region and cleave the 5' end of the Signal probe for
                        subsequent detection. The Secondary Signal probe will be
                        designed to include a quencher dye and a
                        fluorescein-phosoramadite label. Due to the proximity of
                        these dyes in the uncleaved Secondary Signal probe, the
                        fluorescein label is quenched by the quencher dye via a
                        Fluorescence Resonance Energy Transfer (FRET) mechanism.
                        Cleavage of the 5' end of the Secondary Signal probe
                        between the labels enables spacial separation of the
                        quencher dye and fluorescein, thus enabling fluorescence
                        detection using FRET technology.

                -       The melting temperature (T(m)) of the Secondary Invader
                        probe will be estimated and sequence optimized in order
                        to optimize signal generation, a temperature near the
                        T(m) of the Secondary Invader probe will be utilized for
                        the Invader reaction such that the reaction cycle
                        (hybridization of Secondary Invader probe, cleavage of
                        the 5' end of the Signal probe, release of the Secondary
                        Invader probe) will occur rapidly under isothermal
                        conditions.

                As a result of the Secondary Signal/Secondary target complex
                being present in excess and the rapid isothemal cycling of the
                Secondary Invader probe allowing each copy of Secondary Invader
                probe to cause multiple signal generation cleavage events during
                reaction incubation, the accumulation of 5' fragments of the
                Secondary Signal probe is directly proportional to the number of
                Secondary Invader probe molecules generated in the Primary
                Invader Reaction.

        4.  The Institution will determine appropriate assay cut-off values for
            assessment of genotype (wild-type homozygous, mutant homozygous,
            wild-type/mutant heterozygous) based on fluorescence signal.

        5.  The Institution estimates that a minimum of 20pg of PCR product or
            100ng of genomic DNA will be required in each test sample for
            detection in the assay.

B. The development program for each Invader mRNA quantification assay will
   encompass the following:

        1.  At the initiation of the Development Program, the Company will
            provide the Institution with the appropriate genetic sequence
            specifying the mRNA target of interest as set forth on Exhibit B.
            Additionally, the Company will provide the Institution with total
            cellular RNA material known to contain the mRNA target of interest
            at a minimal expression level, and secondarily, at a maximal
            expression level. The Institution estimates that >/=10 micrometer
            (g) of total cellular RNA material will be required.

        2.  Primary Invader Reaction:

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                -       The Institution will design two (2) target-specific
                        oligonucleotide probes (an "Invader" probe and a
                        "Primary" probe) for use in the Primary Invader
                        Reaction. The Invader probe will be designed to
                        hybridize to the 3' portion of the target sequence, and
                        form a region that overlaps the duplex formed by the
                        Primary probe and target by at least a single nucleotide
                        base. The Institution's proprietary Cleavase enzymes
                        will recognize the structure created by this overlapping
                        region and cleave the 5' end of the Primary probe for
                        use in the Secondary Invader Reaction.

                -       The melting temperature (T(m)) of the target-specific
                        Primary probe will be estimated. In order to optimize
                        signal generation, a temperature near the T(m) of the
                        Primary probe will be utilized for the Primary Invader
                        Reaction such that the reaction cycle (hybridization of
                        Primary probe, cleavage of the 5' end of the Primary
                        probe, release of the remaining 3' portion of the
                        Primary probe) will occur rapidly under such conditions.

        The rapid cycling of the Primary probes allows each copy of mRNA target
        to serve as the substrate for multiple Primary probe cleavage events
        during reaction incubation. The accumulation of 5' fragments of the
        Primary probe is directly proportional to the number of mRNA target
        present in the test sample.

3. Secondary Invader Reaction:

                -       The Institution will design oligonucleotides that will
                        function as a Secondary target and a "Signal" probe in
                        the Secondary Invader Reaction. The cleaved 5' end of
                        the Primary probe from the Primary Invader Reaction is
                        designed to act as a "Secondary Invader" probe in the
                        Secondary Invader Reaction (i.e., the Signal probe will
                        be designed such that the 3' end of the Secondary
                        Invader probe (5' of the Primary probe from the Primary
                        Invader Reaction) will overlap the 5' most region of
                        hybridization of the Signal probe/Secondary target
                        complex). The Institution's proprietary Cleavase enzymes
                        will recognize the structure created by this overlapping
                        region and cleave the 5' end of the Signal probe for
                        subsequent detection. The Signal probe will include a
                        quencher dye and a fluorescein-phosoramadite label. Due
                        to the proximity of these dyes in the uncleaved Signal
                        probe, the fluorescein label is quenched by the quencher
                        dye via a Fluorescence Resonance Energy Transfer (FRET)
                        mechanism. Cleavage of the 5' end of the Signal probe
                        between the labels enables spacial separation of the
                        quencher dye and fluorescein, thus enabling fluorescence
                        detection using FRET technology.

                -       The melting temperature (T(m)) of the Signal probe will
                        be estimated. In order to optimize signal generation, a
                        temperature near the T(m) of the Signal probe will be
                        utilized for the Secondary Invader Reaction such that
                        the reaction cycle (hybridization of Signal probe,
                        cleavage of the 5' end of the Signal probe, release of
                        the remaining 3' portion of the Signal probe) will occur
                        rapidly under such conditions.

        This rapid cycling allows multiple Signal probes to be cleaved during
        reaction

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        incubation. The accumulation of signal (5' fragments of the Signal
        probe) is directly proportional to the number of Secondary Invader
        probes (from the Primary Invader reaction) generated in the Primary
        Invader Reaction.

4.  The Institution will develop appropriate standards (in vitro RNA
    transcripts) for use in the assay and will demonstrate assay
    proof-of-principle using this material. From time to time during the assay
    Development Program, the Company will provide the Institution with
    appropriate cellular material known to have the mRNA target of interest
    expressed at various levels. The Institution will use this material for
    further assay refinement and optimization.

 5. The Institution estimates that a minimum of 1 attomole of the mRNA target
    will be required in each test sample for detection in the assay.

                                       v<PAGE>   1

                                                                   EXHIBIT 10.26

                                                                  EXECUTION COPY

                  DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

        This DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (the "Agreement"),
effective as of December 29, 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 U.S.A. ("TWT"), and BML, Inc., a Japanese
corporation, with a place of business at 5-21-3, Sendagaya, Shibuya-ku, Tokyo,
151-0051 Japan ("BML").

                                   BACKGROUND

TWT controls certain proprietary technology useful for detection and
quantitation of nucleic acid sequences and known as and marketed under the trade
name Invader(R).

        A. TWT and BML desire to collaborate to identify, develop and
commercialize nucleic acid diagnostic products utilizing TWT's technology.

        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

As used herein, the following terms will have the meanings set forth below:

        1.1 "Assay" shall mean a method and compositions for detecting and/or
quantifying a specific Target that is dependent upon the coordinate actions of
two (2) target-specific probes and a structure-specific nuclease, and that uses
TWT Technology.

        1.2 "BML Technology" 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 cover the
manufacture, use, sale or importation of the Collaboration Products, in each
case that are Controlled by BML during the term of this Agreement.

        1.3 "Cleavase Enzyme" shall mean with respect to a particular Assay the
structure-specific nuclease provided in the Specification therefor.

        1.4 "Clinical Applications" shall mean the analysis of a patient sample
for purposes of reporting of a patient result.

        1.5 "Clinical Development" shall mean those preclinical studies,
clinical trials and all other activities reasonably required to file MAAs and
thereafter obtain and maintain Marketing Approvals for a Collaboration Product.

<PAGE>   2

        1.6 "Clinical Reference Laboratory" shall mean a company whose primary
business is (i.e., greater than 65% of its revenue is derived from) charging for
the analysis of patient samples for purposes of reporting a clinical result
therefor.

        1.7 "Collaboration Product" shall mean all Assays developed hereunder in
accordance with the Development Plans and Budgets then in effect. It is
understood that a Collaboration Product, and/or any component thereof, may be
changed, substituted or added to by TWT to improve the function of a
Collaboration Product as agreed upon by the parties hereto. Collaboration
Products shall not include Assays (i) incorporating technology exclusively
controlled by a third party or (ii) developed by TWT other than in accordance
with the Development Plans and Budgets.

        1.8 "Confidential Information" shall have the meaning set forth in
Section 14.1.

        1.9 "Control" 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 and without owing any royalty or other
amount to a third party.

        1.10 "CPI-U" shall mean the Consumer Price Index -- Urban all
purchasers, as reported by the United States Department of Labor.

        1.11 "Development Committee" shall have the meaning set forth in Section
2.1.

        1.12 "Development Costs" shall mean all direct and indirect
fully-burdened costs incurred by or on behalf of TWT in conducting the
Development Program, calculated in accordance with GAAP.

        1.13 "Development Plan and Budget" shall mean the plan and budget for
the Development Program in effect from time to time, as established in
accordance with Article 3 below.

        1.14 "Development Program" shall include the activities conducted in
connection with the development of Collaboration Products as described in
Article 4 below.

        1.15 "Exclusivity Period" shall have the meaning set forth in Section
8.1.2.

        1.16 "FDA" shall mean the U.S. Food and Drug Administration.

        1.17 "FTE" shall mean a full-time person, or in the case of less than a
full-time dedicated person, a full-time equivalent person year, based upon the
total of one thousand eight hundred thirty-three (1,833) hours per year of work.

        1.18 "GAAP" shall mean (i) with respect to TWT, the then current
applicable United States Generally Accepted Accounting Principles consistently
applied or accepted by the United States Securities and Exchange Commission and
the Financial Accounting Standards Board, together with cost accounting
principles that are generally accepted in the United States and (ii) with
respect to BML, the Japanese equivalent of such principles.

                                      -2-
<PAGE>   3

        1.19 "Improvement Technologies" shall mean any all Inventions made in
the course of BML's use of the Collaboration Products, Cleavase Enzymes, and/or
Standard Invader Reagents under this Agreement, including all intellectual
property rights therein which comprise an improvement, modification, or
derivative of the TWT Technology.

        1.20 "Invention" shall mean any invention (whether patentable or not).

        1.21 "Marketing Approval" shall mean, with respect to a particular
Collaboration Product, approval of the MAA filed with the Japanese Ministry of
Health and Welfare therefor.

        1.22 "Marketing Approval Application" or "MAA" shall mean any
application with the Japanese Ministry of Health and Welfare for authority to
use or market a Collaboration Product within the Territory for Clinical
Applications, including without limitation, an import approval application
(yunyu shonin shinsei), import license application (yunyu kyoka shinsei),
applications for pricing approval and governmental reimbursement authorization,
or other similar application or filing.

        1.23 "Net Sales" shall mean the amount invoiced by TWT or BML, as the
case may be, to third parties upon the sale or use of Collaboration Products or
Proprietary Target Products, less the following reasonable and customary
deductions to the extent applicable to such invoiced amounts: (i) all trade,
cash and quantity credits, discounts, refunds or rebates; (ii) amounts for
claims, allowance or credits for returns, retroactive price reductions,
chargebacks; (iii) packaging, handling fees and prepaid freight; (iv) taxes,
duties and other governmental charges (including value-added tax), but excluding
what is commonly known as income taxes; and (v) provisions for uncollectible
accounts determined in accordance with GAAP, consistently applied to all
products of the selling party.

        1.24 "Proprietary Target Product" shall mean a Collaboration Product or
other product based on a Proprietary Target the manufacture, sale, use or
importation would infringe a Valid Claim.

        1.25 "Specifications" shall mean, with respect to a particular
Collaboration Product, Cleavase Enzyme or the Standard Invader Reagents, the
written specifications therefor initially designated by TWT and thereafter
approved by the Development Committee. With respect to a particular
Collaboration Product for Clinical Applications, "Specifications" shall mean the
specifications for the Collaboration Product set forth in the Marketing Approval
for the Collaboration Product, and such other packaging and labeling
specifications as are established by the Development Committee.

        1.26 "Standard Invader Reagents" shall mean with respect an Assay
developed in accordance with Section 4.3 below, a reagent package comprised of a
microtiter reaction plate (96, 384 or 1536-well or other similar plate
configuration(s) as the parties may agree from time to time) containing (i)
FRET-Signal Probe/Target complex, (ii) buffer solution and (iii) appropriate
Cleavase Enzyme, as set forth in the Specifications therefor.

                                      -3-
<PAGE>   4

        1.27 "Target" shall mean a particular nucleotide sequence to be detected
and/or quantified by a particular Assay.

                1.27.1 "Non-Proprietary Targets" shall mean a Target which the
composition or use thereof is not covered by a Valid Claim of a patent or patent
application within the BML Technology.

                1.27.2 "Proprietary Targets" shall mean a Target which the
composition or use thereof is covered by a Valid Claim of a patent or patent
application within the BML Technology.

        1.28 "Territory" shall mean Japan.

        1.29 "TWT Technology" 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 cover the
manufacture, use, sale or importation of the Collaboration Products, in each
case that are Controlled by TWT during the term of this Agreement.

        1.30 "Unit" shall mean (i) with respect to an Assay, a single
determination of either a genotype (including both alleles) or gene expression
or (ii) with respect to Cleavase enzyme, the amount of Cleavase Enzyme necessary
to perform a single determination of an Assay as set forth in the Specifications
therefor.

        1.31 "Valid Claim" shall mean a claim of an issued and unexpired patent
or a claim of a pending patent application within the BML Technology which has
not been held unpatentable, invalid or unenforceable by a court or other
government agency of competent jurisdiction and has not been admitted to be
invalid or unenforceable through reissue, re-examination, disclaimer or
otherwise.

                                    ARTICLE 2
                              DEVELOPMENT COMMITTEE

        2.1 Development Committee. BML and TWT will establish a development
committee (the "Development Committee") to oversee, review and coordinate the
development of Collaboration Products and implementation of the Development
Program. From time to time, the Development Committee may establish
subcommittees, to oversee particular projects or activities (such as separate
committees to oversee product and clinical development), and such subcommittees
will be constituted as the Development Committee agrees.

        2.2 Membership. The Development Committee shall be comprised of an equal
number of representatives from each of TWT and BML, selected by such party. The
exact number of such representatives shall be three (3) for each of TWT and BML,
or such other number as the parties may agree. Subject to the foregoing
provisions of this Section 2.2, BML and TWT may replace its respective
Development Committee representatives at any time, with prior written notice to
the other party.

                                      -4-
<PAGE>   5

        2.3 Meetings. During the Development Program, the Development Committee
shall meet quarterly, or more often as otherwise agreed by the parties, at such
locations as the parties mutually agree. At its meetings, the Development
Committee will (i) formulate and review the Development Program objectives, (ii)
monitor the progress of the Development Program toward those objectives, (iii)
review and approve the Development Plans and Budgets, pursuant to Section 3.1 of
this Agreement, (iv) review and approve all Clinical Development (including
design and implementation of any clinical trials) and regulatory efforts within
for Collaboration Products for the Territory, and (v) undertake and/or approve
such other matters as are provided for the Development Committee under this
Agreement. With the consent of the parties, other representatives of BML or TWT
may attend Development Committee meetings as nonvoting observers. All
representatives of either party attending Development Committee meetings shall
enter into confidentiality and invention assignment agreements in a form
acceptable to both parties prior to participating in any Development Committee
activities. One member of the Development Committee shall prepare written
minutes of each Development Committee meeting and a written record of all
Development Committee decisions, whether made at a Development Committee meeting
or otherwise. Such written minutes and written records shall be circulated to
all Development Committee members for review, comment or modification, and
approval. Each party shall bear its own personnel and travel costs and expenses
associated with attendance at Development Committee meetings.

        2.4 Decision Making. Decisions of the Development 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. In the event that the
Development Committee is unable to reach unanimous agreement on an issue, either
party may request that the issue be referred for resolution through good faith
negotiations between BML's and TWT's respective Chief Executive Officers. If
after thirty (30) days such executives cannot resolve the issue, then upon
request by either party such issue shall be resolved in accordance with Section
18.2.1 below; it being understood that issues to be resolved shall be limited to
those issues that are expressly provided in this Agreement to be decided by the
Development Committee.

                                    ARTICLE 3
                          DEVELOPMENT PLANS AND BUDGETS

        3.1 Development Plans and Budgets. During the term of the Development
Program, TWT shall prepare in consultation with BML and provide to the
Development Committee a reasonably detailed Development Plan and Budget pursuant
to which performance of the Development Program will be performed. The
Development Plan and Budget shall specify, on a Target-by-Target basis, the
objectives, activities, timing and cost of the Development Program, together
with a headcount of full time equivalents (FTEs) of TWT personnel to be devoted
to the Development Program. The Development Plan shall also set forth the
estimated Transfer Price of the Collaboration Product being developed. The
Development Plan and Budget for a particular year shall include funding equal to
the greater of: (i) the advance payments provided for such year in Section 7.2.1
below or (ii) such greater amount as established by the Development Committee
including reimbursement for external expenses not included in the FTE rate (if
any) incurred in accordance with the Development Plan and Budget in effect from
time to time.

                                      -5-
<PAGE>   6

        3.2 Annual Review.

                3.2.1 Initial Plan and Budget. Within thirty (30) days after the
Effective Date, TWT shall submit to the Development Committee the proposed
Development Plan and Budget for the period from the Effective Date through
December 31, 2001 (the "Initial Development Plan and Budget"). After submission
of the Initial Development Plan and Budget by TWT, the Development Committee
shall meet and review such proposal as soon as possible and shall establish and
approve the Initial Development Plan and Budget, with such changes as the
Development Committee may agree to the plan and budget proposed by TWT, no later
than thirty (30) days after submission by TWT. For the avoidance of doubt, the
Initial Development Plan and Budget shall be subject to review and written
approval by the Development Committee. For the avoidance of doubt, the Initial
Development Plan and Budget shall not be effective unless the form and content
is acceptable to the parties and approved by the Development Committee.

                3.2.2 Other. Beginning October 1, 2001 and by October 1 of each
year thereafter during the term of the Development Program, TWT shall submit to
the Development Committee the proposed plan and budget required under Section
3.1 above for the following calendar year. The Development Committee shall
review such proposals as soon as possible and shall establish and approve the
Development Plan and Budget for the next succeeding year, with such changes as
the Development Committee may agree to the plan and budget proposed by TWT, no
later than December 1 of such year. For the avoidance of doubt, no Development
Plan and Budget shall be effective unless the form and content is acceptable to
the parties and approved by the Development Committee.

        3.3 Periodic Reviews and Modifications. The Development Committee shall
review the Development Plan and Budget on an ongoing basis as provided in
Section 2.3 and may make changes thereto.

                                    ARTICLE 4
                               DEVELOPMENT PROGRAM

        4.1 Development Program. TWT shall be responsible for conducting,
directly or through third parties, a product development and validation program
(the "Development Program") in accordance with the Development Plan and Budget
then in effect and in accordance with the development objectives and
Specifications established by the Development Committee. Accordingly, TWT shall
use diligent efforts to perform the Development Program in accordance with the
Development Plan and Budget then in effect. TWT agrees to keep the Development
Committee reasonably informed as to the progress of the Development Program for
Collaboration Products hereunder. BML shall provide reasonable assistance to TWT
regarding the Development Program as specified by the Development Committee. BML
shall be consulted and informed with respect to the Development Program through
its representatives on the Development Committee and as set forth in Section 6.1
below.

        4.2 Development Program Funding. TWT shall apply all amounts paid by BML
in accordance with Article 7 below toward the Development Program in accordance
with the Development Plan and Budget then in effect.

                                      -6-
<PAGE>   7

        4.3 BML Probe Development. During the term of and in connection with the
Development Program, TWT shall provide BML access to its proprietary
InvaderCreator(TM) software (the "Software") for design of probes for use with
TWT's Standard Invader Reagents. Such access shall be provided to BML personnel
via secure internet access in accordance with reasonable procedures established
by TWT from time to time, which will include, without limitation,
password-protected access by BML personnel. BML shall use reasonable efforts to
ensure that only those employees of BML who need to have access to the Software
for purposes of this Agreement have access to the passwords therefor. BML shall
use the Software solely for developing Assays for its own internal research and
small-scale collaborative use with academic, pharmaceutical and commercial
laboratories, in each case not for Clinical Applications. Such uses shall
implement Standard Invader Reagents supplied by TWT in accordance with Article 9
below. BML agrees to keep the Development Committee reasonably informed as to
the progress of such activities. The Development Committee will review the
results of such activities and determine whether Targets derived from such
activities will be included in the Development Program.

        4.4 Visiting Personnel. It is understood that in the course of the
Development Program there may be occasions where one party's personnel
("Visiting Personnel") may be stationed at the other party's facilities on a
temporary basis. Such Visiting Personnel shall agree to be bound by all orders,
rules and regulations pertaining to the hosting party's facilities during the
entire time at such facilities.

                4.4.1 Product Support/Training. During the term of the
Development Program, at BML's reasonable request and expense, TWT will send to
BML's a TWT employee reasonably acceptable to BML, to assist BML in coordinating
and managing the use of the Software, Standard Invader Reagents, and
Collaboration Products and training BML's employees in the use thereof.

                4.4.2 Coordinator. Likewise, from time to time as the
Development Committee may designate during the term of the Development Program,
a BML employee, designated by BML and reasonably agreeable to TWT, will, at the
expense of BML, be stationed at TWT's Madison facilities to coordinate research
and development activities between BML and TWT.

        4.5 Term of Development Program. The Development Program shall commence
upon the Effective Date and, unless terminated earlier as provided in Article 17
below, the Development Program shall terminate on December 31, 2003, unless
extended pursuant by mutual agreement of the Parties.

        4.6 Exclusivity of Efforts. Prior to January 1, 2002, TWT agrees not to
enter into a development arrangement for purposes of developing Assays for
Clinical Applications, except in the case of Assays for a proprietary Target or
specifically associated with a therapeutic agent (including therapeutic
monitoring thereof or selection of patients therefor), with or for any Clinical
Reference Laboratory or any of the companies identified on Exhibit A, for use in
the Territory.

                                      -7-
<PAGE>   8

                                    ARTICLE 5
                              CLINICAL DEVELOPMENT

        5.1 By BML. BML shall have the right, at its expense, to conduct,
directly or through third parties, Clinical Development of the Collaboration
Products for Clinical Applications, and in accordance with protocols approved by
the Development Committee. BML agrees to keep the Development Committee
reasonably informed as to the progress of Clinical Development of the
Collaboration Products hereunder. It is understood and agreed that except as
otherwise expressly agreed in writing, TWT shall have no obligation to perform
any of the Clinical Development; provided, however, TWT shall provide reasonable
assistance to BML regarding Clinical Development of the Collaboration Products.
Without limiting the foregoing and subject to the other terms herein, TWT shall
supply BML with Collaboration Products for use in clinical trials in accordance
with the laws and regulations and current Good Manufacturing Practice (GCP)
standards as established by the FDA. Once BML has initiated Clinical Development
for a particular Collaboration Product, it shall use diligent efforts to
complete such Clinical Development as soon as practicable; and thereafter use
diligent efforts to: (i) file the MAA, (ii) prosecute such MAA until receipt of
Marketing Approval and (ii) maintain such Marketing Approval for such
Collaboration Product. Additionally In the event that BML abandons Clinical
Development or prosecution of the MAA for a particular Collaboration Product
after initiation, BML shall promptly notify TWT in writing setting forth the
reasons for such abandonment.

        5.2 By TWT. In the event that BML does not initiate Clinical Development
for a particular Collaboration Product within twelve (12) months from the time
that TWT completes the Development Program therefor or notifies TWT that it has
abandoned the Clinical Development therefor, TWT shall have the right, at its
expense, to conduct, directly or through third parties, Clinical Development of
the Collaboration Products for Clinical Applications and thereafter file for
Marketing Approvals therefor. In such case, TWT agrees to keep the Development
Committee reasonably informed as to the progress of Clinical Development of the
Collaboration Products hereunder. It is understood and agreed that in such case
except as otherwise expressly agreed in writing, BML shall have no obligation to
perform any of such Clinical Development. For avoidance of doubt, nothing herein
shall prevent TWT from conducting clinical trials or other development for
purposes of filing for, obtaining or maintaining marketing approvals to
commercialize the Collaboration Products outside the Territory.

        5.3 Clinical Data.

                5.3.1 Access. A party conducting Clinical Development (the
"Conducting Party") shall provide as the other party may reasonably request with
copies of Data (as defined below) or summaries thereof and otherwise as set
forth in Section 6.1.2. Upon reasonable advance notice by the other party, it
may visit the sites at which the Conducting Party is conducting Clinical
Development to review the Clinical Development activities being performed at
such site, including without limitation the clinical data and other documents
relating to the performance of the Clinical Development. For purposes of this
Agreement, "Data" shall mean, collectively, all data acquired or produced in the
course of such Clinical Development, the MAAs, Marketing Approvals, together
with related documentation.

                                      -8-
<PAGE>   9

                5.3.2 Use. BML shall only use, reference and disclose Data to
third parties as required to obtain governmental approval to use and market
Collaboration Products in the Territory, or as required by law, and in each case
subject to Article 14 below. TWT may use, reference and provide copies of Data
to third parties as is reasonably necessary or useful for commercialization of
Collaboration Products or other products or as required by law.

        5.4 Regulatory Filings. All filings for MAAs for Collaboration Products
and prosecution thereof shall be done in full consultation with the Development
Committee. Without limiting the foregoing, all MAAs, including product
registration plans and applications for use or marketing approvals filed with
the Japanese Ministry of Health and Welfare, shall be submitted to the
Development Committee for review and approval by the Development Committee prior
to filing of such registrations with any health regulatory agency. To the extent
reasonably practicable, all MAAs will be filed in the name of both TWT and BML,
and both parties shall have the right to reference the same, without further
consideration, for purposes of exercising its rights herein. Upon expiration or
termination of this Agreement, the parties shall each have the right to
reference the same, without further consideration.

                                    ARTICLE 6
                           RECORD KEEPING; PUBLICATION

        6.1 Reports and Records.

                6.1.1 Records. TWT and BML shall maintain records of the
Development Program and Clinical Development (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 and Clinical Development (including all data in the form required under
any applicable governmental regulations necessary for obtaining Marketing
Approvals). Each party shall allow the other to have reasonable access to all
records, materials and data generated on behalf of such party with respect to
each Collaboration Product for Clinical Applications at reasonable times and in
a reasonable manner.

                6.1.2 Reports. Each party shall periodically provide the
Development Committee with a written report summarizing the progress of the
Development Program or Clinical Development performed by such party with respect
to each Collaboration Product during the preceding calendar quarter. Unless
otherwise agreed, such reports shall be due ninety (90) days after the end of
each calendar quarter during the term of the Development Program. Coincident
with such reports, TWT will provide BML an accounting of Development Costs
incurred during the corresponding calendar quarter as required in Section 7.2.3.

        6.2 Review of Publications. As soon as is practicable prior to the oral
public disclosure, and prior to the submission to any outside person for
publication of a manuscript describing any scientific data resulting from the
Development Program, in each case to the extent the contents of the oral
disclosure or manuscript have not been previously disclosed pursuant to this
Section 6.2 before such proposed disclosure, BML or TWT, as the case may be,
shall disclose to the other party a copy of the manuscript, or a written summary
of any oral disclosure, to be made or submitted, and shall allow the other party
at least sixty (60) days to determine whether such disclosure or manuscript

                                      -9-
<PAGE>   10

contains subject matter for which patent protection should be sought prior to
publication or which either party believes should be modified to avoid
disclosure of Confidential Information or regulatory or other problems. With
respect to publications by investigators or other third parties, such
publications shall be subject to review by the other party under this Section
6.2 only to the extent that BML or TWT (as the case may be) has the right to do
so.

                6.2.1 Publication Rights. After the expiration of sixty (60)
days from the date of receipt of such disclosure or manuscript, unless BML or
TWT has received the written notice specified below, the authoring party shall
be free to submit such manuscript for publication or to orally disclose or
publish the disclosed research results in any manner consistent with academic
standards; provided that, in any publication permitted under this Section 6.2,
each party shall acknowledge its collaboration with the other party under this
Agreement.

                6.2.2 Delay of Publication. Prior to the expiration of the sixty
(60)-day period specified in this Section 6.2 above, the other party may notify
in writing the submitting party of its determination that such oral presentation
or manuscript contains Confidential Information of such other party or
objectionable material or material that consists of patentable subject matter
for which patent protection should be sought. The notified party shall withhold
its proposed public disclosure and confer with the other party to determine the
best course of action to take in order to modify the disclosure (including
removing Confidential Information of the other party) or to obtain patent
protection. After resolution of the confidentiality, regulatory or other issues,
or the filing of a patent application or due consideration as to whether a
patent application can reasonably be filed, but in no event more than ninety
(90) days after notification of the submitting party as provided above, the
submitting party shall be free to submit the manuscript and/or make its public
oral disclosure in a manner consistent with academic standards. If the
submitting party declines to file an appropriate patent application, then either
BML or TWT, as the case may be, may undertake to file such application in
accordance with Section 13.2 below.

                                    ARTICLE 7
                           DEVELOPMENT PROGRAM FUNDING

        7.1 Development Costs.

                7.1.1 FTE Costs. An FTE rate determined in accordance with this
Section 7.1.1 shall be used for purposes of formulating the Development Plan and
Budget and for determining the Development Costs incurred in performance of the
Development Program. The initial FTE rate shall be Two Hundred Fifty Thousand
Dollars ($250,000) per FTE (as adjusted below). The FTE rate includes all
salary, employee benefits, materials and other expenses including support staff
and overheard for or associated with an FTE, but does not include travel and
lodging expenses incurred by such FTEs in performance of the Development Program
(which travel and lodging expenses shall be included in the Development Costs
separately under Section 7.1.2 below). The FTE rate shall be subject to annual
adjustment based on the greater of cost-of-living increases or adjustments in
the Radford Index.

                7.1.2 Non-FTE Costs. It is understood that the Development Costs
may include reasonable costs for items other than FTEs incurred in the course of
performing the Development

                                      -10-
<PAGE>   11

Program in accordance with the Development Plan and Budget. In addition,
Development Costs may include reasonable depreciation charges or lease expenses
for capital equipment purchased or leased by TWT for use in connection with the
Development Program provided that if such equipment are used both (i) in the
course of the Development Program and (ii) for other projects or programs, then
the costs of such equipment shall be allocated between the Development Program
and such other projects or programs in accordance with GAAP. It is understood
that the party acquiring equipment will be the owner of such equipment in
connection with the Development Program, whether or not separately identified in
the Development Plan and Budget.

        7.2 Collaboration Product Development Payments.

                7.2.1 Advance Payments. On or before the dates set forth below,
BML shall pay to TWT the corresponding amounts as advance support payments for
TWT's performance of the Development Program in the immediately following
calendar year:

                        (a)     January 1, 2001, Two Million Dollars (U.S.
                                $2,000,000);

                        (b)     January 1, 2002, One Million Dollars (U.S.
                                $1,000,00); and

                        (c)     January 1, 2003, One Million Dollars (U.S.
                                $1,000,00).

For avoidance of doubt, it is understood that the amounts payable under this
Section 7.2.1 shall be creditable against the amounts due under Sections 7.2.2
and 7.2.3 below, and satisfy the minimum funding commitments of Section 7.4.

                7.2.2 Escrow. The parties shall agree on a mechanism to deposit
the funds advanced on an annual basis in accordance with Section 7.2.1 above
with a mutually agreeable U.S. bank, which amounts shall be released quarterly
in advance to fund the Development Program in accordance with Sections 7.2.3 and
7.2.4 below.

                7.2.3 Initial Payment. Promptly after the Development
Committee's approval of the Initial Development Plan and Budget, BML shall pay
to TWT the amounts budgeted for the first quarter thereunder.

                7.2.4 General. Thereafter, on or before the first day of each
calendar quarter, BML shall pay to TWT the amounts budgeted for such quarter in
the Development Plan and Budget then in effect; unless otherwise specified in
the applicable Development Plan and Budget, amounts budgeted for the full year
will be deemed budgeted in equal amounts for each calendar quarter during such
year. Within ninety (90) days following the end of each calendar quarter, TWT
shall provide to BML a summary of the Development Costs actually incurred by TWT
during such calendar quarter. If the actual Development Costs incurred by TWT in
such quarter are less than the amounts advanced by BML, then any amount in
excess of such Development Costs will be carried forward and applied to BML's
funding obligations for the subsequent quarter, applied to BML's minimum funding
obligation for the subsequent year or returned to BML.

        7.3 Excess Costs. To the extent the Development Costs to be reimbursed
by BML under Section 7.2 above exceed by more than five percent (5%) the
Development Costs budgeted for a calendar year in the Development Plan and
Budget then in effect, BML shall reimburse TWT up to

                                      -11-
<PAGE>   12

the five percent (5%) overage but shall not be responsible to reimburse any
portion over such excess Development Costs. Except as otherwise provided in this
Section 7.3, TWT shall be responsible for any Development Costs incurred in the
course of its performance of the Development Program in excess of Development
Costs budgeted for a calendar year in the Development Plan and Budget, unless
otherwise agreed by the Development Committee. For avoidance of doubt, it is
understood that TWT shall not be obligated to incur any Development Costs in
excess of the Development Costs budgeted for a calendar year in the Development
Plan and Budget therefor, provided, however, that in the event it can be
reasonably anticipated at any time that the Development Costs that will be
actually incurred will exceed beyond five percent (5%) such costs budgeted for
in the relevant Development Plan and Budget, (a) TWT shall notify BML and each
member of the Development Committee without delay, (b) the parties shall cause
the Development Committee to confer in good faith as to the means for addressing
such cost overruns, and (c) the parties shall fund such excess in such manner as
is determined upon approval of the Development Committee.

        7.4 Minimum Funding Commitments. Notwithstanding anything herein to the
contrary, unless otherwise mutually agreed by the parties, the parties agree
that the Development Committee shall approve a Development Plan and Budget for
each calendar year during the term of the Development Program providing for a
budget that is not less than the amounts set forth below for such year below.

<TABLE>
<CAPTION>
            Calendar Year             Committed Funding Amount
            -------------             ------------------------
            <S>                       <C>
                2001                         $2,000,000
                2002                         $1,000,000
                2003                         $1,000,000
</TABLE>

                                    ARTICLE 8
                                MARKETING RIGHTS

        8.1 Marketing Rights.

                8.1.1 TWT. Subject to Section 8.1.2, TWT shall have the
worldwide right to market, sell and distribute Collaboration Products (itself or
through others) for all applications, except as provided in Section 8.1.2.

                8.1.2 Japan. TWT will have the right to market, sell and
distribute Collaboration Products itself or through others for use in Japan;
provided that such right will begin with respect to (i) Collaboration Product
marked for "research use only" (a) if such Collaboration Product is for a
Proprietary Target twelve (12) months after the first delivery of the
Collaboration Product to BML or (b) if such Collaboration Product is for a
Non-Proprietary Target six (6) months after the first delivery of the
Collaboration Product to BML and (ii) Collaboration Products for any Clinical
Application for which BML completed Clinical Development (a) if such
Collaboration Product is for a Proprietary Target twenty-four (24) months after
receipt of Marketing Approval therefor or (b) if such Collaboration Product is
for a Non-Proprietary Target twelve (12) months after receipt of Marketing
Approval therefor (each such period, the "Exclusivity Period").

                                      -12-
<PAGE>   13

                8.1.3 BML. At such time as BML notifies TWT of its desire to do
so, TWT and BML will negotiate in good faith the terms and conditions (including
transfer price) under which BML will have the right to market, sell and
distribute a Collaboration Product (directly or through a subdistributor) for
use in the Territory; provided, however such terms and conditions shall be at
least as favorable to BML as any terms and conditions granted by TWT to a third
party with respect to the marketing, sales and distribution of a Collaboration
Product for the Territory, and, provided, further that TWT shall engage in such
negotiation in a commercially reasonable manner designed, consistent with the
spirit and intent of this Agreement, to not unreasonably frustrate BML's rights
to market, sell and distribute such Collaboration Product in the Territory.

        8.2 Restrictions. Except as may be agreed in accordance with Section
8.1.3, BML agrees not to market, sell or distribute, directly or indirectly, any
Collaboration Product.

                                    ARTICLE 9
                             MANUFACTURE AND SUPPLY

        9.1 Terms and Conditions. All supply of Collaboration Products, Standard
Invader Reagents and Cleavase Enzymes 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 PURSUANT TO THIS
AGREEMENT SHALL HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY
EXCLUDED.

        9.2 Manufacturing Rights. Except as otherwise provided herein, TWT shall
have the exclusive right to manufacture, or have manufactured and to supply to
BML, Collaboration Products, Standard Invader Reagents and Cleavase Enzymes.

        9.3 Supply. TWT shall supply BML with BML's requirements for
Collaboration Products during the term of this Agreement in accordance with
applicable Specifications.

        9.4 Use. Notwithstanding anything herein to the contrary, all
Collaboration Products, Cleavase Enzyme and Standard Invader Reagents supplied
by TWT to BML hereunder shall be used solely in accordance with this Agreement
or as otherwise reasonably necessary in connection therewith (e.g., quality
control analysis) and shall not be used for any other purpose unless otherwise
mutually agreed by the parties hereto.

        9.5 Forecasts. During the term of this Agreement, at least thirty (30)
days prior to the start of any calendar month ("M1"), BML shall provide TWT with
a rolling written forecast of the quantities of Collaboration Products (on a
Collaboration Product-by- Collaboration Product basis), Standard Invader
Reagents and/or Cleavase Enzyme, as applicable, estimated to be required on a
month-by-month basis for twelve (12) consecutive months ("M1" to "M12",
respectively). Each forecast shall indicate the estimated quantities identified
by the catalog number (if applicable) designated by TWT. Except as set forth in
Section 9.6 below, BML will provide such forecasts as a means of production
planning only and shall not constitute a binding obligation upon TWT or BML.

        9.6 Orders.

                                      -13-
<PAGE>   14

                9.6.1 Orders. Together with each forecast provided under Section
9.5 above (the "Current Forecast"), BML shall place its firm order with TWT for
delivery in M1 to M3 of that quantity of Collaboration Products, Standard
Invader Reagents and/or Cleavase Enzymes equal to the quantity of Collaboration
Products, Standard Invader Reagents and Cleavase Enzymes reflected for M1 to M3
in the Current Forecast. For ordering purposes, the forecast for M3, once set,
will be fixed for that calendar month, as it rolls to M2 and then M1. In
addition, (i) the forecasts for M4, M5 and M6 will not be increased for that
calendar month by more than ten percent (10%) or decreased for that calendar
month by more than twenty percent (20%), as each rolls to M3, and (ii) the
forecasts for M7, M8 and M9 will not be modified for that calendar month by more
than +/- 30%, as each rolls to M3. TWT shall accept such orders from BML,
subject to the remaining terms and conditions of this Agreement, provided that
TWT shall not be obligated to accept orders for quantities in excess of the
amounts set forth above, but shall use good faith efforts to fill orders for
such excess quantities from available supplies.

                9.6.2 Form of Order. BML's orders shall be made pursuant to a
written purchase order which is in a form mutually acceptable to the parties.
TWT shall use reasonable efforts to notify BML within fifteen (15) days from
receipt of an order of its ability to fill any amounts of such order in excess
of the quantities that TWT is obligated to supply. The parties shall establish
reasonable lead times and minimum order quantities for Collaboration Products,
Standard Invader Reagents and Cleavase Enzyme based on standard lot sizes
formatting as required by the Specifications therefor.

        9.7 Pricing. In consideration for the supply of Collaboration Products,
Standard Invader Reagents and Cleavase Enzyme by TWT, BML shall pay the amounts
set forth in Section 10.3.

        9.8 Shipping. All Collaboration Products delivered pursuant to the terms
of this Agreement shall be suitably packed for shipment in TWT's standard
containers, marked for shipment to the destination point indicated in BML's
transfer order for Collaboration Products, and shipped FCA (Incoterms 2000)
TWT's facility ("Shipping Point"). The carrier shall be selected by agreement
between BML and TWT, provided that in the event no such agreement is reached,
BML shall select the carrier. With respect to exact shipping dates of
Collaboration Products, TWT shall use its good faith efforts to ship quantities
of Collaboration Products on the dates specified in BML's transfer orders
submitted and accepted in accordance with this Article 9 above.

        9.9 Dedicated Manufacturing. As BML's orders require, TWT and BML will
discuss the possibility of establishing a dedicated manufacturing capability
within TWT's existing manufacturing to supply BML's requirements of
Collaboration Products, in which case BML will provide TWT a standing order for
Collaboration Products to ensure that such capacity is fully used.

        9.10 Shortage of Supply.

                9.10.1 Allocation. In the event that TWT is unable to supply
worldwide requirements of Collaboration Products, TWT shall allocate the
quantities of Collaboration Products that TWT has in inventory, and that TWT is
able to produce, so that BML receives at least its

                                      -14-
<PAGE>   15

proportional share of available Collaboration Products as determined based on
firm orders of BML and TWT's other customers.

                9.10.2 Right to Manufacture. If for three (3) consecutive months
TWT fails to adequately supply BML's requirements of Collaboration Products, and
provided that such failure will or does result in a substantial interruption of
BML's use hereunder and is not due to action or inaction of BML, then BML may
manufacture (or have manufactured) pursuant to this Section 9.10.2 below the
quantity of such Collaboration Products that TWT fails to so supply using
Cleavase Enzyme provided hereunder. Such right shall continue in effect until
such time as TWT provides BML not less than three (3) months notice and
reasonably demonstrates that it is able to adequately supply BML's reasonable
requirements of such Collaboration Product, and shall include the right to
sublicense. For purposes of this Agreement, a failure to "adequately supply
BML's requirements" shall mean a failure to supply BML ninety percent (90%) of
the quantities of a Collaboration Product which TWT is obligated to supply
pursuant to orders placed pursuant to Section 9.6, in any three (3) consecutive
months.

                        (a) License to Manufacture. Subject to all other terms
and conditions of this Agreement, in the event of TWT fails to adequately supply
BML's requirements TWT shall grant to BML a license (the "Manufacturing
License") under the TWT Technology, necessary to make, have made, use a
particular Collaboration Product in the Territory (which TWT has failed to
adequately supply as set forth above). Without limiting the foregoing, it is
understood that the Manufacturing License shall terminate on expiration or any
termination of this Agreement.

                        (b) Exercise of the Manufacturing License. BML agrees
not to exercise any of its rights under the Manufacturing License except to the
extent expressly permitted in this Section 9.10.2 above. In such event, TWT
shall provide to BML copies of all documentation within TWT's control that is
reasonably necessary for BML to manufacture (or have manufactured) Collaboration
Products, and shall reasonably cooperate with BML to establish alternative
supply, including sources of materials. BML may exercise its right to have
Collaboration Products manufactured in accordance with this Section 9.10.2
through a single third party contract manufacturer subject to TWT's approval,
not to be unreasonably withheld; and provided that such third party manufacturer
(i) enters into a confidentiality agreement with TWT to protect against the
unauthorized use and disclosure of Confidential Information of TWT and (ii)
agrees to provide Collaboration Products only to BML for its use.

                        (c) Supply of Cleavase Enzyme. In the event that BML
exercises its Manufacturing License in accordance with this Section 9.10.2
above, TWT shall supply those Units of Cleavase Enzyme reasonably necessary for
and for the sole purpose of BML's exercise of the Manufacturing License and
ordered by BML in accordance with this Article 9. In the event that TWT fails to
supply any such Cleavase Enzyme, then the Manufacturing License shall include
the right to make (or have made) Cleavase Enzyme.

                9.10.3 Exclusive Remedies. SECTIONS 9.10.1 AND 9.10.2 ABOVE AND
15.2 BELOW ARE BML'S SOLE AND EXCLUSIVE REMEDY FOR A FAILURE BY TWT TO SUPPLY
PURSUANT TO THIS ARTICLE 9, EXCEPT FOR ORDERS ACCEPTED BY TWT PURSUANT TO
SECTION 9.6.

                                      -15-
<PAGE>   16

                9.10.4 Royalty. In the event of manufacture of Collaboration
Products by or under authority of BML pursuant to the Manufacturing License,
BML's payment obligations to TWT, in lieu of the amounts set forth in Section
10.3 of this Agreement for Collaboration Products, shall be equal to ten percent
(10%) of Net Sales of such Collaboration Products by BML.

        9.11 Product Acceptance/Rejection. All shipments and all shipping and
other charges shall be deemed correct unless TWT receives from BML, no later
than thirty (30) days after BML's receipt of a given shipment, a written notice
specifying the shipment, the transfer order number, and the exact nature of the
discrepancy between the order and the shipment or the exact nature of the
discrepancy in the shipping or other charges, as applicable. Any Collaboration
Product, Standard Invader Reagents or Cleavase Enzymes supplied by TWT under
this Agreement which fails to conform to the applicable Specifications shall be
subject to the provisions of Section 15.2 below.

        9.12 Invoicing. TWT shall submit an invoice to BML upon shipment of
Collaboration Products, Standard Invader Reagents or Cleavase Enzymes ordered by
BML hereunder. All invoices shall be sent to BML's address for notices hereunder
or such other address as designated by BML in writing, and each such invoice
shall state BML's aggregate and unit transfer price for Collaboration Products,
Standard Invader Reagents or Cleavase Enzymes in a given shipment, plus any
insurance, taxes or other costs incident to the transfer or shipment initially
paid by TWT but to be borne by BML hereunder. Payment shall be made within
thirty (30) days after receipt of invoice.

                                   ARTICLE 10
                                    PAYMENTS

        10.1 Development Reimbursement Payment. As partial reimbursement of
certain development expenses incurred by TWT with respect to the TWT Technology
prior to the Effective Date, BML shall pay to TWT Three Million Dollars (U.S.
$3,000,000) within ten (10) days of the Effective Date.

        10.2 Proprietary Target Royalties.

                10.2.1 Proprietary Target. In consideration of the rights
granted to TWT hereunder, TWT shall pay to BML three percent (3%) of Net Sales
of Proprietary Target Products.

                10.2.2 Single Royalty/Non-Royalty Sales. In no event shall more
than one royalty be due hereunder with respect to any Proprietary Target
Product; nor shall a royalty be payable under this Section 10.2 with respect to
transfers of Proprietary Target Products for use in clinical trials or as
samples.

                10.2.3 Combination Products. In the event that a Proprietary
Target Product is sold in combination with another product, component or service
for which no royalty would be due hereunder if sold separately, Net Sales from
such combination sales for purposes of calculating the amounts due under this
Section 10.2 shall be calculated by multiplying the Net Sales of the combination
product by the fraction A/(A + B), where A is the average gross selling price
during the applicable calendar quarter of the Proprietary Target Product sold
separately and B is the average

                                      -16-
<PAGE>   17

gross selling price during the applicable calendar quarter of the other
product(s), component(s) and/or service(s). In the event that such separate
sales were not made during the calendar quarter then the Net Sales shall be
calculated by multiplying the Net Sales of the combination product by the
fraction C/(C + D), where C is the average cost of goods sold during the
applicable calendar quarter of the Proprietary Target Product and D is the
average cost of goods sold during the applicable calendar quarter of the other
product(s), component(s) and/or average cost of performance in the case of
service(s), in each case calculated in accordance with GAAP.

                10.2.4 Proprietary Target Product Royalty. Within sixty (60)
days after the end of each calendar quarter, TWT shall provide to BML a report,
which report shall include a calculation of Net Sales of Proprietary Target
Products in such quarter and a calculation of the royalty amount due with
respect thereto. Concurrently with providing such report, TWT shall remit
payment to BML of any royalties due under this Sections 10.2 for such calendar
quarter.

        10.3 Transfer Prices.

                10.3.1 Collaboration Products. With respect to Collaboration
Products, the parties shall mutually agree upon transfer prices for each
Collaboration Product (the "Transfer Price"), which Transfer Prices shall be
established prior to the initiation of the Development Program therefore. To the
extent reasonable, Transfer Prices shall be consistent with the estimated
Transfer Price set forth in the Development Plan and Budget and pricing of
comparable Collaboration Products. The parties acknowledge that the Transfer
Price for Collaboration Products for Clinical Applications will be higher than
those for research use only. If the Transfer Price for a particular
Collaboration Product set by the parties later creates an imbalance of the
economic result, then such Transfer Price will be equitably adjusted to remedy
such imbalance.

Notwithstanding the foregoing, the Transfer Price for a particular Collaboration
Product will be no more than the following:

                        (a) 85% of the Best Price to any third party for use in
the Territory for the period from the expiration of the Exclusivity Period until
the date that is six (6)months after expiration of the Exclusivity Period;

                        (b) 90% of the Best Price to any third party for use in
the Territory for the period six (6) to twelve (12) months after expiration of
the Exclusivity Period;

                        (c) 95% of the Best Price to any third party for use in
the Territory for the period twelve (12) to eighteen (18) months after
expiration of the Exclusivity Period; and

                        (d) 100% of the Best Price to any third party for use in
Territory thereafter.

For purposes of the foregoing, "Best Price" shall mean the price for the
particular Collaboration Product for the same configuration for similar
quantities.

                                      -17-
<PAGE>   18

                10.3.2 Standard Invader Reagents. For Standard Invader Reagents
supplied by TWT to BML hereunder, BML shall pay to TWT the amounts set forth in
a mutually agreed pricing schedule referencing this Section 10.3.2.

                10.3.3 Cleavase Enzymes. For Cleavase Enzymes supplied by TWT to
BML hereunder, BML shall pay to TWT the amounts set forth in a mutually agreed
pricing schedule referencing this Section 10.3.3.

                10.3.4 Adjustments to Transfer Prices. Subject to the provisions
of Section 10.3.1 (a) -- (d) above, beginning in January 2002 upon written
notice by TWT the transfer prices set forth in this Section 10.3 may be adjusted
no more than once per year to reflect the aggregate change in the CPI-U since
the later of: (i) the Effective Date or (ii) the last such adjustment.

                                   ARTICLE 11
                           PAYMENTS; BOOKS AND RECORDS

        11.1 Payment Method. All payments under this Agreement shall be made by
check or bank wire transfer in immediately available funds to an account
designated by the receiving party. All amounts specified or referenced in this
Agreement, and all payments made hereunder, are and shall be made in U.S.
dollars. Any payments due under this Agreement which are not paid by the date
such payments are due under this Agreement shall bear interest in the lesser
amount of (i) the U.S. prime rate per annum quoted in the "Money Rates" column
of The Wall Street Journal (U.S., Eastern Edition) on the date such payment is
due, or (ii) the highest rate allowed by applicable law, calculated on the
number of days such payment is delinquent. This Section 11.1 shall in no way
limit any other remedies available to either party hereto.

        11.2 Currency Conversion. If any currency conversion shall be required
in connection with the calculation of amounts payable hereunder, such conversion
shall be made using the buying exchange rate for conversion of the foreign
currency into U.S. Dollars, quoted for current transactions reported in The Wall
Street Journal (U.S., Eastern Edition) for the last business day of the calendar
quarter to which such payment pertains.

        11.3 Nonrefundable. Except as expressly set forth in the Agreement, the
amounts paid hereunder shall be nonrefundable.

        11.4 Taxes. All amounts specified hereunder are expressed as net amounts
and shall be made free and clear of, and without reduction for, any withholding
taxes. Any such taxes which are otherwise imposed on payments, including any
applicable value-added or sales tax, shall be the sole responsibility of the
payor. The payor shall provide the payee with official receipts issued by the
appropriate taxing authority or such other evidence as is reasonably requested
by the payee to establish that such taxes have been paid. The parties shall
cooperate to structure the payments hereunder to reduce the tax burdens
hereunder; provided that neither party shall be obligated to incur tax
obligations contrary with the intent of this Section 11.4 above.

        11.5 Records; Inspection. Each party shall keep (or cause to be kept)
complete, true and accurate books of accounts and records for the purpose of
determining the amounts payable pursuant

                                      -18-
<PAGE>   19

to this Agreement. Such books and records shall be kept at the principal place
of business of the for at least three (3) years following the end of the
calendar quarter to which they pertain. Such records will be open for inspection
during such three (3)-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 11.5 shall be at the expense of
inspecting party, unless a variation or error producing an over or underpayment,
as applicable, in amounts payable exceeding ten percent (10%) of the amount
payable for any period covered by the inspection is established in the course of
any such inspection, whereupon all costs relating to the inspection for such
period and any unpaid amounts that are discovered shall be paid by the party in
error, together with interest on such overpaid or underpaid amounts at the rate
set forth in Section 11.1 above. The parties will endeavor to minimize
disruption of the party being inspected's normal business activities to the
extent reasonably practicable

                                   ARTICLE 12
                                 LICENSE GRANTS

        12.1 Grant of Rights to BML. Subject to the terms and conditions of this
Agreement, TWT hereby grants to BML a non-exclusive license under the TWT
Technology necessary (i) to use Collaboration Products solely for its own
internal use in the Territory and (ii) to carry out the Clinical Development in
accordance with this Agreement.

        12.2 Grant of Rights to TWT.

                12.2.1 BML Technology. Subject to the terms and conditions of
this Agreement, BML hereby grants to TWT a non-exclusive, worldwide license
under the BML Technology, with the right to grant and authorize sublicenses, to:
(i) develop, make, use, import, sell, and otherwise exploit Collaboration
Products and Proprietary Target Products; and (ii) to carry out the Development
Program in accordance with this Agreement.

                12.2.2 Improvement Technologies. Additionally, BML hereby grants
to TWT a non-exclusive, fully paid-up, worldwide license under the Improvement
Technologies, with the right to grant and authorize sublicenses.

        12.3 No Implied Licenses. Only the licenses granted pursuant to the
express terms of this Agreement shall be of any legal force or effect. No other
license rights shall be created by implication, estoppel or otherwise.

                                   ARTICLE 13
                              INTELLECTUAL PROPERTY

        13.1 Ownership. Subject to the provisions of Article 12, title to all
Inventions made solely by TWT personnel shall be owned by TWT; title to all
Inventions made solely by BML personnel shall be owned by BML; and title to all
Inventions made jointly by personnel of TWT and BML in connection with the
Development Program shall be jointly owned by BML and TWT (such jointly

                                      -19-
<PAGE>   20

owned inventions "Joint Inventions"). 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 of any
such Joint Inventions and each party waives any right it may have under the laws
of any country to require such accounting or approval.

        13.2 Patent Prosecution and Enforcement.

                13.2.1 Sole Inventions. TWT or BML, as the case may be (the
"Controlling Party"), shall, at its sole discretion and expense, control the
preparation, filing, prosecution and maintenance of any patent applications,
patents or other intellectual property rights claiming an Invention solely owned
by the Controlling Party in accordance with Section 13.1 above. Notwithstanding
the foregoing, if TWT or BML elects not to file, prosecute or maintain any
patent application, patent or other intellectual property right claiming such an
Invention comprising an Improvement Technology, Target or use thereof, the other
party may do so at its own expense and in its own name.

                13.2.2 Joint Inventions. Except as otherwise provided in this
Section 13.2.2, it is understood that Joint Inventions shall be jointly owned by
BML and TWT. TWT shall have the first right to pursue the preparation, filing,
prosecution and maintenance of any patent applications, patents or other
intellectual property covering Joint Inventions. TWT shall keep BML fully
informed as to the status of patent matters described in this Section 13.2.2,
including without limitation, by providing BML 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 BML the opportunity, as
far in advance of filing dates as practicable, to fully review and comment on
any documents which will be filed in any patent office, and incorporating all
reasonable comments. BML shall reasonably cooperate with 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. BML
shall promptly reimburse TWT for one-half (_) of TWT's out-of-pocket expenses in
connection with such activities as they are incurred, provided that if BML so
provides TWT sixty (60) days notice, BML shall not be responsible for any costs
under this Section 13.2.2 related to any particular patent or patent
application, in which case all right, title and interest in and to such
application or patent (as the case may be) and any patents issuing thereon shall
be owned by TWT (subject to the licenses granted to BML under this Agreement).
Likewise, in the event TWT fails or declines to take such actions with respect
to any Joint Invention in accordance with this Section 13.2.2, then BML shall
have the right to do so, in which case all right, title and interest in and to
such application or patent (as the case may be) and any patents issuing thereon
shall be owned by BML (subject to the licenses granted to TWT under this
Agreement).

        13.3 Defense of Third Party Infringement Claims. If the production, sale
or use of any Collaboration Product for Clinical Applications pursuant to this
Agreement results in a claim, suit or proceeding (collectively, "Actions")
alleging patent infringement against TWT or BML, such party shall promptly
notify the other party hereto in writing. The party subject to such Action shall
have the exclusive right to defend and control the defense of any such Action
using counsel of its own choice, and the Action shall be at such party's own
expense; provided, however, that the other party may participate in the defense
and/or settlement thereof at its own expense with counsel of its

                                      -20-
<PAGE>   21

choice. Except as agreed in writing by TWT, if BML is the party named in the
Action it shall not enter into any settlement relating to a Collaboration
Product, if such settlement admits the invalidity or unenforceability of any
patent within the TWT Technology. The party in the Action agrees to keep the
other party hereto reasonably informed of all material developments in
connection with any such Action.

                                   ARTICLE 14
                                 CONFIDENTIALITY

        14.1 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 which if disclosed in tangible form is marked
"Confidential" or with other similar designation to indicate its confidential or
proprietary nature or if disclosed orally is indicated orally 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 a reasonable time after such
disclosure (collectively, "Confidential Information"). Notwithstanding the
foregoing, Confidential Information shall not include information that, in each
case as demonstrated by written documentation:

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

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

                14.1.3 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;

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

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

        14.2 Permitted Disclosures. Notwithstanding the provisions of Section
14.1 above, each party hereto may disclose the other party's Confidential
Information to the extent such disclosure is reasonably necessary to exercise
its rights or fulfill its obligations under this Agreement, filing and
maintaining intellectual property protection, prosecuting or defending
litigation, complying with applicable governmental regulations, submitting
information to tax or other governmental 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, save to the extent
inappropriate as in the case of patent applications, will use its reasonable
efforts to secure confidential treatment of such information prior to its
disclosure (whether through protective orders or otherwise). If the party whose
Confidential

                                      -21-
<PAGE>   22

Information is to be disclosed has not filed a patent application with respect
to such Confidential Information, it may require the other party to delay the
proposed disclosure (to the extent the disclosing party may legally do so), for
up to sixty (60) days, to allow for the filing of such an application.

                                   ARTICLE 15
                         REPRESENTATIONS AND WARRANTIES

        15.1 General Warranties.

                15.1.1 TWT Warranties. TWT warrants and represents to BML that
(i) it has the full right and authority to enter into this Agreement and grant
the rights and licenses granted herein; (ii) it has not previously granted, and
will not grant during the term of this Agreement, any right, license or interest
in or to the TWT Technology, or any portion thereof, to manufacture, sell or use
Collaboration Products that is in conflict with the rights or licenses granted
under this Agreement; and (iii) as of the Effective Date, TWT has not received
from a third party notice that the manufacture, sale or use of Collaboration
Products would infringe any intellectual property rights of such third party and
to its knowledge and belief, no action, suit or claim has been initiated or
threatened against TWT with respect to the TWT Technology or its right to enter
into and perform its obligations under this Agreement.

                15.1.2 BML Warranties. BML 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; (ii) it has not previously granted, and
will not grant during the term of this Agreement, any right, license or interest
in or to the BML Technology, or any portion thereof, to manufacture, sell or use
Collaboration Products that is in conflict with the rights or licenses granted
under this Agreement; (iii) BML has not received from a third party notice that
the manufacture, sale or use of Collaboration Products would infringe any
intellectual property rights of such third party and to its knowledge and
belief, no action, suit or claim has been initiated or threatened against BML
with respect to the BML Technology or its right to enter into and perform its
obligations under this Agreement.

        15.2 Certain Warranties and Covenants Regarding Cleavase Enzymes

                15.2.1 General. TWT represents and warrants that Collaboration
Products, Standard Invader Reagents and Cleavase Enzymes supplied to BML under
this Agreement will comply with all applicable Specifications at the time of
shipment to BML. BML shall, promptly upon receipt of each shipment perform
customary inspections. 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 receipt thereof,
together with reasonable evidence of such nonconformity at the time of
inspection.

                15.2.2 Remedy. In the event that (i) BML and TWT agree (or there
is an independent finding) that any Collaboration Product, Standard Invader
Reagent or Cleavase Enzyme failed to comply with such Specifications at the time
of shipment to BML, or (ii) TWT recalls the same as set forth in Section 15.2.3
below, TWT shall at its own cost (including freight and

                                      -22-
<PAGE>   23

insurance) deliver replacement quantities of such Collaboration Products,
Standard Invader Reagents or Cleavase Enzymes to BML as soon as practicable;
provided, that in the case of a recall if replacement is commercially
unreasonable, TWT shall credit BML's account for the amount paid therefor. TWT
may analyze any unit of Collaboration Products, Standard Invader Reagents and
Cleavase Enzymes rejected by BML for nonconformity. In case of a disagreement
between the parties, the claim shall be submitted for tests and decision to an
independent testing organization, which meets appropriate current Good
Laboratory Practices as defined by the FDA from time to time and mutually agreed
upon by the parties (the "Laboratory"), the appointment of which shall not be
unreasonably withheld or delayed by either party. The determination of such
entity with respect to all or part of any shipment shall be final and binding
upon the parties. The fees and expenses of the Laboratory making such
determination shall be paid by the party against which the determination is
made. TWT shall give BML written instructions as to how BML should, at TWT's
expense, dispose of any non-conforming Collaboration Products, Standard Invader
Reagents or Cleavase Enzymes, and such instructions shall comply with all
appropriate governmental requirements.

                15.2.3 Recalls. Pursuant to the FDA's Medical Device Reporting
(MDR) Regulations or other similar reporting regulations, TWT and/or BML may be
required to report to the FDA, Japanese Ministry of Health and Welfare and/or
another regulatory agencies information that reasonably suggests that a
Collaboration Product has malfunctioned and that the product would be likely to
cause or contribute to a death or serious injury if the malfunction were to
recur. Each of TWT and BML agree to provide to the other any such information
promptly after becoming aware of it so that each of TWT and BML can comply with
governmental reporting requirements. In the event that TWT or BML is required by
any regulatory agency to recall any Collaboration Product or if TWT voluntarily
initiates a recall of any Collaboration Product, BML shall cooperate with and
assist TWT in locating and retrieving if necessary, the recalled Collaboration
Products. BML shall maintain records of Collaboration Products to allow
traceability. Upon TWT's request, BML shall provide TWT with access to such
records in the event of a recall of a Collaboration Product recall or other
quality related issue. Each party shall make available to the other party for
inspection such party's process and records for adverse event and other
regulatory reporting purposes at mutually agreed upon times and further shall
ensure that its processes comply with all applicable laws and regulations.

        15.3 Disclaimer of Warranties. EXCEPT AS PROVIDED IN THIS ARTICLE 15,
NEITHER PARTY MAKES ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY,
NONINFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF TWT
TECHNOLOGY, PATENTED OR UNPATENTED, AND NONINFRINGEMENT OF THE INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES.

                                   ARTICLE 16
                                 INDEMNIFICATION

        16.1 Indemnification of BML. TWT shall indemnify each of BML and its
trustees, directors, officers, and employees of BML and the successors and
assigns of any of the foregoing (each an "BML Indemnitee"), and hold each BML
Indemnitee harmless from and against any and all liabilities, damages,
settlements, penalties, fines, costs or expenses (including, without limitation,

                                      -23-
<PAGE>   24

reasonable attorneys' fees and other expenses of litigation) arising out of any
claim, complaint, suit, proceeding or cause of action brought against an BML
Indemnitee by a third party (any of the foregoing, a "BML Claim") alleging
damage, physical injury, death or otherwise, arising from or occurring as a
result of (i) use, marketing, sale or distribution of Collaboration Products by
or on behalf of TWT (except to the extent such claim results for any breach by
BML of any of its representations and warranties under Section 15.1 or is a
result of BML's use of a Collaboration Product) or (ii) any breach by TWT of its
representations and warranties under Sections 15.1 and 15.2, in each case
subject to the requirements set forth in Section 16.3 below. TWT shall have no
obligation to any BML Indemnitee under this Section 16.1 to the extent a BML
Claim results from the negligence or knowing and willful misconduct of the BML
Indemnitee.

        16.2 Indemnification of TWT. BML shall indemnify each of TWT and its
trustees, 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 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 "TWT Claim") alleging
damage, physical injury, death or otherwise, arising from or occurring as a
result of (i) use, marketing, sale or distribution of Collaboration Products by
or on behalf of BML (except to the extent such claim results for any breach by
TWT of any of its representations and warranties under Sections 15.1 and 15.2),
(ii) the use of any Assays developed by BML pursuant to Section 4.3 (except to
the extent such claim results for any breach by TWT of any of its
representations and warranties under Sections 15.1 and 15.2), or (ii) any breach
by BML of its representations and warranties under Section 15.1, in each case
subject to the requirements set forth in Section 16.3 below. BML shall have no
obligation to any TWT Indemnitee under this Section 16.1 to the extent a TWT
Claim results from the negligence or knowing and willful misconduct of the TWT
Indemnitee.

        16.3 Procedure. A party (the "Indemnitee") that intends to require
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 require 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 obligations
of the parties in this Article 16 shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the consent of the
Indemnitor, which consent shall not be withheld or delayed unreasonably. The
failure to deliver written notice to the Indemnitor within a reasonable time
after the commencement of any such Claim, if prejudicial to its ability to
defend such action, shall relieve such Indemnitor of any liability to the
Indemnitee under this Article 16, 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 16. The Indemnitee under this
Article 16 and its employees shall cooperate fully with the Indemnitor and its
legal representatives and provide full information in the investigation of any
Claim covered by this indemnification. It is understood that only BML may claim
indemnity under this Article 16 (on its own behalf or on behalf of an BML
Indemnitee), and other BML Indemnitees may not directly claim indemnity
hereunder. Likewise, it is understood that only TWT may claim

                                      -24-
<PAGE>   25

indemnity under this Article 16 (on its own behalf or on behalf of a TWT
Indemnitee), and other TWT Indemnitees may not directly claim indemnity
hereunder.

                                   ARTICLE 17
                              TERM AND TERMINATION

        17.1 Term. Unless otherwise agreed in writing, the term of this
Agreement shall commence on the Effective Date, and shall continue in full force
and effect until December 31, 2007.

        17.2 Termination for Cause. Either party to this Agreement may terminate
this Agreement in the event the other party hereto 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 (or any other party on its behalf) has cured
any such breach or default prior to the expiration of the sixty (60) day period;
provided, if the alleged breaching party disputes in good faith the alleged
material breach, the non-breaching party shall have no right to terminate this
Agreement until finally determined hereunder that the party was in material
breach and it has failed to cure such breach.

        17.3 Termination Upon Notice. BML may terminate this Agreement upon six
(6) months written notice to TWT, provided that such notice shall not be
delivered prior to June 30, 2003.

        17.4 Effects of Termination.

                17.4.1 Accrued Obligations. Termination of this Agreement for
any reason shall not release either 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 any rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement.

                17.4.2 Refund of Collaboration Product Development Funding. In
the event that BML terminates this Agreement for cause pursuant to Section 17.2
above, TWT shall refund within thirty (30) days of the effective date of such
termination all amounts paid to TWT pursuant to Section 7.2 above in excess of
the Development Costs actually incurred by TWT prior to the effective date of
such termination and provide BML a financial statement setting forth the
Development Costs incurred for the period since the last report provided by TWT
pursuant to Section 6.1.2 above until the effective date of such termination.

        17.5 Survival. Articles 1, 11, 14, 16, and 18 of this Agreement, and
Sections 5.3, 8.1.1, 10.2, 12.2, 13.1, 13.2, 17.5 and the last sentence of
Section 5.4 shall survive the expiration or termination of this Agreement for
any reason. Except as otherwise provided in this Article 17, all rights and
obligations of the parties under this Agreement shall terminate upon expiration
or termination of this Agreement for any reason.

                                      -25-
<PAGE>   26

                                   ARTICLE 18
                                  MISCELLANEOUS

        18.1 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, United States, without
reference to conflicts of laws principles and without regard to the 1980
Convention on the International Sale of Goods.

        18.2 Dispute Resolution.

                18.2.1 Senior Executives. If the Development Committee, or TWT
and BML, are unable to resolve any dispute between them, either TWT or BML may,
by written notice to the other, have such dispute referred to the Presidents of
TWT and BML or their designees, for attempted resolution by good faith
negotiations for a period of thirty (30) days after such notice is received.
Unless otherwise mutually agreed, the negotiations between the designated
officers shall be conducted by telephone, within three (3) days and at times
within the period stated above offered by the designated officers of BML to the
designated officer of TWT for consideration. Subject to Section 18.2.2 below, if
the parties are unable to resolve such dispute in accordance with the
aforementioned procedure or within such thirty (30)-day period, either party
shall have the right to pursue any and all other remedies available to such
party.

                18.2.2 Arbitration. BML and TWT agree that any dispute or
controversy arising out of, in relation to, or in connection with this
Agreement, or the validity, enforceability, construction, performance or breach
hereof, shall be settled by binding arbitration in San Francisco, California,
United States, under the then-current International Arbitration Rules of the
Asia-Pacific Center for the Resolution of International Business Disputes by a
single arbitrator appointed in accordance with such rules, provided that if
either party requests the arbitration shall be conducted by a panel of three (3)
arbitrators appointed in accordance with such rules. The arbitrator(s) shall
determine what discovery will be permitted, based on the principle of limiting
the cost and time which the parties must expend on discovery; provided, the
arbitrator(s) shall permit such discovery as they deem necessary to achieve an
equitable resolution of the dispute. The decision and/or award rendered by the
arbitrator(s) shall be written, final and non-appealable and may be entered in
any court of competent jurisdiction. The parties agree that, any provision of
applicable law notwithstanding, they will not request, and the arbitrator shall
have no authority to award, punitive or exemplary damages against any party. The
costs of any arbitration, including administrative fees and fees of the
arbitrator(s), shall be shared equally by the parties, unless otherwise
specified by the arbitrator(s). Each party shall bear the cost of its own
attorneys' and expert fees; provided that the arbitrator(s) may in their
discretion award to the prevailing party the costs and expenses incurred by the
prevailing party in connection with the arbitration proceeding. The arbitral
proceedings and all pleadings and written evidence shall be in the English
language. Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original or true copy
thereof.

        18.3 Force Majeure. Except for the payment of amounts due hereunder,
nonperformance of any party shall be excused to the extent that performance is
rendered impossible by strike, fire,

                                      -26-
<PAGE>   27

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.

        18.4 No Implied Obligations. Nothing in this Agreement shall be deemed
to create any implied obligations of either party.

        18.5 No Implied Waivers; Rights Cumulative. No failure on the part of
TWT or BML 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.

        18.6 Limitation of Liability. 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.

        18.7 Independent Contractors. Nothing contained in this Agreement is
intended implicitly, or is to be construed, to constitute TWT or BML 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.

        18.8 Language. This Agreement is in the English language only, which
language shall be controlling in all respects, and all versions hereof in any
other language shall not be binding on the parties hereto. All communications
and notices to be made or given pursuant to this Agreement shall be in the
English language.

        18.9 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be (i) personally delivered or (ii) sent by
registered or certified mail, return receipt requested, postage prepaid, (iii)
FedEx, DHL or other international courier service or (iv) or faxed, receipt
confirmed, in each case to the respective address specified below, or such other
address as may be specified in writing to the other parties hereto:

               BML:                           BML, Inc.
                                              1361-1 Matoba
                                              Kawagoe-shi, Saitama 350-1101
                                              JAPAN
                                              Attn: Managing Director
                                              Fax: 81-3-492-32-0400

                                      -27-
<PAGE>   28

               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

        18.10 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 that
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.

        18.11 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.

        18.12 Further Assurances. Each party hereby agrees, at the reasonable
request and expense of the other party, to execute such documents and take such
other actions as are necessary to fulfill the intent of this Agreement or
provide the full benefit intended hereunder to the requesting party.

        18.13 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. In the event a party seeks to avoid a provision of this
Agreement by asserting that such provision is invalid, illegal or otherwise
unenforceable, the other party shall have the right to terminate this Agreement
upon sixty (60) days' prior written notice to the asserting party, unless such
assertion is eliminated and cured within such sixty (60)-day period.

        18.14 Compliance with Laws. Notwithstanding anything to the contrary
contained herein, all obligations of BML and TWT are subject to prior compliance
with United States and foreign export regulations and such other United States
and Japanese 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. BML and TWT shall cooperate with

                                      -28-
<PAGE>   29

each other and shall provide assistance to the other as reasonably necessary to
obtain any required approvals.

        18.15 Publicity. Each of the parties hereto agrees not to disclose to
any third party the financial terms of this Agreement (except for those limited
financial terms disclosed in the press release described below) 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. Notwithstanding
the foregoing, within five (5) days after the Effective Date, the parties shall
agree upon and issue a press release announcing the execution of this Agreement
and describing the collaboration, thereafter, each party may disclose to third
parties the information disclosed in such press release without the need for
further approval by the other party.

        18.16 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.

        18.17 Entire Agreement. This Agreement together with the Exhibit hereto
constitute the entire agreement, both written or oral, with respect to the
subject matter hereof, and supersede all prior or contemporaneous understandings
or agreements, whether written or oral, between TWT and BML with respect to such
subject matter.

        18.18 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. 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.                    BML, INC.

By:                                              By:
   -------------------------------                  ----------------------------
Name: Lance Fors                                 Name:  Motoyoshi Arai
     -----------------------------                    --------------------------
Title: President & CEO                           Title: President
      ----------------------------                     -------------------------

                                      -29-

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